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AMAZON AND : THE FUTURE OF DIGITAL DISRUPTION IN THE TRAVEL INDUSTRY

Imagine if Google suggested a vacation based on your age, the time of year, and whether your friends or family were also planning to be in the vicinity. The idea is not so far-fetched. Both Google and Amazon are moving in this direction to disrupt the travel industry by streamlining planning and booking. Amazon and Google: The future of digital disruption in the travel industry Whether you call it the elephant in the room or the 500-pound gorilla, Google and Amazon are both looking at the travel industry as a new source of revenue. They’re threatening to disrupt the travel market in two different ways. In 2016, Google jumped into travel with its Trips app. Amazon took off on a smaller scale in May 2019 by enabling the payment of domestic flight tickets in through Amazon Pay.1 Both companies know a lot about their customers, and that data is a gold mine. Their mastery of data will enable them to introduce the next wave of travel industry disruption. They can predict when customers are planning a vacation and where they want to go. Their new Netflix-style approach makes it easier for consumers to plan, book and be more spontaneous about travel. This is the future of disruption in the travel industry.

External Document © 2019 Infosys Limited The Netflix algorithm suggests content Digital travel’s paradox you might be interested in based on Google: The elephant The last wave of disruption in the user data. Google is doing the same in the room travel industry started with websites thing, using an algorithm to determine Now, Google is bringing its nice, clean like Booking.com, , where you want to take a trip and look and search engine strength to and TripAdvisor. Travel websites what you might want to do while the game. What does that mean for effectively became travel agents and you’re there. travelers? Google is the organization revolutionized the way people plan Perhaps, the most important card up with the most data. They want to help and book their holidays. TripAdvisor Google’s sleeve is not its design, but its you keep your trip planning organized, went about this in the most Google Reviews. learn about you and advertise to you unexpected way. The website started at the same time. In May, Google off as a place for people to review Google has recently increased its unveiled a streamlined trip-planning hotels and restaurants. It then went on review volume and made Google platform called Google Travel. It brings to become a great way to plan where ratings more prominent in its search, , Google Hotels and to go on vacation and what to do maps and hotel listings. That’s other tools under one roof, making while you’re there. where it really starts to edge in on TripAdvisor’s space. it easier to plan your travel itinerary. While the digital revolution This combines the advantages of democratized choice for the Online reviews left by strangers have the mobile Google Trips app, Google travel industry, it made decisions become almost as trusted as personal Flights, and Google Hotels and its more difficult. The problem is that recommendations. However, placing search functionality. It’s a streamlined consumers now have so many this much trust in reviews requires the experience that you can access from destinations right at their fingertips. user to be able to filter real reviews any device and pick up where you Psychologist Barry Schwartz coined from fake ones. This can be hard to do, left off. You can access all booking the phrase “Paradox of Choice” (Figure but at least fake reviewers are starting information within your itinerary, 1). He found that while increased to face some real consequences. In including confirmation codes and choice allows us to achieve objectively September 2018, a man in Italy was travel information as well as weather better results, it also leads to greater sentenced to nine months in jail for forecasts for your travel time. This anxiety, indecision, paralysis and selling fraudulent TripAdvisor reviews. launch is the beginning of an evolution dissatisfaction. In December 2018, Google was hit for Google’s travel services. with a massive fake review attack. To improve this situation, Google’s The company confirmed 37 fake If you’re signed in to your Google travel solution takes some inspiration profiles posted over 3 million fake account, your recent searches, saved from what Netflix created for TV. You 4-star ratings. Google removed all places and flights are automatically can watch thousands of movies and the fake reviews about five days later. added to your travel account. Google TV shows on Netflix, and Google has There’s no word who initiated this adds items you viewed and saved, at least that many trips you can book. attack, but it highlights the issue of including hotels, to your trips so you Netflix does a lot of work behind the automated or systematic review spam. don’t have to reinvent the wheel or scenes to help you make up your mind. keep track of all the details yourself. Basically, Google becomes your travel wallet. Figure 1: Paradox of Choice: Less is more because too much The information keeps coming choice is stressful from Google once you reach your destination. does more than just point out places to see, restaurants to try and things to do. It will now pinpoint popular Happiness neighborhoods nearby and what they may be famous for. Google wants its Maps to be the ultimate go-to for all information while you travel.

