The world was told to stay at home and e-commerce exploded. Not surprisingly, the online retailers that have seen the most success in this boom of online shopping were the ones that invested heavily in their digital experience and marketing strategies, both before the pandemic and throughout.
As experts in digitalising onboard and inflight retail, we at AirFi closely follow developments in the on-ground e-commerce world so that we, and our customers, can benefit from knowledge of trends and best practices that increase profitability and improve user and passenger experience. In this blog, we will examine how onboard retailers can incorporate lessons from online retail, which has made great strides in 3 key areas that airlines and railways can learn from: better customer acquisition, improving the shopping experience and expanding seamless order fulfilment options. We will also provide some examples of brands that are setting the benchmarks in each area.
What’s the problem around “Customer Acquisition”?
Airlines and railways have been notoriously weak at this aspect of retailing, often missing opportunities to create awareness in passengers of – and incentive to act on – onboard offerings or cross-sells beyond just tickets, excess baggage or seat upgrades. Our passengers are already well-conditioned to shop online, using their mobile devices, but they are also increasingly discerning and trained to expect promotions, incentives and rewards from the brands they choose. And thanks to solutions like AirFi’s, airlines now also have access to a wealth of system, transaction, demographic and most importantly behavioural data from passengers who use the system onboard. The key as always is to understand the data and take specific action for the business, particularly, but not only, to acquire customers and build loyalty towards repeat transactions.
How can we increase the number of customers purchasing onboard and increase average transaction values?
1. Enable Pre-orders: this is a unique retailing strategy only because traditional onboard retail consists of physically selling in-situ i.e. in-flight or on the train. In e-commerce, pre-orders are for items as yet not manufactured or released, and this works because it creates a sense of exclusivity and excitement for customers. The success of sites like Kickstarter and Indiegogo for example, are testimony to the power and potential of the pre-order model, so there is no reason why this cannot be adopted and adapted to onboard retail. Within the inflight domain for example, pre-orders are simply orders for products made prior to the actual flight, usually for in-flight fulfilment. This could easily be extended in future to offer pre-orders for fulfilment at home as well. The key to pre-order success is to offer “exclusive access”, viral marketing, and convenience of fulfilment. There are many ways for airlines and railways to do this successfully, especially if they leverage loyalty databases and/or other passenger booking data to market the right products at the right time to passengers prior to the actual day of travel.
2. Implement an Affiliates & Referrals Strategy: What if airlines and railways implemented a referral system for onboard retail, particularly upon launch? For example: Passenger A buys a product or registers for a service, then refers that product or service to Passenger B, who also buys the product or service and both are rewarded. Cloud storage giant Dropbox famously grew its user base by 3900% over 15 months in 2001/2010 by doing precisely this.
3. Try influencer marketing and encourage User Generated Content: No really, hear us out. Why not incentivise passengers to share photos of their onboard buys or food and beverage on social media by creating a special hashtag and chance to win a reward? To kick things off, work with some legitimate micro-influencers to get the word out. Encourage shoppers to take photos and share their feelings and thoughts on social media. The driving force to all this is the authenticity of this user-generated content, as opposed to “advertising”, which many people now intuitively distrust and overlook. Read this article to see how Dunkin Donuts got a slam “Dunk” with a nano-influencer Instagram campaign designed to raise awareness the company’s coffee-first focus as part of a rebrand.
4. Promote with coupons and vouchers: To create a successful campaign, a coupon must match passenger needs. Airlines and railways have significant intelligence and data on passenger demographics and travel patterns, while onboard platforms like AirFi’s can help them collect valuable first party data around demonstrated passenger behaviour and preferences. Passengers with a coupon for a meal or duty free onboard are going to be less likely to seek out food or duty free at the airport. How else can you make sure your coupon deals are a good customer fit? Check out this article to see how online clothing retailer Zalando used customer data and A/B testing to nail its voucher strategy.
What’s the problem with the onboard “Shopping Process”?
“Retail” is usually a catch-all for the entire process from search and discovery, to browsing, to price and quality comparison, to finding social proof and validation, to finally transacting and buying. As consumers, we are all intuitively (if not consciously) familiar with this entire process of shopping, be it for groceries or other products and services that we buy online. When it comes to onboard shopping however, the traditional analogue process has been and continues to be so different – so un-engaging and un-inspiring – that it has been largely ignored by most shoppers; less than 3% of passengers on a typical flight by any merchandise. Even crew are often reluctant to wheel the merchandise carts out to actively “sell”. Bottom line – it might be charming to flip through a magazine, but most of us prefer a much more engaging and empowering digital shopping experience that is convenient and familiar for us already.
How can we implement a more intuitive and engaging shopping process for onboard retail?
1. Work with AirFi!
2. Recommend relevant add-ons and alternatives: Now that you have AirFi’s market-leading digital onboard retailing platform, you are all set! In 2019, Amazon accounted for 37.7% of all U.S. e-commerce sales, so we would be remiss in not mentioning the internet giant at this point. Check out this case study on how Amazon drove growth and revenues through its recommendation system, based upon insights about its customers behaviours and preferences. AirFi’s platform enables this first-party data analysis opportunity, as already mentioned above.
