Alibaba’s Alitrip has a distinctive travel model
A little more than a year ago, Alibaba, a giant Chinese e-commerce company, rebranded its travel booking website as Alitrip (去啊) — and made it a separate unit.
Unlike its well-funded rivals, Alitrip doesn’t participate in marketing. Its search engine optimization and search engine marketing are almost non-existent.
The best Western comparison is as if Amazon opened an full online travel agency on its shopping platform, introducing its retail goods shoppers to vacation products.
To extend the analogy, Alitrip is like an Amazon Travel with Chinese characteristics. It’s much more attuned to the shopping tastes, destination inventory preferences, and preferred payment methods of its customers than Western businesses typically are of those same Chinese customers.
To find out the latest on Alitrip, Tnooz interviewed Sherri Wu, chief strategy officer of Alitrip and head of international e-commerce business development at Alibaba, while she was attending the Phocuswright Conference.
Tnooz: I’ve seen you at different moments during the conference. People keep cornering you and asking you questions. How does it feel to be like a rock star?
Wu: Haha. People are fascinated by the Chinese market, which is obviously changing so often. Everyone is like, “Oh my God, what’s going to happen next? Tomorrow?”
Tnooz: Do you think that Expedia is doing a good job? They’ve struggled a bit with Asia. They’re sending over their head of global product to be based in Singapore.
Wu: Yeah, last week they launched an Expedia-branded site in China.
Tnooz: But they have a different sort of approach to Alitrip’s.
Wu: Yeah, just from the past experience and everything we have seen, it’s very hard for Western companies to succeed in China and other Asian countries as well, Japan, India… same thing, right?
Wu: Booking.com, the most successful publicly-owned, hotel-booking site in the world, has had limited success in China, I would say. I definitely wish them all the best of luck.
Tnooz: What’s the story about Alitrip that hasn’t been properly told? Anything comes to mind?
Wu: One thing I definitely want to say is people, especially probably people outside China do not really understand how marketplace platform is working, that’s why the question keeps coming out. For instance, Amazon closed their travel business, why you think you guys will continue?
Because one is, our model is different to probably Amazon and secondly the audience are different.
Do you know the customers are different? That’s a major thing, right?
You fulfill the needs of the customer so I think we are a player which is really trying to help the merchants and customers in between.
That is something I think Chinese merchants see more and more of that.
For instance, we had a large conference in Hangzhou, just yesterday, with more than a thousand merchants joining us, including different travel agencies and organisations.
Tnooz: Mainland or also from Hong Kong and Taiwan?
Wu: Also from those places and international. You know why? They see the great opportunity to make their brand known to everyone. We are a marketing dashboard for them.
We can help them make the page look like their brand. We are a full branding and merchandizing solution.
It’s the best way for them. For the consumer, it’s a fair playground for anyone to be in there. They have more choices, right? They can do the price comparison in here….
I want us to do an even better job of introducing this model, more in depth to suppliers. It’s another part of the growing process.
We hope we can help our merchants more and share the data with them. We’re an open platform….
When these consumers shop, they go to TaoBao or Tmall. It’s like a big search engine, almost, for shopping products but then also increasingly in travel services and packages as well.
So you could enter if you want to go to Shanghai, you know the hotel flights there as well takes you to Alitrip. It’s a very seamless experience.
Tnooz: Oh right, how they’re already used to think in terms of shopping and then they move over?
Wu: Yes. They might buy a luggage because they think they are going to go to US and they’re like, “Oh okay, now there is hotels, flights… Great!”
It is definitely something distinctive in China e-commerce.
Tnooz: Sure, of course. How much inventory has Alibaba Group have for the home market?
Wu: We have a little bit more than two million travel products, yeah.
Tnooz: Okay. Anything to say about performance? Or what people can look forward to in 2016?
Wu: Literally for the 11/11 holiday, we sold out more than 800,000 outbound travel products. That is something. The funny thing is, halfway through the day on 11/11, we were running out of products.
Take airline tickets. Last year, we sold out probably 300,000 tickets of all kinds during the 11/11 whole day but this year we sold 300,000 outbound tickets alone. Domestically it was even bigger, much bigger this year. Our 11/11 numbers were 6 times average in some areas.
Yeah, when we talk about 11/11, the big day in China, and people might say, “Hey, it’s one day’s number, right?” But if we look at 2015 in general as a year, we grew a lot.
Today we have more than 100 million registered users with Alitrip. We’re not talking about the big Alibaba Group family in that number. So we have grown tremendously.
We have lots of sellers who have more than $ 100 million a year in sales through us. That’s not a small number for any platform.
That’s why I think Alitrip is definitely in a very fast growth pace and moving forward. Outbound is where there is opportunity.
