Amazon Explore - Is This Another Attempt to Enter the Travel Industry?
— 12 experts shared their view
Amazon Explore launched recently, tries to capture consumer demand for experiencing virtual tours and activities in destinations, such as how to cook a dish, personalized guided tours of cities and attractions.
Some local experiences executives believe that this is Amazon's initial step toward entering in full force the highly lucrative and digitally-underserved "Tours & Activities/ Local Experiences" travel sector and that it would be an "easy implementation" for Amazon to become an online retailer/online travel agency in the local experiences sector and can do this "just by opening a category" on their site.
Other industry experts believe that these virtual tours are more like curated reality cooking and travel shows, more like Amazon Prime TV series, and not yet another attempt by Amazon to enter the travel business as an OTA and that the online retail giant does not have the expertise and technology to enter the travel space as a major player.
The question is, is Amazon Explore yet another attempt by Amazon to enter the travel space as a major player and online travel agency/retailer?
Partner at Hudson Crossing
Looking at the travel world from inside travel lends us a perspective that is both more informed and more narrow. When we look at a potential new entrant, we're biased to think it will enter through conventional pathways. I think Amazon looks at travel as an outsider, which explains why they failed with their previous entrance and allows them to come up with creative entry points into travel like Amazon Explore.
- I believe AE is definitely a foray into the travel world and that they will test it like crazy to see how customers react, but I don't think they'll be using the same yardsticks we might think of when evaluating the success of a new travel service. Since they've been forced to cede the mobile market to Apple and Google (note the fire phone disaster) they've decided that the home is where they want to play and Alexa is going to function as the 'operating system' for the home. Mobile is very powerful, but far less so in the home where you want to let the whole family turn on the TV or play music or whatever they want to do. This week's announcements about the new Amazon Alexa Guard home security, new Echo devices, and upgraded 'hunches' get them further embedded as an "ambient (you aren't aware of it, it's just there) computing presence" in the home. And as HC partner Max Rayner is fond of saying, if you can get someone to use one of your products you're at risk of losing them when the next shiny version of that product comes along. But get them to use 2 or 3 of your products (as in a bundle) and they're customers for life.
- So amazon Explore can give amazon customers a way to travel (sort of) without all the cost (and risk of infection for today's customers) and it's something Amazon can build a very deep and defensible moat on because it will be a scale-driven business. It's more like building AWS than going into traditional travel, and there are few other companies with the scale to compete in building something similar and zero that have the penetration into the home that Amazon has. Amazon Explore is also another service to put into the Prime subscription at some point to build the value of that bundle and thereby reduce churn. I expect that once they have sufficient scale and testing knowledge around exactly how this service will work, we will see some AE services built into Prime and others as an add-on at a significant discount to the price for non-members. (Disney did something roughly similar with Mulan on Disney+ Premier Access)
- Once the AE service becomes more widespread in 2-3 years, I expect there will be a version of AE that involves wearing a virtual reality headset connected to your guide (possibly in another country) who will be wearing a helmet with cameras that capture her view in all directions. As she walks around, you see what she sees, and you can speak to and hear each other and go on a guided tour in real-time without leaving your home. You'll be able to see the Coliseum or the Fountains of Trevi on Saturday morning and then go watch your kids play baseball in the afternoon at your local park. And the new olive oil decanter and 6 tins of olive oil you bought from the store in Rome will arrive with one of your other amazon orders in 2 weeks.
- So yes, I do think it's part of an entrance into travel, but it's on Amazon's terms supporting Amazon's bundling strategy, it will carry a deep competitive moat, and it will be aimed at one of the few pieces of the travel industry not already driven to diminishing marginal returns by the OTAs.