I have been to Indonesia several times and it is interesting to observe the travel ecommerce space in this growing country. The Indonesian travel market is truly getting hot with at least ten travel startups that I know of.
NB: This is a viewpoint from Minh Bui, founder/blogger at EcomEye.com, a Southeast Asia ecommerce blog.
Entrepreneurs in Indonesia don't just copy the model from the US. They know what their customers need and are quite flexible in changing business models to meet local demands.
Tiket.com, one of the leading OTAs in Indonesia, was initially an online train ticket booking platform - similar to what redBus is to buses in India, ThaiTicketMajor is to movie/event ticket in Thailand, VeXeRe.com is to buses in Vietnam.
Now, it has already expanded its service to offer hotels, flights and events online.
Recently, the travel metasearch space has been hotting up with Skyscanner valued at $800 million after a funding round from the top notch VC Sequoia in Silicon Valley. Wego, a leading metasearch site in Asia also received funding of $17 million in Series C.
But, Traveloka, one of the two leading travel metasearch sites in Indonesia has been switching its model to become an OTA. This move surprised me and I wanted to dig deep to know the reason behind it.
I met Ferry Unardi, co-founder/CEO of Traveloka a few times this year - once at a WebInTravel Jakarta event when Traveloka was still a travel metasearch service, and then I met Unardi at WebInTravel Singapore last month, just a few weeks after Traveloka's announcement to become an OTA.
Traveloka recently raised series A funding from Global Founders Capital, the venture capital arm of Rocket Internet.
I discussed with Unardi the reason behind this pivot.
Background about Traveloka launch and why you focused on metasearch?
I spent six months in China, just to study the local language. I realized that the Chinese internet industry was much more mature than Indonesia. I was impressed by really big companies like Alibaba, Taobao, Ctrip, and Qunar.
When I was in China, I saw Qunar's marketing campaign everyday. I thought the same model could work in Indonesia.
I didn't really want to quit Harvard Business School because I wanted to see what is going on in Harvard. So, I studied one semester and I thought it was good enough.
Tiket.com launched in Indonesia while I was still in school. I thought, "Oh boy, somebody is venturing into the Indonesian travel industry, it is going to be very competitive soon".
I called my friend (my current co-founder) who was working at LinkedIn then. We thought that instead of launching a travel metasearch in future, we should do it now. That was LinkedIn pre-IPO time in 2011.
Why pivot to an OTA model?
The original idea was along similar lines as Qunar. Since we are engineers, we just wanted to focus on technology. Actually, we got good traction and visits to our site.
We were working with OTAs and other travel providers. The margins were very low, because, as a metasearch we earn commission on the commission earned by OTAs.
Besides that, it is also natural for customers to search and book in the same website. So, we decided to build a platform where users can book with us, this way we will have much better commission, conversion and even user experience. [Qunar launched TTS platform in 2010 to fulfill transactions on its site]
How is the transition from being a metasearch to an OTA?
Usually travel metasearch engines are tech-oriented. But, with OTAs it is a different story as it involves too much offline business.
In metasearch companies, most employees are technologists and business development people working with OTAs and airlines companies.
We are slowly switching the model from being a metasearch player to an OTA. We can't really switch the model overnight.
An OTA model has more offline activities, so we have to build teams to work with hotels and customer service teams to run the call center .
We have information about the way travellers search for hotel and flight tickets, but we don't have data on customer booking behaviors.
How are you differentiating Traveloka from other OTAs?
The Indonesia travel market is still in its early phase. We have a strong engineering team in place, we don't need to differentiate, we just need to be better.
But how can you do that while other OTAs are strong and all want to do better too?
Tiket.com is the first big player with a strong team. But, Tiket.com focuses on many line of businesses (hotels, flight, trains, events, etc). We focus only on flights for now. Nusatrip.com is focusing on international flight travel, we are the only one to focus on domestic.
Minh Bui comments: A side-effect of Traveloka becoming an OTA - current OTA partners of Traveloka will become competitors and Wego, the main competitor of Traveloka, will now become its potential partner.
I spoke to Graham Hills, managing director of Wego Indonesia about Traveloka's pivot.
Hills told me:
"Traveloka's pivot to becoming an OTA was an interesting story. It was clear it saw an opportunity to simplify the flight booking process in Indonesia; a market where the majority of travellers are first timers and not yet very experienced booking travel online.
"Its new investors, Rocket Internet, also operate many businesses with a transactional model, so Traveloka should be able to draw on Rocket's experience. We at Wego look forward to an opportunity to work with Traveloka in the future."
NB: This is a viewpoint from Minh Bui, founder/blogger at EcomEye.com, a Southeast Asia eaommerce blog.
NB 2:Businessman image via Shutterstock.