Digital Airport Commerce Ecosystems
AOE develops digital business and E-Commerce platform solutions based on Open Source technologies. We specialize in the implementation of complex enterprise software applications for global corporations. We support our customers in the development of digital business models and consistently rely on agile methods. In long-term agile projects, we execute innovative solutions with automated and digitalized processes together with our customers.
Digital Airport Commerce Ecosystems
OM³ is the foundation for building Digital Airport Commerce Ecosystems to meet the challenges currently facing the travel retail industry. The OM³ platform has been successfully implemented at Frankfurt Airport, London Heathrow and Auckland International Airport, where innovative new digital business models are changing the way airports, airlines and retailers are doing business and helping to optimize the customer journey.
The Changing Face of Travel Retail
Rapidly changing purchasing behavior by customers, the evolving E-Commerce industry and digitalization are just some of the factors disrupting traditional revenue streams and business models of airports and airlines.
The passenger’s buying behavior has fundamentally changed. Research shows that traditional travel retail is being challenged and major growth is unlikely. Digitalization is both threat and opportunity for all key players in the aviation industry. Airports, airlines and travel retailers should embrace digitalization and view it as an enormous opportunity to find new ways to generate core non-aviation revenues. To achieve this though, they will need to collaborate and create a digital airport commerce ecosystem together. The result: A win-win situation for all stakeholders.
Digital Airport Commerce Ecosystems as Foundation for sustainable non-aviation Revenues
Digital Airport Commerce Ecosystems are the key to meeting these challenges to Travel Retail. It is here that what we call “The new Quaternity of Travel Retail” comes into play. Such an ecosystem is only possible if the key players – Airports, Airlines, Brands and (Duty-Free) Retailers – collaborate.
The focus of such an ecosystem is the airport. Airports have several competitive advantages when utilizing E-Commerce that can help them gain the pole position in omnichannel retailing. To create a digital airport commerce ecosystem and an online platform, the key players in aviation need full management support, a skilled team with a digital attitude, value-creating digital business models, enabling legal contracts and high-performance, scalable IT.
OM³ Platform: Digitalization of Airports, Airlines & Travel Retail
AOE’s award-winning Omnichannel Multi-Merchant Marketplace (OM³) is a powerful online marketplace, which venues with large numbers of customers such as airports, shopping malls or integrated resorts can use to realize their full retailing potential. With the comprehensive suite of software applications and services, customers can enjoy a seamless online and offline shopping experience.
OM³: Digitalization and Connection of Airport Service
OM³ helps multi-retailer venues such as airports to realize their full potential and create a short-term return on investment by fusing the offline and online experience into one comprehensive suite of software applications and services. It enables complete customer interaction across multiple touchpoints. OM³ created immediate results at Frankfurt Airport, where the platform was initially implemented. The solution helped to reverse a significant downward trend in travel retail, observed by airports across the globe. For example, cross- and upselling increased by 35 percent and basket value increased by 300 percent.
OM³ consists of a unique and modular set of pre-integrated Omnichannel functionalities, services and infrastructure. It enables customized selection of functionalities according to airport-specific business requirements. The one-of-a-kind solution offers passengers a variety of convenient options for planning their travel and during the trip itself, during online and offline shopping at the airport and for accessing airport services. Passengers can get information about products and shop in advance of their trip or during layover and waiting times. OM³ transform airports to digital airports.
