This article was originally published on July 2, 2018 by The Moodie Davitt Report.
Last November, London Heathrow Airport announced that it had partnered with global technology service provider AOE to create an improved digital marketplace for the airport’s 300 brands. That marketplace, via Heathrow’s enhanced online store (Heathrow Boutique), is underpinned by AOE’s OM³ (Omnichannel Multi-Merchant Marketplace) Suite. It’s all part of an ambitious digital transformation strategy from Europe’s largest hub airport. Martin Moodie, of The Moodie Davitt Report, spoke with AOE Chief Executive Kian Gould about progress to date.
A “unified and seamless online and offline experience”. Seven words that make the fusion of physical and digital sound beguilingly simple. In fact, it represents one of the most complex challenges facing airport companies around the globe as they seek to simultaneously stave off the threat from E-Commerce and benefit from the opportunities it presents.
Kian Gould’s company, AOE, helps companies plot – and simplify – their paths towards the digital future of commerce. Its clients in the aviation space to date include Auckland and Frankfurt airports; and a joint venture between Singapore Airlines, DFASS and SATS.
At the time of the November announcement, Heathrow Airport Retail and Service Proposition Director Chris Annetts commented: “We have a long-term vision to deliver a seamless digital experience for all our passengers, both inside the airport and in the comfort of their homes. This partnership with AOE is the next step towards building seamless end-to-end experiences for passengers and enabling us to interact with them more efficiently for an enhanced and memorable journey.”
The first release of that vision is now live, says Gould. A phased launch of the revamped online Heathrow Boutique in mid-March went very smoothly and the company plans to strongly extend the product offer in coming months. So far, interestingly, Heathrow says most of the revenue is coming from high-end items, across luxury, fashion, spirits and consumer technology. “The airport sees high-end electronics such as the iPad Pro or the top-of-the-line cameras as some of the most popular pre-orders. These are items that people have made the decision to buy already and have identified that buying them from the airport is a cost-efficient way of doing it,” Gould notes.
Another highly popular item for online reservation is baby formula – although passengers often decline to pick it up at the airport when they see it is actually available on the shelves there.
The most exciting finding to date is that the average basket value is running at nearly £400 (US$530) and growing. That’s about five times Heathrow’s average and underlines the clear lean towards luxury items.
There is also a swing towards reservation of luxury items that people look to reserve.
A very large number of people are also using the site for researching their purchases. Many passengers tend to contact the support department about products that are not yet listed or products that they can’t directly reserve online yet – because they are in a different terminal or the reseller is not live yet.
That’s a clear pointer for Heathrow to do exactly what it had planned anyway, to largely increase the range. The airport is also planning the rollout of inter-terminal delivery and extending the pre-order window (some retailers still impose a maximum of three days for advance orders, while 24 hours is the standard cut off).
Another interesting finding is that Google and Apple Maps are among Heathrow Boutique’s top traffic generators. Both platforms map the whole airport terminal by terminal, featuring many of the store and F&B locations and with links to the outlets. “So, basically, with one flip of Google Maps you can get into the store and order the product online,” says Gould, “and that is proving to be a very important traffic channel that other airports have not even explored yet.”
Airports, he argues, should consider diverse ways to generate suitable paid traffic through external partnerships with platforms such as Yaok, Alibaba-owned Tmall.com, Google and others. “The traffic doesn’t come by itself,” says Gould. “The airports need to realize that sometimes they also need to pay for that traffic and it’s not all free.” Heathrow is already making headway in this area.
Describing the Heathrow Boutique site, Gould notes how high-end brands such as, say, Hublot enjoy their own separate brand pages within the site after the consumer enters via a generic fine watches page. This allows the brands to control their luxury image within the framework of the site. “The Heathrow Boutique represents the multi-brand approach,” says Gould. “The site design is very much focused on the brands. It's not, as you can see, in the design of Heathrow’s main site. There’s no purple coloring [Heathrow’s predominant hue -Ed] at all, for example. It’s a complete brand of its own.”
The site navigation is simple and intuitive. Click on, say, a £15,500 (High Street price £18,600) Hublot Big Bang Unico Skeleton Chronograph, and the prospective purchaser will discover an enlargeable image, detailed product information and a link through to the retailer (in this case Watches of Switzerland). The consumer clicks ‘Add to bag’ and is asked ‘To determine if this product is available for reservation in your terminal, we need the following information about your flight’ – date of journey, and destination airport or flight number. In seconds, you are the new owner of one of these technological marvels.
The live pages act as a reservation platform with the order being transmitted to the retailer. The customer then picks up and pays for the goods in-store. Diverse online payment options will be introduced in the next phase, a key consideration, as it will help offset a currently modest pick-up rate of around 50 percent of reserved products. Typically, a pre-payment option will lift that rate to 90 to 95 percent, Gould points out.
Four months in from the soft launch, Gould and Heathrow are pleased with progress to date. “Generally, the feedback has been very good both from Heathrow and from customers,” says Gould. “The airport has heard many comments like, ‘This is the easiest to use online store I know,’” and similar praise. Everyone who is working with the platform is very happy and the first phase went live on time and in budget.
Currently the plan set by Chris Annetts is to onboard around 40 additional retailers this year to increase the product range. This will hopefully include World of Duty Free adding all their 40,000 SKUs, which as Chris Annetts said at the ACI conference recently [ACI Europe Airport Commercial & Retail Conference & Exhibition in Tel Aviv -Ed] “would be fantastic.”
As stated by Annetts in March, the Heathrow Boutique first phase launch is just one component of a much broader digitalization program designed to grow the airport’s digital revenues to a significant portion of the total commercial revenues. “This is just the beginning,” says Annetts.
AOE’s award-winning Omnichannel Multi Merchant Marketplace (OM³) helps multi-retailer venues such as airports, shopping malls or integrated resorts to seamlessly fuse offline and online experience into one full-featured suite of software applications and services. OM³ provides a unique platform for omnichannel retailing and offers customers numerous useful online and offline shopping-, service- and real-time information options.
AOE is a leading global technology service provider and consultancy, offering Open Source-based Enterprise solutions for digital transformation and Omnichannel E-Commerce as well as mobile apps and web portals. The company has headquarters in Germany and the USA and branch offices in Dubai, Zurich and Hong Kong. More than 250 employees support international corporations in the operative digitalization of business models through the implementation of open, scalable and secure solutions. AOE relies on excellence and is organized as an agile company.
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