“Alexa. Book me a holiday”. If reports from the US are to be believed, then Amazon is about to re-enter the travel market.
In which case, as Jeff Goldblum would say to all the current players in the online travel industry, “Be afraid, be very afraid”.
Why? Because Amazon’s financial firepower and scale is truly eye watering. US investment bank Morgan Stanley suggested that Amazon may make the move in a recent financial report on the company prepared by one of its analysts. The report then caused quite a storm as the author argued that “Amazon has more than 300 million consumers who could spend money on a potential travel offering”.
He also claimed that “travel represents an annual market of $480 billion in the U.S. alone…Amazon could make $600 million of profits a year if it builds an online hotel business roughly half of Expedia’s size”.
The goliath online retailer did try to enter the travel market once before in 2015 when it launched a product called ‘Destinations’ – a platform where consumers could book getaways and hotel deals – but pulled it from its virtual shelves just a few months later. But that was then and this is now and since then, the company has invested heavily in two key technologies, cloud-computing and voice.
Although these are both relatively new technologies, its Amazon Web Services subsidiary – that offers cloud computing, storage, networking and analytics – already accounts for 10% of the company’s total revenue (with a figure put at $17.46 billion) whilst third-party estimates suggest that the company’s Alexa-powered devices already dominate the smart-speaker market with 76% of the total user base.
All this talk of domination suggests that the consumer is missing out. Quite the contrary, according to one American analyst who said, “They have a history of being very, very good at optimizing the supply chain and controlling it and squeezing out every penny from every step that they can and thereby reducing the cost to the consumer for what would normally be a lot of intermediary steps.”
So why should we complain if Alexa – who will soon have learnt all about our purchasing habits – suggests a holiday that she knows we’d enjoy and can afford?
Come to think of it, we wonder if she’d feed the cat whilst we’re away?