Amazon is the largest online retailer in the world with a market capitalization of over $773 billion. Amazon has mastered online retailing, inventory management, online order fulfillment and logistics. From e-books to electronics and streaming video, Amazon excels in and “owns” every single retail category, except online travel retailing. Why?
Business strategy to enter online travel: In both of its failed attempts to enter online travel retailing, Amazon tried to build an organic travel and hotel retailing product. This was the wrong approach due to the complexities (read: expensive and time-consuming) of gaining access to travel inventory, and lack of expertise in managing travel industry relationships.
Complex travel inventory management, pricing and distribution technology: Amazon underestimated the complexity of travel and hospitality technology which consists of many moving parts: old legacy systems that are poorly functioning, co-existing with next-gen apps and promising AI and blockchain implementations.
Perishable travel inventory: Despite all of its retailing prowess and innovation, Amazon has no idea how to manage ultra-perishable inventory, such as that of travel inventory.
Overall, hoteliers should NOT be concerned by an organic entry of Amazon into the online travel space. As mentioned above, it would take Amazon unsurmountable efforts and resources to build an OTA type of retail travel product from scratch.
However, if Amazon decides to buy an existing OTA player and build a global travel retail empire on this new acquisition’s platform, then hoteliers should be concerned.
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