November 4, 2016

How Travel Startups can Compete with Established Marketplaces

by Malek Murison

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It seems like since the dawn of the internet age, a handful of e-Commerce giants have had the travel industry in a chokehold. Expedia, TravelSupermarket,, Trip Advisor... you know the ones. All are internet monsters willing and able to spend millions on marketing and advertising while offering rates that ruthlessly undercut any fresh travel startups in the industry. It goes without saying that this is a frightening, intimidating environment in which to set up a travel marketplace.

how to compete with travel industry marketplaces
Standing out among travel industry heavyweights is tough, but not impossible.

Unfortunately, that's just the way things are. If you want to get a piece of the pie, you're going to have to struggle against the dominance of the established players. The world of online search is already heavily slanted in favour of the incumbent giants. So what can you do to start punching above your weight? And where do you even begin to start grabbing a share of a market dominated by the incumbents?

Today we're going to be taking you through five strategies that you can apply to your travel marketplace to help push you in the right direction. Some are commonly employed by new marketplace startups, and others you might not have heard before.

Travel Startups Need to Lower That Commission

A major part of setting up a competitive travel marketplace is attracting sellers. The more sellers you have, the more buyers you can bring in and the more sales you will make. If you’re just starting out, a low take rate is a smart way to grease the wheels of e-commerce. Unencumbered by hefty commission, sellers will be more inclined to offer great deals to your site's visitors. Sales. Success. Perpetuate. Win. Repeat.

However, as a long-term strategy though, this can be dangerous. Too low a take rate and you risk struggling to break even and not making enough to develop your marketplace for the better. But as an opening strategy, it's not a bad idea at all. Low commission will be key to attracting operators to set up in your marketplace, helping you get off the ground in no time at all.

Certinaly don't go the other way and think that charging sellers high fees will get you off to a good start. There are two reasons why high take rates are generally seen as a bad idea:

First, and most obvious of all, high commission imposes too much of a tax on operating within your marketplace. It'll put off potential partners and eventually ruin any level of diversity in the travel products you are offering. Second, let's say you become more established and raise your commission rates too high. The second you do so, you open up opportunities for competitors keen to offer your sellers their services, but for less.

Gaining traction is easiest to do with a low take rate, as established competitors will struggle to come down to your level. But in the long term, the position of top dog will require more than an appealing rate of commission to differentiate yourself from the market leaders. Invest in your marketplace, your sellers, and their products.

Focus, focus, focus

Just as we have done with Travelshift software and our first marketplace in Iceland, it's a good idea to setup your travel marketplace with a niche in mind. Why not focus on creating the best product for a specific vertical? It could be corporate travel, honeymoons, food tours, staycations, adventure activities - you name it, there's a whole bunch of niches you could target. In fact, why don't you check out our 'Gap in the Market' series for some more inspiration? Plenty of marketplaces have had huge success starting small and focusing on an area where they can claim to have expertise and exclusivity. Once you’re established and a big player in your chosen field, it’s time to expand.

Blow the Established Players Away

We know: This is much easier said than done. After all, the established market leaders in your chosen niche are there for a reason. They must be doing something right. But that certainly doesn't mean that they're doing everything right. If you can successfully put together a product(s) that’s more appealing, for whatever reason, you’re onto a winner.

Want some evidence that this is even possible? Take a look at Uber’s sudden emergence in the taxi industry, or AirBnB’s revolutionary mark on international accommodation.

If the thought of taking your niche by storm sounds too idealistic and unrealistic, remember that transformation isn’t even necessary to make you stand out from the competition. Simply filling your marketplace with exclusive tours and better products is a great way to get noticed for the right reasons.

Build a Marketplace That Works For You

So what exactly does that mean? Well, when you think about it, the actual marketplace is seen by many travel startups as simply a conduit. It's the platform through which your sales are received and your sellers' products are advertised. Not a minor part, obviously, buy a vehicle, a means to an end. What you need to do is go one step further. You need to build a marketplace that works for you.

You can do this by ensuring that the entire thing is fully SEO-optimized, that a community of locals and travellers drive constant traffic through your site, and that you build something that brings added value to you, your buyers and your sellers.

Many of the established marketplaces in the travel industry generate sales and traffic purely through size, through dominating search engine results. We've built a software package that helps you shout just as loud with nowhere near as much intensive effort required. That's what we do, by the way. You can check out our software offering and get in touch if it sounds like something you'd be interested in.

Build and Maintain Relationships

Again, this is another tip that's easier said than done. The travel industry is hardly famed for high levels of customer loyalty. But that doesn't mean that people won't regularly visit your marketplace if the content is good enough or return if they have a positive experience with you.

Clearly the first steps are to create great products, build as smooth a purchasing process as possible, and continue to offer great customer service right the way through booking to departure to return.

But subsidiary actions can be just as influential in the long run. Social media engagement and building a thriving, engaged community should also be top of your list of priorities.

Keep the relationship going with your customers long after they return from their trip. Offer them bespoke deals, get their feedback on the experience and learn from it, encourage them to share their experience with friends and family.

Services such as Hootsuite are great for managing and measuring social media campaigns, so make sure you take advantage of the latest in analytics and learn more about your potential customers and their desires. And when dealing with customers, build a dedicated team to handle those interactions.  One thing that you will always have over the industry giants is the ability to offer a personal, memorable (for the right reasons) customer service.

Optimise for Mobile and Adapt to Customer Trends

Let's get this out of the way: If your travel marketplace doesn't have a mobile strategy, you're going nowhere fast. The majority of research and plenty of bookings and transactions now take place on mobile devices, so your software needs to be able to accommodate that. This is especially the case in emerging markets.

Some quick stats for you: 88 percent of people agree that having a mobile device with real-time information makes them more spontaneous with shopping. 63 percent of people are expecting to do more shopping via mobile over the next few years. So what does it all add up to? Well, if your marketplace isn't delivering a smooth, stress-free experience via mobile, you're going to miss out on sales.

So that's all for this week. Hopefully there a few tips that you can take forward as you build a travel industry marketplace.