People see that mobile is strong. We have more than 70% of our bookings coming from mobile. So it’s definitely huge.
The most important thing is we hold the view that travel is about experience and destination.
So we’re going to really build our inventory to have a breadth of different products and services surrounding each major destination.
We want to make sure we have local destination products for our customers, not just air and hotel.
Tnooz: Like tours and activities?
Wu: Yes. We want to create better offerings for local transportation, concierge to help customers, etc.
Tnooz: But what makes Alitrip unique and differentiated from others travel companies?
Wu: Yeah, definitely. For one thing, we help Chinese consumers shop from within Alitrip. When they get to a destination they can shop at the local shops with their coupons they get from Alitrip.
We’re actually doing it even one step further, like truly O to O (online to offline), with Shilla, which is a duty-free shop in South Korea. They opened a small global store with us and now we have the online coupon they can get which they can shop in the local places.
Essentially, what they can do is before they go, they will look into “What I can buy there?”, they plan the whole thing then once they get there, they can use their coupon and discount to buy them.
We’re also working with them to see if they will send all these things to these people’s hotel room. They’ll be like, “Hands free, I’m going to buy more.”
We want to develop more experiences like that, by working with suppliers. We’re also working with few large merchants in US as well and we will probably push the promotion out before Chinese New Year.
Tnooz: It’s true omni-channel. Fascinating.
Wu: It’s a really sort of popular thing in China right now, with people browsing online, shop offline or when they want to shop offline they don’t want to bring the products with them home, they can just simply ask the store to send it to their homes.
They don’t have to carry so many items, so I just thought an example would help.
I don’t think anyone else is doing it in travel besides Alitrip. We of course are in a unique position which we can offer that because Alibaba’s online retail platform is in there already.
Our customers love shopping. We have all the different shopping channel in our travel platform now. Discounts for Japan, Korea, US…
All these different places. That’s our goal, eventually, if they want to enjoy some place, if they want to visit there, we’re going to take care of them before, during and after the trip, the whole thing. That’s our future direction’s strategic goal.
One of our advantages, as a marketplace, is our depth and breadth of inventory, and that our customers are already primed to convert.
Essentially you have lots of players in there offering different kinds of products and services.
Inventory is essential, because we don’t want to push just anything to our consumer. We want to be sure our consumers are seeing relevant product of high quality, especially during 11/11 but also year-round, right? The best products to our consumers.
We help suppliers, too. We can help these different kinds of business to be successful in our platform model, which they may not understand.
From the large international players like Marriott, KLM, Air France, Cathay and then to the major hotel chains, to different kinds of large travel agencies, plus the smaller ones.
We provide a platform that can really help them all grow their revenue, to reach consumers in an easy direct way. Because, lots of times, trying to set up your own e-commerce and reach out to the audience can be really complicated.
Tnooz: Yeah, complicated. What about Golden Week? Is that another prime time for travel sales?
Wu: Golden Week is a peak time for people to travel. We definitely want different kinds of events and promotions for our merchants before that, that’s for sure.
Tnooz: It’s more family, no?
Wu: It depends, we see more people travel during summer break as a family because kids are out of school and weather is usually a little bit more pleasant.
Not to say Golden Week is not good, but Golden Week is only starting to become more outbound for now.
People start to realize in China, domestically, there’s just so many people everywhere, so essentially they’re like, “Hey, I’m going to go a little bit further, Europe or US in that situation.”
Tnooz: Is cruise something that you want to build up more as inventory?
Wu: We definitely found out that more Chinese people are very interested in that and that is why large cruise companies start to build specific products and services for Chinese travelers.
For instance, they do doctor’s exam on the boat, for people because it’s a great time for people to just come here to get their physical exam. They start to have luxury brands and products again towards Chinese, literally.
Apparently a lot of cruises offer Botox and microsurgery because it’s the time when you relax and nobody sees you.
But regardless of the itinerary or goals, for the Chinese, cruising is a fast-growing segment.
I recently talked to a few executives from a large global cruise line. They said they are just starting to hire Chinese experts who understand the consumer.
They design all of these kinds of products, specifically for that customer. For example, they found out that high-end watches are efficient to sell on kiosks or small shops on ships because the inventory is small and sells very well on a unit basis.
They’re trying to explore what Chinese tastes are in watches. Similarly, jewelry may have better economics than large handbags or luggage.
Shopping is a key part of the travel experience for many Chinese, but it’s been hard for Western companies to get right. We know what Chinese shopping tastes are based on our data from Alibaba’s years of sales of all sorts of products.
Wu: I mean, we as a platform, we also understand our consumers’ behavior. Like I mentioned, we have so many years of data.
We want to design the product and service for the consumer’s needs and also help our merchants to design those products as well so essentially, everyone will benefit from this. We call it a win-win situation for everyone.