The most important aspects of the OM³ platform
- Omnichannel Experience: Seamless shopping for end customers across all channels and devices through networking of information, services and platforms
- Management of Products and Product Ranges: Marketplace with a virtually unlimited number of products and product ranges, controlled through a PIM System
- Integration of Retailers and Systems: Integration of any number of retailers as well as varied systems and software programs via an integration layer
- E-Commerce Process Chain: Complete process handling from order management to payments to fulfillment
- Omnichannel Fulfillment: One-hour delivery when picking up in-store or at selected pickup points, same-day home delivery
The 68.6 billion USD (2017) global Travel Retail Market is contracting, Spent per Head (SPH) is decreasing. Source: TFWA, IATA, ACI
Heathrow: Reserve & Collect Boutique transformed into digital marketplace
Heathrow is the largest airport in Europe with 78 million passengers, four terminals and 76,000 employees annually. To strengthen the non-aviation business, digital platforms are becoming increasingly important for airports. Passengers expect flight information, service and shopping offers on digital channels. The smartphone is the most commonly used diversion for passing the time at airports
This leads to changed expectations and behavioral patterns and thus to changed user and shopping behavior among passengers. For example, Asian passengers in particular are increasingly interested in pre-planned shopping for high-quality products – impulse purchases in duty-free shops, on the other hand, are declining. In addition, airport shops compete with online providers such as Amazon and Alibaba. In order to meet growing customer requirements, Heathrow set itself the goal of replacing the existing Reserve & Collect system with a modern digital marketplace that combines flight information, shopping and airport services on a single platform.
Heathrow already had a Reserve & Collect service, which was largely operated by the Heathrow call center. However, it was limited by high maintenance requirements, a limited number of products and manual fulfillment. Products of the individual retailers were entered manually, the product data came randomly in various formats.
The challenge of digital transformation of airports
The new digital marketplace was to replace the existing Reserve & Collect system, with Heathrow putting great emphasis on a scalable, future-proof solution with significantly reduced maintenance requirements and automated processes. The integration of existing and future services and third-party providers was also an important factor. Other requirements included simplified product maintenance, solutions for fulfillment, order management and payment, the integration of flight information and airport services such as personal shoppers and the simple integration of future merchants, products and services. In the first step, the existing Reserve & Collect system was to be migrated to AOE’s new digital OM³ marketplace without passengers noticing any disruption during ongoing operations in front of the passengers. Migration including included products, retailers and processes, during ongoing operations.
Based on the OM³ Platform, AOE implemented a scalable digital marketplace that includes flight information as well as the platform for shopping and airport services such as personal shopping. The classy “mobile first” design is extremely fast and reflects Heathrow’s premium experience.
High conversion rates through personalized promotions and recommendations
In order to drive personalized marketing campaigns, various sales and dialogue marketing features as well as personal shopping services were integrated in seven languages. One highlight is the integration of the marketing solution from Acxiom based on Adobe Campaign, which makes it possible to define highly personalized marketing campaigns for very specific user groups in real-time based on passengers’ purchasing behavior. These campaigns are supported by promotions and personalized recommendations, so that passengers are provided with targeted attractive offers of high-quality products. These tailor-made offers are extremely successful and result in above average conversion rates and five times higher shopping basket values.
Loyalty Program Integration enables personalized marketing to pre-qualified customers
The close integration of the Heathrow Boutique with the Loyalty Program is a key driver for personalized offers. Heathrow has 1.5 million loyalty customers whose data, preferences and sales behavior are known to the airport. Through smart product offers, these pre-qualified loyalty customers can be supplied with tailor-made proposals and convenient services with high conversion rates.
Airports and duty-free offers are subject to a number of rules and restrictions, the implementation of which was taken into account during platform development. For example, passengers have to enter their flight number when shopping, which is then validated in real time. The flight data is used for the fulfillment processes in order to guarantee the closest possible collection point in the time window before departure.
The Heathrow Boutique is an important part of Heathrow’s overall strategy to digitalize non-aviation revenues. With the successful and seamless launch of the OM³ platform, Heathrow now has a powerful and future-proof digital marketplace that meets modern requirements and customer wishes and can be continuously enhanced. The scalable solution uses automated processes in product maintenance, order management and fulfillment, which significantly reduces manual effort for Heathrow and its retailers. The marketplace offers passengers all flight data, airport services, shops and products consolidated on a single platform. The solution has been enthusiastically accepted by passengers, thanks to attractive premium products and targeted promotions.
Auckland Airport: Tax-free downtown shopping, on-airport fulfillment
Auckland International Airport is the second major airport to choose AOE’s award-winning OM³ Suite, after the new platform’s successful initial deployment at Frankfurt Airport. As part of the solution for Auckland International Airport, the Logistics Portal creates a true omnichannel connected customer experience for more than 19 million Passengers, seamlessly interconnecting on- and off-airport shopping and services. It is a major example as to how airports and travel retail are digitalizing their business models to create new and sustainable revenue streams. With the Logistics Portal, Auckland Airport is taking the latest developments in the travel retail industry into account and is rethinking the way it does business to meet these challenges.
