It’s interesting how Orbitz was responsible for lowering commission rates as now airlines pay minimal commissions to online travel sites, whose primary revenue streams come from hotel and hotel package bookings. The industry is also facing tremendous consolidation and there are now just two large players in the business: Expedia–whose portfolio include Orbitz, Travelocity, Hotwire, Hotel.com and Cheaptickets, among others– and Priceline–which owns Kayak, booking.com and Agoda, among others. (Source: http://ehotelier.com/insights/2015/12/16/the-ota-duopoly-priceline-vs-expedia/) Hotels now have less leverage than ever with online travel agencies given the lack of competition, meaning that Expedia and Priceline have can demand higher commissions without leaving them much resource. And in all likelihood, prices will be higher for consumers given that they don’t have many real competitors to choose from — the “choice” is only an illusion.
This is fascinating, Nick. Regarding business intelligence, I think restaurants would love the ability to pick more of their customers. During prime time like a Saturday night, the tab for four people at a nice restaurant in Boston could conceivably vary from $60 (four main courses like pasta with no appetizers, drinks or desserts) to $400+. Imagine if Toast’s POS system could integrate with OpenTable and limit reservation availability during certain time slots to customers who average a certain minimum spend. Given the low margins in the restaurant business and the high failure rate, helping restaurants get the most profitable customers at any given could revolutionize the business — although there are obviously moral and ethical concerns with allocating tables in this way.
It is interesting to see how Axel Springer is diversifying — both geographically and the types of companies in its portfolio — as a way of future-proofing itself. The company now has 20+ investments in American companies including digital research platform EMarketer (acquired for $242 mm), Business Insider (bought 88% for $343 million), as well as smaller stakes in companies ranging Airbnb to Mic to Thrillist. In fact, it is even opening a New York Headquarters to oversee its investments in these US tech and media companies (source: http://www.wsj.com/articles/axel-springer-plans-to-open-u-s-headquarters-1470414085). As Döpfner told the New York Times, “I would not exclude that, in 10 years’ time, our company [revenues] could be 100 percent digital…and 80 or even 90 percent international..And that given the scale of the U.S. market, the largest part of our English-language business will be in the United States.” (source: http://www.nytimes.com/2015/12/21/business/media/an-old-media-empireaxel-springer-reboots-for-the-digital-age.html)
It will be interesting to see how Axel Springer creates synergies between its different worldwide holdings. Last month, it launched MarketsInsider.com, a site centered around market data, leveraging the Business Insider brand as well as its look and feel. However, the site’s data comes from Axel Springer’s German financial data platform, Finanzen.net. I look forward to seeing other collaborations in the future.
Great post, Sanchali. As you wrote, the lion’s share of traffic comes from social media referrals. This is incredibly problematic as social media platforms, especially Facebook, will increasingly control the fate of news companies. Facebook is constantly changing its algorithms for what to display on your newsfeed–and that can profoundly affect traffic to the New York Times. In Q2 2016, for instance, Facebook traffic to the New York Times declined by 25% and Facebook has indicated that going forward it will de-prioritize news articles and privilege posts from friends. (source: http://fortune.com/2016/08/16/facebook-traffic-media/). As Harvard Nieman Lab Director, Joshua Benton put it, “It’s going to have a real impact – and it’s another instance of publishers who thought Facebook was an open platform that they could use to reach their audiences having to realise that it has its own set of incentives and goals that do not always line up with theirs.” (source: http://www.bbc.com/news/technology-36666749) So the big question is what can The New York Times and other media companies do to reduce their dependence on Facebook?
Another fascinating thing Amazon is doing in its retail stores is not displaying prices on its merchandise. Shoppers need to use the Amazon app on their phone or use a scanner. Currently, Amazon Prime members get the same prices as are offered online while non-Prime members pay higher prices. (Source: http://www.geekwire.com/2016/amazon-gives-prime-members-better-prices-physical-bookstores-hinting-new-retail-strategy/). In the future, I wonder if they would offer different prices to help move inventory and cross-sell additional merchandise. Imagine a historical fiction novel of which a store ordered 200 copies isn’t selling well. As an avid historical fiction reader, Amazon might ping me with a special offer to buy the book for $2.50, a price point that might lead me to buy the book even if I wasn’t particularly interested. On the other hand, someone else who has spent a few minutes standing in front of the book’s position on the shelf (as ascertained through store positioning hardware) and appears to be especially interested in buying the particular book might get charged $10.00.
