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Analysis

You buy on Amazon, you sell on Amazon… why not use Amazon to pay?

Effective immediately: it will be possible to pay on LastMinute.com, the European online travel giant, using the service Amazon Pay. Who needs to worry? OTAs, whose market is coveted by Amazon, or maybe PayPal? And hotels? It is time to examen the situation.

Amazon and Lastminute.com

            It is now possible to pay on Lastminute.com via the Amazon Pay payment service. However, this service does not concern the sale of complete packages, this option is only available for the purchase of flights, hotel rooms and flights plus hotels. It's actually an option that works almost like PayPal: rather than creating a new account on the shopping site, just click on a button and Amazon Pay takes over. There are many advantages. First of all for the customer: as mentioned above, no need to identify yourself on the site, no need to enter your delivery and invoicing address either, the service is free... in short, a beautiful example of a "seamless" customer experience. In addition, the Amazon Pay service allows you to benefit from the American giant's "A to Z guarantee". Moreover, there are the advantages for merchants: integration of the tool is simple, payment is fast, it allows you to take advantage of the trust customers have in Amazon - says the Amazon Pay site.

            Hence the interest of the lastminute.com site: according to the company, 50% of the traffic on its site comes from mobile phones, a medium where the possibility of a single "click", without even having to enter its credit card number, could really improve the conversion rate. In any case, this is the point of view of the Lastminute group. Moreover, for the OTA, it is also a way to open up to the 300 million accounts opened on Amazon. Of which 33 million would be Amazon Pay users. Not to mention the image of Amazon, whose smile logo is supposed to represent customer satisfaction... a useful fact for the hundreds of salespeople offering Amazon Prime: the guarantee is Amazon, the service is Amazon. Customer data is kept by Amazon and not by the site, a significant factor for the company. It will of course have to be seen whether or not this service will eventually be adopted on a massive scale by lastminute.com customers.
 

Amazon and tourism: OTA, dematerialization, hotels…

            The appearance of this payment service on Lastminute is almost part of the long series of news connecting Amazon and the OTA market. We say almost, because this time Amazon appears as a payment solution and not directly as an OTA. It is a service rather than a competitor but as David Kong, CEO of Best Western said at the last Worldwide Hospitality Awards: "If you look at the figures, I think OTAs are afraid of GAFAs. In the USA, 70% of the richest households have Amazon Prime. If you look at the whole country one out of two households have Amazon Prime. You can then imagine how powerful they are. If they choose to enter the hotel market and become a market place they could easily do it. So, I think it’s not if Amazon goes in but when Amazon goes in. Their CEO has already said: they want to sell everything." Jeff Bezos' statementhas definitely left an impression. (David Kong interview here)

         And there have already been attempts. First, with Amazon destinations in 2013. A real OTA, including hotel reservations. But the adventure ended in 2015 when the parent company decided to close the subsidiary after having securing the last reservations. Then there was Amazon Locals, for services and local activities, on a just-in-time basis. A little bit like Groupon's model. There, again, after testing the water temperature, the river dries up and the idea is abandoned... Until the water comes back again: notably through the group's artificial intelligence, Alexa, which has been adapted for hotels since last summer (2018). In some hotels and rooms, where a high-tech aspect is being tested or showcased, thanks to Alexa, it is possible to regulate the temperature of the room, close the windows and turn off the lights. There you go: Amazon sets foot in hotels again. (More information here)

           

Warning: a raging river?

           Jeff Bezos' company remains to be monitored. The figures speak for themselves: as of February 6, 2019, an Amazon share is worth 1,600 euros, an Expedia share just over 120. 178 billion in turnover on the one hand, around 10 on the other, and the differences are similar for net profits or investments... Moreover, regarding investments, the figures speak for themselves: in the United States, between 2009 and 2013, the sales figures increase from 34 to 75 billion. However, on the same period, profits fell by 75% and the amount paid in taxes fell by 57%. Rather than seeking profit, Amazon reinvests, thus avoiding the harshest taxation. While generating cash and buying power: the company buys Twitch, Whole Foods... And the same is true for Europe: more than 4.2 billion euros in turnover in 2013 in the United Kingdom, for 4.3 million taxes paid, representing a tax rate of 0.1% or enough to launch "Amazon destination" and then close the platform. Before reopening it?

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