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?
Founder & President, Tim Peter & Associates
I haven't seen any sign that Amazon plans to compete aggressively in travel. That could change. But Amazon Explore likely represents just another test, rather than a full commitment to the travel industry. Why? A few reasons.
First, Amazon competes in e-commerce generally by providing customers low prices, broad selection, and overall convenience, with benefits such as fast, free shipping. However, the infrastructure Amazon has built that allows it to deliver those customer benefits to provide Amazon little value in travel. OTAs already can provide an equal or greater selection. Travel doesn't require shipping, warehousing, or logistics. And without those advantages, Amazon holds no particular pricing leverage.
Second, Amazon makes the majority of its revenues through platforms (online store, AWS, Marketplace, Alexa, advertising) and subscriptions (Prime). As noted, its platforms aren't set up for travel. So, a better question might be, "How does travel help make Prime more valuable to customers... and by extension to Amazon?" If Amazon can provide a travel benefit to Prime members that makes them more likely to subscribe/maintain their Prime subscription, they'd definitely include one. But it would represent a feature that enhances their core offering, rather than a category unto itself. Again, that's not an argument in favor of Amazon making a bold travel play.
Finally, when Amazon wants to get into a category in a big way, they've either invested heavily (Echo devices) or acquired strong players (Twitch, Ring, Zappos, Whole Foods, Audible, Zoox, Kiva Systems) to establish -- or expand -- their dominance. I haven't seen any sign of Amazon making either move in travel. Contrast that with Google's acquisitions of ITA and Ruba a decade ago. Until Amazon does make an acquisition or other investment there, their small-scale tests probably mean only small-scale results.
Obviously, any of these could change. Amazon's got a large war chest and has proved willing to deploy it to their advantage. But until they make bigger moves more directly related to travel, I suspect they're happy to provide cloud services/advertising opportunities to travel companies and continue sticking with where their competitive advantages lie.