Airports, airlines and travel retailers worldwide are facing the challenge of declining spend-per-passenger impacting their non-aviation revenue. To face this challenge, Auckland International Airport chose the innovative approach of providing customers with a true omnichannel experience by combining off-airport retail, E-Commerce and on-airport fulfillment into one convenient solution for retailers, customers and the airport alike. To achieve this, the Logistics Portal needed to be integrated with the numerous existing retailer systems, sales channels and Auckland Airport’s Collection Points.
The Logistics Portal at Auckland Airport is a comprehensive solution for both off- and on-airport fulfillment. Typically, similar solutions provide on-airport fulfillment only. However, the Logistics Portal, which is perfectly integrated into AOE’s OM³ commerce platform, offers retailers the best of both on- and offline worlds. Retailers that are not located at the airport can sell their products off-airport and have them tracked, monitored, delivered and collected at on-airport collection points. Customers can purchase items through any channel from any retailer and conveniently pick up all goods from just one Collection Point at Auckland International Airport. The new Logistics Portal meets three main criteria:
- Convenient duty- and tax-free shopping, both off-airport and online
- Highly efficient and convenient, both for retailers and for customers
- Easy to use, allowing for a rapid onboarding of additional retailers and sales channels
Downtown shopping, on-airport fulfillment
The solution provides passengers with the unique service of shopping at over 60 participating retailers located in downtown Auckland, while being able to save 15 percent New Zealand Goods and Services Tax (GST) plus additional duty on selected products at the same time. Purchased goods are delivered to on-airport collection points. To benefit from the significant tax- and duty-free savings, passengers must be traveling internationally; the goods are always handed out airside.
Here’s how shopping on the Logistics Portal works
- Tax-free Downtown Shopping
Tax- and duty-free shopping in Auckland city, providing identification and verifying passenger flight details.
- Retailer creates Parcel and Collection Authorization
The retailer creates a parcel for the items purchased as well as a Collection Authorization Document for the customer.
- Grouped Shipments to Airport
The retailer uses the Logistics Portal to group individual parcels together for easier handling and more efficiency and sends the shipments to the airport for storage and distribution. Security checks each parcel at the airport.
- Distribution to Collection Points
Airport service staff identify parcels using barcode scanners and send the shipment to the Collection Point, where the purchases are stored in individual compartments. Based on the barcodes, the Logistics Portal makes recommendations to service staff for consolidating separate parcels from different retailers for each customer, making pickup much easier.
- Pickup at the Collection Point
The passenger picks up his or her goods at the Collection Point before boarding the outbound flight or after passing immigration on flights arriving at Auckland International Airport.
To date, the airport and retailers handled the entire process manually, making it error-prone and inefficient, while reducing customer satisfaction. With the new Logistics Portal, airport service personnel can handle more parcels along the way in a shorter timespan with virtually no errors. Thanks to the OM³ Omnichannel solution, customers benefit from quick, hassle-free purchasing and pick-up while also saving money. Retailers and Auckland Airport increase their revenue streams.
Logistics Portal as part of AOE’s OM³ Suite
The Logistics Portal at Auckland Airport is part of AOE’s OM³ Suite, a powerful online marketplace that connects retailers and customers across all channels. With the OM³ Logistics Portal, Auckland International Airport combines on- and off-airport shopping (both digitally and in the store) with on-airport fulfillment, making the airport digital-ready and creating sustainable non-aviation revenue streams.
The Logistics Portal at Auckland International Airport is just one of many use cases for AOE’s OM³ Suite. By providing a powerful, state-of-the-art platform, Auckland International Airport is increasing its non-aviation revenue streams and making its business model digital-ready. Auckland Airport’s customers benefit from a service that makes shopping quick, convenient and enjoyable, while creating significant savings for them at the same time. Customer reaction, first numbers and industry acceptance are all proof that the Logistics Portal will contribute significantly to the economic success of the airport in the future, while creating happy, loyal customers.