How to Choose a Travel Marketplace Niche
It's likely that if you've decided to build a travel marketplace, you already have a niche in mind that you want to target. But maybe you haven't gone about it that way. Maybe you just want to break into the travel industry, figure a marketplace is the best place to start, and are looking for some inspiration and guidance on what to do next. If so, you're in the right place.
It goes without saying really: Choosing the right travel niche for your marketplace is going to be fundamental to your business. So how do you go about making the big decision? Do you set up in a niche that you know well? Do you take on a market with few competitors? Do you focus on a particular country or tourism sector? The possibilities really are endless.
Five factors to think about when selecting your travel marketplace niche
Here are some things to bear in mind as you go about choosing the focus of your travel marketplace.
Knowledge is power
As with any business, knowing the industry you want to work in and understanding the kind of customers you are trying to appeal to is absolutely crucial. Let's say you want to set up a marketplace dedicated to travel in France. Do you know the country, have a good idea of its appeal and understand why tourists go there? If you can't answer these questions positively, you might want to reconsider.
Going one step further, choosing a niche that you already have experience in is usually a good idea. If you've worked in the travel industry before, you may have contacts in a certain niche already. Filling up your marketplace with sellers is going to be one of your biggest challenges. Sure, you can reach out to vendors and entice them in, but if you already have a strong network, it's a no-brainer.
Don't underestimate enthusiasm
At the foundation of your travel marketplace is you and your team. As with any startup, there are going to be ups and downs, moments when everything feels like it's against you, and times when you will wonder what on earth you signed up for. This is to be expected, especially in the world of travel.
Setting up and scaling your marketplace will be your biggest challenge, so enthusiasm and a willingness to go the extra mile will definitely come in handy. So how does this tie into which travel niche you are going to select?
Well, you should set up a marketplace in a niche that you're passionate about - a market that will inspire you to get out of bed on the bad days.
Read more about team building in the travel industry.
There are also some technical specifications that you should look for in any potential travel market niche...
Competition is a good thing
As a travel marketplace, competition among providers is what brings value to your platform. If there is plenty of choice for customers and vendors are fragmented, the aggregation you offer will act as a magnet.
Ideally, you want to set up an online marketplace in a sector where there are plenty of operators and customers. Choose a niche where competition is limited, and you may have difficulty persuading vendors to share their profits with you and set up in your marketplace.
Of course, if there is competition in terms of other marketplaces, you may want to assess things more closely. Other marketplaces in the niche you are considering suggests that the marketplace format is viable - it's up to you if you want to compete and become the marketplace in that niche.
Is there any loyalty?
It's well established that loyalty is increasingly hard to come by in the travel industry. Luckily, this is where the value of a marketplace comes to the fore. If travellers used the same operator every time they arranged a trip or chose a tour, aggregating agencies together would be pointless.
Your task is to build a marketplace that inspires loyalty by offering the best of what is available in your chosen niche. So think: Does your niche have a particularly high level of loyalty compared to travel in general? If you're wanting to aggregate food tours or excursions, perfect - people tend to do them once and move on. Zero loyalty. Accommodation, on the other hand, might be a different story.
Do you fit into the transaction?
When buyers and sellers use an online marketplace to exchange money for goods or services, things are happening in the background that wouldn’t be in the real world. We all know that marketplaces make their profit by handling the transaction and giving vendors their portion of the revenue with the necessary fees automatically deducted. Vitally, for both sellers and buyers, fees are easy to tolerate when that money was never really present in the first place.
So how does this impact upon which travel niche you choose? Well, first of all, are your end customers used to going through a third party for the service or products you'll be offering? Are the vendors in your niche working with profit margins wide enough to give you room for commission? For more information on this, read our post on building a travel marketplace pricing strategy.
How big is the opportunity?
If this sounds obvious that's probably because it is. But still, it needs to be said.
How much potential is there in your chosen niche? For sales right now and for sales 6 months, or even 6 years down the line? You don't need a crystal ball to make an educated prediction. Setting up a marketplace in the travel industry with your eyes closed isn’t a good idea. You need to know the market, the changing attitudes of your would-be customers, and the potential for sales and growth
A proper analysis of these factors should be the foundation of your business plan before you get started. This is also a good point at which you can set some goals. How much of the market captured would stand for success in your opinion?
Vitally, you need to make these predictions with one crucial factor in mind: Your marketplace. The best travel marketplaces, across countries, niches and sectors always always always create new value. This might be encouraging vendors to offer combined deals, special offers and out-of-season trips, or devising your own products through picking and choosing the best bits from your sellers.
To thrive you'll need to do more than simply offer a platform for the goods and services of others. Because of this, the current market size doesn’t necessarily reflect how big an opportunity your niche really is.
The frequency of sales
Some travel niches are always going to be held back because it's in their nature. Honeymoons for example. Or skiing trips. Honeymoons (if all goes well) are only going to be bought once per person at the most. There's not going to be much in the way of return buyers or repeat business. Skiing trips tend to work on a seasonal basis, so sales are not going to be made all year-round.
When choosing your travel sector, it’s important to think about the frequency of sales, and preferably select a niche that will allow you to do repeat business 365 days a year. That's not to say that super-niche, seasonal or one-time product marketplaces can't be a success. But startups tend to rely on regular revenue streams, so perhaps that's something to look at further down the line.
Plenty of marketplaces go under because they target purchasing cycles that are too infrequent. As well as hitting your revenue stream, this kind of niche makes it more difficult to build brand awareness through word of mouth.
As we mentioned above, the best travel marketplaces will grow their chosen sector and create new value. Why not encourage your sellers to offer a certain tour all year round, or introduce some special out-of-season packages?
Where Travelshift comes in
So, you're probably wondering why on earth we're giving away this valuable travel industry information for free. Well, in case you didn't know already, here at Travelshift we build marketplace software and platforms that really work. Just take a look at the case study of our now booming marketplace for travel services in Iceland. We take care of all the technical stuff in the background - all you need is a travel niche, a willingness to build contacts in that sector, and no small amount of dedication.
Once you've got all of that covered, feel free to get in touch.