3. De-clutter the basket and checkout! We know we just said special offers, coupons and promotions are good – and they are – but placement and timing are everything. When customers get to final stages of the digital retail journey and are ready to complete, make sure the path forward is clear as day and distractions are minimal. Read this case study to learn how a simple change to a page layout drove a 43% conversion increase for the makers of the popular computer game Sim City. In fact, the clutter is almost embarrassing in traditional onboard retailing conducted with clunky “brick” POS systems, mobile printers and the inability to handle promotions and vouchers effectively.
4. Reform the form: Filling out form fields is a big hassle and a major friction point for many people attempting to make online transactions. Check out this article to learn about the surprising benefits of implementing multi-page forms. When it comes to traditional onboard retailing, the functions and objective of “form filling” – to collect data and validate status for example – are largely lost; the physical paperwork, effort, logistics and overall analogue process will put anyone off from shopping. It is also a disincentive to the crew to make any effort to sell.
5. Plan to scan: Digital wallets are becoming increasingly popular these days, and AirFi accepts many different kinds, but a lot of travellers still prefer to use their physical credit and debit card. As we said in the last point, forms are a pain and paying online by card requires this. Back in 2014, Travelocity trialled the Netswipe card scanning application on its LastMinute brand app and rolled it out to its flagship Travelocity app after testing showed conversion rates of 52% for users offered card scanning versus 9% for keyboard input. That’s a huge difference and food for thought. AirFi customer Scoot has also added card scanning functionality to their ScootHub streaming IFE and retail system.
What’s the problem around “Onboard Fulfilment”?
Traditionally, onboard retail has only offered in-flight or in-train fulfilment as fulfilment options because the products that are sold are those that are carried physically on board of the aircraft or train. In a digitalised future of onboard retail, there would be almost no reason to physically cart most products on the aircraft or train, other than those which are typically fast-moving and proven impulse purchases, such as tobacco, liquor, or travel adapters, for example. The product range can therefore be expanded to thousands or tens of thousands of products, including virtual ones (transport tickets, services, experiences, etc.) that are otherwise nearly impossible to sell due to “live inventory” issues. All this will be enabled by the new digitalised fulfilment options – off-aircraft, on ground, home delivery, digital delivery, etc. – in the future.
Customers have been used to e-commerce driven, omnichannel fulfilment options and are far savvier today than ever before. They are engaging and purchasing across multiple channels and blending their digital and in-store experiences — starting on mobile on their way to work, later, seeing a promotion on social media and buying online, then popping into a store on their way home to pick up their purchase. These conveniences are therefore the same expectations around “fulfilment” they will have when it comes to inflight and onboard retail. Expanding fulfilment options allows for the expansion of product range, which allows for greater relevance to a wider segment of passengers across multiple product and service lines, which in turn drives the propensity to purchase.
How can additional fulfilment options be implemented for inflight and onboard retail?
1. Drop-shipping model: Drop-shipping is essentially order acceptance and management without holding the stock or being responsible for its delivery. There is no reason why airlines and railway retailers cannot do the same – unless of course they are engaging in manual and analogue sales processes, and not using the AirFi platform. The internet is full of examples of entrepreneurs and small- to medium-sized retailers making it big by leveraging the drop-shipping model of business. Here is a case study on how an online cat product shop called “Meowingtons” successfully used this drop-shipping. The order management modules and functionality that power this type of model are built into the AirFi solution and can be applied to the onboard retail environment. We already work with multiple vendors for a variety of fulfilment options and our payment system supports multi-vendor transactions automatically managed on the back-end within a single checkout window for the passenger.
2. Home/hotel/off-airport delivery: The necessary corollary to all the above suggestions around improving customer acquisition and the shopping process, is to offer the choice of fulfilment to passengers. Nothing could be more frustrating than having spent time browsing and selecting a product only to realise it cannot be purchased, paid for, or fulfilled in a manner that you desire. Embedded IFE screens notoriously suffer this problem; is it a wonder almost no retail ever happens via an embedded IFE screen? Check out this article detailing how airline caterers delivered airline food to consumers at home throughout the pandemic. There is no reason this concept cannot work for airlines or railway operators or include a broader set of products as we resume operations – assuming you have the digital platform in the first place, to manage the order-to-fulfilment process.
Conclusion – what are you going to do now?
These examples are, of course, from commerce environments that differ drastically from what we have been used to traditionally in aviation or on board trains. Our typical constraints are more challenging and our passenger demographics and behaviours are far more diverse than the average brand or retailer operating on e-commerce. But at AirFi we believe that inspiration is everywhere and great ideas, innovations or workarounds transcends industry, time and even place. Our vision of creating a “Mall-in-the-Sky” is a moving, challenging target but If we begin to embrace best-practices and a mindset of applying digital finesse within the onboard domain, we will see significantly higher rates of onboard retail conversions, revenues, and much-improved passenger satisfaction as well.