Latin America’s Despegar wants to double bookings by 2025: How realistic is that?
You might assume that a small agency like Despegar would be even more reliant on gaming Google’s search engine than global giants. Yet Despegar only relies on Google for only 12 percent of its site traffic, Scokin said. Despegar is most likely less dependent on Google for free customer referrals than companies like Expedia and TripAdvisor, though those latter companies don’t break out their numbers. That freedom reduces its exposure to Google’s rising cost for advertisers.
Despegar said it has worked hard at boosting other forms of unpaid traffic, such as brand advertising that encourages consumers to download its mobile app and book directly. Expedia, which holds a minority stake in Despegar, could, like other Western travel brands, learn from Despegar’s modest exposure to Google. In the past two years, Despegar’s overall marketing costs as a percentage of all gross bookings have dropped.
Despegar has decided not to offer a paid subscription service for added benefits the way MakeMyTrip has with its Double Black program, where users can avoid cancellation fees for bookings by paying an annual fee. Given the potential for subscriptions in travel, as smaller European player eDreams has shown, that might prove to be a mistake. In other words, too many Despegar customers can’t afford to buy their trips outright. That fact, combined with how Despegar has significantly changed its cost model and revenue model, may make it trickier to predict how future economic turmoil might impact the company.
Investing in challenger to dominant Tetra Pak – Greatview Aseptic
In 1952 the Swedish businessman Ruben Rausing convinced a local dairy company that his peculiar tetrahedral shaped cardboard beverage carton was the way of the future. The rest as you say, is history. Aseptic packaging as it is called became the most popular way globally to sell milk products but also many other beverages, the packaging being superior in both preserving the drinks taste and ease of transportation. Later on the Tetra Brik was invented and the company Rausing created with these innovative products became Tetra Pak (part of Tetra Laval). The company today has 11.2bn EUR of Net sales. The case of Tetra Pak is interesting because the company has over the years had no to little competition in many markets – a dream situation for any company to be in. But how was it possible to be so successful and why did not more competition come in? Firstly it came down to patents, which gave the company a monopoly position in the early years. Secondly the company has and continues to be extremely well run with a clever sales strategy. Tetra Pak sell the filling machines that creates the packaging, to the beverages producers at a low price. Then making the margins on selling the cardboard box paper used by the machines, which of course will be continuously ordered. The contracts for the machines tied the customer to not buy the cardboard paper from anyone else. In this way the customers were tied to Tetra Pak and had to invest in new lines of machines, to switch to a competitor, obviously at high switching costs. In 2002 it was estimated that Tetra Pak still had 85% market share globally, but around this time things slowly started to change, partly due to regulatory intervention but also due to beverages producers who helped create companies like Greatview Aseptic Packaging.