One word has come to define the ambitions and vision of several internet companies. Super app. To not let users stray away to other platforms by offering them virtually everything — shopping, food and grocery deliveries, entertainment, travel, taxi-hailing, payments, financial services, etc.
Amidst the hotpot of services, travel has emerged as an aspirational offering for all the super apps. Easily among the world’s largest e-commerce categories, the travel vertical offers a variety of business propositions, including niches, for these online giants. From high volume, low margin segments such as bus and train ticketing, to a relatively complex and higher margin flight, hotel and package bookings.
Moreover, by striking third-party distribution partnerships, the super apps face minimal inventory risk. And it opens up a plethora of opportunities to upsell and cross-sell products. By analyzing the user’s interest and intent around travel, these one-stop-shop services could recommend ancillary products — Booked a beach destination? Here is a swimsuit you can buy. And by the way, people who bought swimsuits also bought sunscreen. This strategy has been widely prophesied by China’s Alibaba with reference to its travel brand, Fliggy.
Most super apps begin their travel journey as a metasearch. Paytm, for instance, started as a metasearch engine, partnering with online travel agents (OTAs) like Sastiticket and Cleartrip, back in 2016. But soon after, it shunned that model and decided to forge direct relationships with airlines, buses, trains and hotels to bolster its Paytm Travel vertical. Others are still powering their travel offerings through partnerships. For example, Line acquired 34% of Japan’s Venture Republic in July 2018 as a part of its strategy to build a travel portfolio, Grab partnered with Agoda and Booking.com in April 2019 for hotel bookings, and Amazon introduced flights for Indian users in May 2019, powered by Cleartrip — a year after Walmart-owned Flipkart struck a similar partnership with India’s leading OTA, MakeMyTrip. China’s ride-sharing juggernaut Didi also lists Booking.com as a strategic investor, allowing both the parties to tap into each other’s services.
On the other end of the spectrum, Google, so far, has had separate, disconnected travel metasearch offerings — Google Trips, Google Flights, Google Hotels and Google Maps. In May 2019, Google stitched together its myriad travel offerings with the launch of Google Travel, a metasearch website aggregating flights, hotels, vacations, and trip planning features, all in one place.
In general, companies adopting a super app strategy have a significantly larger user base than individual travel companies, thus attracting the latter to partner as opposed to compete head-on. But in the dynamic e-commerce market, margins are everything. We have already witnessed some super apps — Fliggy, Meituan-Dianping, Paytm — drop metasearch partnerships in favor of a more direct relationship with suppliers, evolving as competitors to the OTAs.
If travel companies thought piggybacking super apps would be a good move to reach more users, they may need to consider again. Those with more money and more traffic may be gearing up to swallow the entire segment.