An additional use I thought of for these stores would be doubling as mini-warehouses for Amazon’s Prime Now delivery service, which offers free delivery of select items in as little as two hours.
I love this campaign and think it is apparent that Chouinard’s commitment to sustainability is heartfelt and authentic. That said, for many of us, there are high barriers to repairing clothing. While minor repairs are more straightforward–it’s easy enough to use a sewing kit or send a pair of pants with a torn seam to the dry cleaners–it’s far more intimidating to repair high performance outdoors gear. From looking at the Worn Wear “how-to repair & care guide”, it’s clear that several of the repairs–e.g. fixing a baffle on a down jacket, accessing the insides of a jacket, putting in a new zipper, among many others–are quite complicated, involved, and time-intensive. I, for one, wouldn’t be able to perform these repairs and I’m not sure that dry cleaners work on winter jackets and other synthetic, waterproof materials. From Kenzie’s comment above, I learned that Patagonia has traveled around to different cities doing repairs in its trucks, but this is not a scalable solution. Patagonia might consider performing free or low-cost repairs in its stores and/or having a mail order repair service so it can actually provide a viable repair solution. Otherwise, I’m not sure how much Patagonia can actually achieve its stated goal of having people hold onto older clothing instead of buying new stuff.
I wonder how Heinz might be able to source and produce its condiments more locally to reduce its transportation carbon footprint. Through some quick research, I found that tomatoes are grown in every U.S. state and they are commercially grown in 20 states (http://www.ers.usda.gov/topics/crops/vegetables-pulses/tomatoes.aspx). I wasn’t able to find more recent numbers, but as of 2007, 80% of Heinz Ketchup was produced at one factory in Fremont, Ohio (http://www.post-gazette.com/business/businessnews/2007/04/17/Fremont-Ohio-A-visit-to-the-heart-of-Heinz/stories/200704170329). Perhaps, given the merger with Kraft, there are Kraft factories around the country and around the world that could begin manufacturing Heinz products using local raw ingredients, thus reducing the new to transport ketchup over long distances. Even if this is not the case, the company could also look into the costs and benefits–both in dollars and to the environment–of opening new factories to reduce the need for long-distance shipping and transit.
Another key area of focus for United that could help move the needle on sustainability and ultimately help lower costs (United spent $11.6 billion on 3.9 billion gallons of gas in 2014) is replacing conventional jet fuels with biofuels, which can lower CO2 emissions by 80%. In June 2015, United invested $30 million in biofuel producer Fulcrum Bioenergies and later that summer became the first US airline to fly a plane using fuel from animal fats and farm waste. The key challenge with biofuels is producing sufficient quantities at scale and reducing the costs of production. (Source: http://www.nytimes.com/2015/06/30/business/energy-environment/farm-waste-and-animal-fats-will-help-power-a-united-jet.html?_r=0) Several other airlines are also pursuing biofuels and those that most successfully replace conventional fuels with biofuels will have a competitive advantage, both from a carbon footprint standpoint and because they will be more insulated from fluctuations in oil prices.
One significant way Whole Foods could help curb greenhouse gas emissions could be through consumer education. Livestock, for instance, accounts for 14.5% of all emissions, and beef and sheep are the biggest culprits. As CNN.com columnist John Sutter put it, “Eating beef…has come to be seen, rightly, in certain enviro circles, as the new SUV — a hopelessly selfish, American indulgence; a middle finger to the planet.” (http://www.cnn.com/2015/09/29/opinions/sutter-beef-suv-cliamte-two-degrees/). There is an opportunity for Whole Foods to raise awareness and teach customers that chicken, pork, seafood, and eating vegetarian are much more sustainable meat choices. The company could also indicate carbon footprints for produce to make it easy for customers to discern the environmental impacts of their choices.