Choices Source: Barry Schwartz

External Document © 2019 Infosys Limited Google also creates a digital footprint that send money to friends (think Venmo or allows travelers to relive their vacation. Amazon: The 500-pound PayPal) and borrow money. Now, they It tracks every moment using Google gorilla can buy plane tickets too. In May 2019, Amazon announced a partnership location tracking. This lets travelers If Google is the elephant in the room, with , a flight booking service look back and see where each picture Amazon is the 500-pound gorilla. in India. Amazon partnered with was taken, restaurants where they ate Amazon is the largest online retailer in Cleartrip, rather than starting a new and even where they went sightseeing. the world. The company is cementing service. Travelers get cash back for a Location tracking can also be used for its role as the global leader in one flight purchase on Cleartrip. Amazon push advertising. Google knows you’re industry after another — forcing Prime members get an even higher traveling with children and that it’s companies to adapt or close. Some call rebate. hot. That information lets Google make it “death by Jeff,” after Amazon founder a prediction and recommend a nearby and CEO Jeff Bezos.2 gelato shop on a hot afternoon. This Experimenting in India Amazon has mastered online retailing, is a new channel for Google’s clients India is one of Amazon’s fastest- inventory management, online to reach their customers, further growing markets. The company often order fulfillment and logistics. From extending the search giant’s reach as tests new ideas there. Amazon Pay is e-books to electronics and streaming the advertiser of choice online. For the embedded in popular Indian services video, Amazon excels at targeting end consumer, it really could take the like movie ticketing site BookMyShow, and disrupting new industries. travel experience to a whole new level. food delivery startup Swiggy and However, in 2015, Amazon tried to bus-ticketing startup redBus. The sharing of data across all Google sell hotel deals through a microsite Amazon offers cash-back incentives products results in an extremely personalized called Destinations but shut the to customers who check out using Google Travel experience that some people site down after just six months. The Amazon Pay. The flight ticketing option will find helpful and others will find intrusive. same year, the company shut down is similar. Amazon offers about $28 (Rs Amazon Local, which offered flash sale What if you don’t want Google 2,000) cash back for the booking. tracking your entire thought process discounts on hotel or restaurant deals. This travel experiment is focused on as you plan? You can opt out by In both of its failed attempts, Amazon domestic airline tickets at the moment, changing your settings, but by doing tried to build an organic travel and but that could change. so you also stand to lose the cross- hotel retailing product. This was platform functionality. the wrong approach due to the It wouldn’t be surprising to see Amazon duplicate what it’s doing in India in other Some say Google has an unfair complexities in gaining access to travel emerging markets, using key partnerships advantage. As the world’s largest inventory and lack of expertise in rather than going head to head with search engine, Google is the de facto managing travel industry relationships. entrenched online travel players. gatekeeper for online travel planning. For example, Booking.com features When you search for a flight or a hotel, over 1,703,622 properties and covers Third-party sellers now exceed 50% of Google controls what appears at 129,117 destinations in 229 countries all units shipped by Amazon. It makes the top of the results. It’s no surprise and territories worldwide. Despite all sense that Amazon would want to that Google’s own platform is at the of its retailing prowess and innovation, expand this third-party-seller model top. And one has to wonder how Amazon has no idea how to manage beyond physical goods and into the advertising works and whether ultra-perishable travel inventory. services such as travel. customers are really getting a fair view Unlike books or socks, you can’t store India isn’t the only place Amazon is of the best travel options. Google is travel inventory in a warehouse. Once experimenting in the travel market. working aggressively with airlines the gate closes, those 15 empty airline Booking.com and Amazon are working to provide a best-price predictor, seats are gone forever. together in Germany and Austria. advising people whether they should This time Amazon took flight with a Amazon Prime members there who buy the airline ticket now or later. A different approach. In India people log on to Booking.com using their product like this could start chipping already use Amazon to pay their bills, away at the market share of the online travel giants.

External Document © 2019 Infosys Limited Amazon Prime credentials will get information about their customers. make a percentage off the sale of that immediate Genius loyalty status. That Google as an advertising-driven vacation, just as they get a percentage gives them a 10% discount on what platform has behavioral information of the swimsuit or suitcase if they’re they book now and a 10% travel credit on all of its users. Ninety-seven sold by a third party. they can use on Booking.com in the percent of Google’s revenue is from Google and Amazon are both in a next two years. advertising, more than 2 billion unique position to leverage their devices log on every month and customer data. By advertising the 69% of users in the United States use It’s all in the data right products to the right people, Google services and products on a First, TripAdvisor, Booking.com, both companies stand to cash in on daily basis. 3 Kayak, Skyscanner and a host of other travel by charging a fee to the third- travel websites changed the way we Every month, more than 197 million people party sites actually selling the airfare plan travel, replacing a phone call around the world log on to Amazon. That’s or hotel rooms. If it works, it will make to a travel agent with online advice more than the entire population of Russia. 4 travel easier to book and plan. But it from strangers. Now, Google and could threaten the last generation Just like Google, Amazon collects data Amazon are changing the game of disruptors who rely on online from all those people and understands again. Both internet giants bring big- reviews and price comparison. In five the relationship between what people data reservoirs that can dramatically or 10 years, expect both Amazon and like and their behavior. It just makes change the way we book trips. They Google to be travel industry game sense for Amazon to offer a deal on a don’t hold any flight or hotel inventory, changers. beach vacation to someone ordering but Google and Amazon have tons of a swimsuit and a suitcase. Amazon will

External Document © 2019 Infosys Limited External Document © 2019 Infosys Limited References 1 “Amazon Now Sells Flight Tickets in India,” Tech Crunch, May 2019, https://techcrunch.com/2019/05/17/amazon-flight-plane-tickets-booking-india/ 2 “A Dozen or so Companies Amazon Is Slaying This Year,” Investopedia, June 2019, https://www.investopedia.com/news/5-companies-amazon-killing/ 3 “Google Statistics in 2019,” Tech Jury, March 2019, https://techjury.net/stats-about/google/ 4 “Amazon Statistics You Should Know: Opportunities to Make the Most of America’s Top Online Marketplace,” BigCommerce.com, https://www.bigcommerce. com/blog/amazon-statistics/#executive-summary-what-this-means-for-amazon-sellers

Authors Mitrankur Majumdar Samik Ghatak Christine Calhoun VP – Regional Head, Services Director – Client Services Senior Consultant – Infosys Knowledge Institute [email protected] [email protected] [email protected]

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