It is stories such as those of Flocations that inspired the first WIT Developer & Designer Challenge – matching real issues with fresh minds and offering new talent a guaranteed chance at Proof of Concept should they win.
The story of Singapore-based start-up Flocations and how it morphed from a graphical search interface into a marketplace for tour packages is a good example of how entrepreneurs with good ideas can often get lost or caught in the complex world that is travel.
Let’s start at the beginning. I first received a call from Tudor Coman, co-founder of Flocations, more than two years ago when he and his friends were working on a competition at Microsoft.
They had this idea to develop a graphical search interface for flights out of Singapore. Type in your budget and the map would show you where you could fly to for that budget.
I liked the simplicity of the idea and the enthusiasm of the team. I knew the challenges they would have executing it but at that stage, you really just want to encourage ideation, and not pour cold water on a good idea.
Enthusiastically, the team executed on it. Then, they pitched their product at the WIT Start-Up Pitch and the team got the attention of travel companies and investors, and they continued to tell their story at travel events wherever they could and eventually, they did receive some funding.
But then obstacles started appearing. The execution was harder than had been expected by a team that knew technology but didn’t travel. The air fare market in Asia is complex and non-transparent, unlike the US.
It was hard for the team to get access to content. Companies they spoke to thought their model more of a feature which could easily be developed by bigger competitors rather than a business in its own right.
Challenges loomed. Beyond trying to get access to content, they also had to build traffic which means developing a consumer brand. That requires massive investment and costlier if you don’t have a good, comprehensive search product in the first place.
The team sought out travel advisors and mentors and slowly, with the involvement of strategic advisors such as Kei Shibata of Venture Republic who had built similar businesses in Japan, it changed direction into the current model. So from graphical, it’s gone to listings and from flights, it’s gone to tour packages.
Coman says:
"We now have a growing business and are encountering real business issues and decisions. Everything about the travel business is much more real now."
Before the pivot though, it was challenging.
"After running it for a year, we were definitely not growing as we should – people liked the idea when we told them face to face – but unless you can get people to organically find your product, it’s hard."
Going into a niche market like packages makes it easier for Flocations to be found organically as well. Coman explains:
"Players like Skyscanner and Agoda are not bidding on packages. Expedia has packages but it’s not their core business. Our packages and deals are attached to flights, and experiences."
Put it simply, Flocations is now like a classified ad marketplace for tour operators and hopefully, that’s a model traditional tour operators in markets like Singapore understand. Almost all their advertising dollars go on traditional media and Flocations is hoping to shift some of those dollars online.
Convincing traditional tour operators to use an online marketplace could be a challenge but perhaps not such a big hurdle because operators are fast realizing that more and more consumers are moving online especially with the advent of mobile devices.
Coman says he is seeing good response from smaller tour operators who have web presence, adding:
"They see this as a way of generating incremental traffic and leads and we can help grow their business."
Resistance is from the big brands who "don’t want to bring traffic to their sites through other search engines but rather through offline advertising. They also feel their brand is strong enough".
With an initial focus on Singapore, Flocations is now targeting Indonesia and has started offering packages from that market.
"We bring qualified users to their brand and if they have the ability to convert, it becomes real sales to them," says Coman. Flocations earns on the conversions it gives to suppliers.
There are of course still problems to solve, Coman concedes.
"Packages are a lot more difficult than hotels, that’s why it’s the last bastion to go online. It’s been a steep learning curve – dealing with traditional tour operators is like the opposite end of the spectrum to us – paper format, traditional advertising, local players and manual labour.
"But we are localizing the team and hiring good people to help us get into the local markets. We have a real business now and we will soon start seeking Series A funding."
Hopefully now with the right advice, Flocations has found a path to build a sustainable business that solves a real problem in travel.
NB:Tune in to our webinar at 4pm Singapore time on Tuesday 13 August. Find out more about the WIT Developer & Designer Challenge.