Tnooz: Oh, very cool, I think of Alitrip as a search platform and I think of it in terms of like, some people come to listings of results and reviewing the listings is a way of having inspiration. They may not have decided where they want to go, this city or that city, this hotel or that hotel and so they’re comparing.
They also want to feel more confident and if I pick that one it’s good compared to all the other ones. Do you partner with suppliers and brands to see if they can help get people to pick one hotel or destination over another?
Wu: Yeah definitely, that’s why we always wanted to do this, have a one stop shop, essentially. Customer comes over, they look for it, found it and can buy it immediately.
In China, we already invested, for instance in a travel review site and other travel-themed properties, particularly we also invested in Sina WeiBo, kind of like Facebook in China.
Tnooz: Oh, yes.
Wu: We can absorb that content, aggregate it into our mobile devices to help the customer make a choice and the most important thing is we also started to team up with different tourism organisations as well.
We signed with Australian tourism organisation, Sydney in particular as well, and also New Zealand, Singapore…
All these different ones and they provide lots of great content as well. It’s like, “Hey, if you come to Sydney, this is the best place.” You can get local wine because Australian wine is actually surprisingly good, compared with many, sometimes people don’t realize that.
Because people sometimes don’t know Australia is also famous for beer so we push all those great quality contents to the customers so they’ll have the right product to help them book immediately.
Wu: It’s very in-depth, the relationship between our organisation with our partner organisation and also these official tourism organisations as well.
Tnooz: Interesting. Do you have trouble in getting, when you want to push out new innovations on the travel side, technically so let’s say the mobile interface, you want to have a more relevant message appear at a different place in the screen, can you go in and you have your access to your technical team and you can make it happen or do you have to go through the Alibaba Group?
Wu: Oh, no.
Wu: Alitrip has it’s own separate product technology organisation. We even go one step further, for different verticals, in an area, hotel, even my international, we have our own team.
In US and Europe, we talk about the agile development. We really embrace that, day-to-day.
We have a small and nimble team, that’s why if we feel like, “Hey, this is a great model. We want to do it.” We have a quick discussion, we feel like, “Yeah, this is the right direction, do it.” Literally, we make it happen.
This is probably part of the reason, yesterday I was discussing with a few leaders, in a different occasion, that’s probably part of the reason why Alibaba has been growing so fast in the past.
It’s this kind of innovation. It’s always there. Even now, Alibaba is a big company but we still run it like a startup and of course for Alitrip, we are a startup, you know what I mean? We are a big family, having grown up past in the past year.
Tnooz: There are other Chinese travel companies that I’ve interviewed and written about and they are not as agile. They are not immediate competitors to Alitrip. They do different things but they have old systems and they’re not doing as much agile. It’s a bit more bureaucratic. How is it that you’re able to be more nimble?
Wu: Partially it’s inside Alibaba family’s DNA. People always seem encouraged to do things fast, encouraged to be innovative.
They are not afraid to bring out a new idea, challenge each other. We often see engineers just stare at a whiteboard and argue with each other very, how should I say this, passionately.
So essentially that is something probably built-in there into our corporate culture.
The second is, we are trying to introduce a new technology to the team and to learn from best practices in the industry. We definitely are very open-minded.
We look into how Google is doing things, how, let’s say, Uber is doing things, how other companies are really bringing the sharing economy into our future.
That is why it’s always, we try to look for the top of the trend but then we don’t just blindly follow people, it’s like, “Hey, just because that is cool, let’s do it.”
We try to understand how that’s going to impact our business. What kind of value eventually we’re going to bring to the consumer, to our merchants, then we pick the best idea.
The great thing is, the teamwork is important. Once you make a decision, the team will do it. It’s not like, “I don’t like the idea”. No one is doing that.
That’s something which impresses me a lot because I worked in US for a long time, I see different cultures in my past experience.
Tnooz: Yes, I’m sure. What do you think about what’s happened with Orbitz and Expedia? For nearly four years, you were Vice President, GM, Technology at Orbitz.
Wu: It is probably, from Orbitz, it’s a mixed feeling, that’s for sure, right? You know what I mean? Everyone loved-
Tnooz: Everyone worked so hard to build this brand.
Wu: Yeah, you have the independent operation and things like that but on the other hand, the team up with the company Expedia was such a great resource there. They are definitely going to have more efficiency for sure. It’s a blessing and sadness all mixed together for everyone, no matter if it’s on the professional or personal side.
October 2015: Interview: Wu on Alitrip, Alibaba’s travel site, and Chinese outbound travel
Earlier today: Qunar brings its mobile dominance to the Ctrip party
Earlier this week: An Expedia with Asian characteristicshttp://www.hotelglobe.net/alibabas-alitrip-has-a-distinctive-travel-model/Best Hotels