E-Commerce in the Aviation Industry

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E-commerce has achieved a massive acceptance in various industries primarily because of convenience. According to Yilmaz (2019), the middle class spend most of their time at work as they focus on career growth and an increase in their income. In the current family set up in the United Kingdom, United States and other parts of the world, both men and women are in gainful employment. As such, time that was initially available for them to visit brick and mortar stores is no longer available. E-commerce has made it possible for such people with tight schedules to shop at the convenience of their homes or offices. E-commerce makes it possible for one to view various products offered by different players, compare their prices, select, and purchase products that offers the best value based on their current needs (Singh & Duhan, 2016). Online sales and marketing has gained massive popularity not only in the developed economies of Europe and North America but also in emerging economies of South America, Asia, and Africa (Fisk, 2016). The concept of e-commerce has particularly become critical in the aviation sector. Most airlines are currently relying more on online ticketing than the traditional approach where customers had to physically visit their offices to purchase the tickets. This paper focuses on discussing the growing relevance of e-commerce in the aviation sector and how airlines can optimize its usage to achieve market growth.

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How Airlines Can Use E-Commerce to Optimize Market Reach

The aviation market is one of the most competitive industries because of the entry of numerous firms offering the same products. Many airline companies have tried to differentiate their products from what their competitors have to offer as a way of attracting and retaining a pool of loyal customers. Erdemir (2017) advises that in such a highly competitive market, the only way of achieving sustainable growth is to expand market reach. British Airways is one of the leading regional airline companies in Europe. However, it needs to ensure that it explores new markets in North and South America, Europe, Africa, and the Pacific. E-commerce offers a perfect platform through which airlines can optimize their market reach. According to Langham (2019), many airlines have embraced this new concept to enable them expand their market coverage. The following are some of the major steps that a firm should consider if it seeks to use e-commerce to optimize their market reach.

Creating of Interactive Websites

One of the first steps that an airline company should take if it seeks to expand its market reach through e-commerce platform is to create a website. Almost all the major airlines in the United Kingdom have developed websites that allows customers to view what the firm offers (Singh & Duhan, 2016). The website acts as a perfect replacement for the traditional brick-and-mortar offices. Just like traditional offices, the website offers all the vital information that a customer may want to know about the product and its price. Through the website, the company can define its products, what a customer needs to do to purchase a ticket, and the nearest office where they can visit in case they need to make further verification. Wheeler (2019) advises that the website should be as interactive as possible. Some customers may have unique questions that may not have been simulated in the FAQs (frequently asked questions) section of the website. There should be a mechanism of addressing their concerns. Given that the firm will be targeting the global market, customers should be given opportunity to choose the language they understand. The flexibility makes this platform more effective than when using agents who may be limited to one or two languages.

Use of Social Media to Direct Customers to the Websites

The management of these airlines will need to use social media platforms to reach a wider global audience. Facebook currently has over 2.4 billion users around the world, and the number is growing rapidly (Camilleri, 2018). YouTube, Instagram, and WeChat each have over one billion users. Airline companies should consider these platforms as perfect avenues through which they can reach out to a wide audience. They can use different software to ensure that they can guide potential customers from these social media pages to their website where they can get further details about the product they want. Lee and Lee (2019) note that social media marketing has become an effective way of reaching out to a large number of audiences in the modern society because of the popularity and regular use of these platforms.

Engage Online Booking Agencies in the Global Market

Traditional travel agencies that operated brick-and-mortar officers have been replaced with online booking agencies because of the changing trends and practices in the aviation and tourism sectors. Some of the leading online agencies in the market today include TripAdvisor Flights, Expedia, Kayak, SkyScaner, Google Flights, and Travelocity (Sales, 2017). These airlines use various search optimization engines to ensure that they can direct online customers to their websites. They work closely with various airlines as agents in exchange of a commission. Local firms in the country should consider working closely with these firms to expand their pool of customers. Instead of viewing them as market rivals, they should be considered as partners in the firm’s quest to expand its market reach.

Develop an Effective Call Center

The next step is to have an effective call center where customers can engage staff of the airline. Some customers may want to make verifications of their bookings and authenticity of the online products before making payments. Others may want to get clarifications or special requests after completing their bookings. A call center helps in ensuring that these customers can be assisted appropriately by agents of the company (Albers et al., 2017). The call center officers should have the right information about bookings made by the customer or any other relevant information about the firm and products it offers in the market.

Have a Secure Online Payment Platform

When an online customer is satisfied when the product they have viewed in the market, the next step is to make appropriate payment to secure their purchase. That can only be possible if the firm has a secure online payment platform that customers trust. According to Liu (2018), because of the increasing cases of cybercrime all over the world, there is a concern that clients’ bank details can be stolen and later used to drain their accounts. As such, local airline companies should have effective mechanism of protecting the data of their customers. They should also use trusted online payment platforms such as PayPal, Payoneer, Visa Card, Amazon Payments, Skrill, and Google Wallet.

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Conduct Regular Research

The ability of a firm to expand its operations in the current competitive aviation market depends on its ability to understand and effectively respond to the changing trends and practices in the market. According to Law (2018), conducting regular market research is critical, especially for a company that is seeking to explore new markets. Using online platforms such as Facebook, Instagram, and YouTube, these firms can collect valuable information from the current and potential customers about their changing preferences, their experience when using these products, and changes that they may want in their future purchases. The information can then be used to define future products that the firm offers in the market.

Metrics and Analytics Needed to Measure and Optimize Their Use of E-Commerce

When using a new system or platform, it is always appropriate to measure the effectiveness to determine if it is more valuable than the one that was previously in use. According to Abbasov (2020), various metrics and analytical process exist that the airline companies in the country need to assess and optimize their use of e-commerce. These metrics and analytical processes will enable the management to determine if embracing of e-commerce is having the desired impact on the firm’s overall performance in the market.

The Net Profit/Bottom Line

The bottom line net profit is one of the most important metrics that the management should use to determine the effectiveness of their use of e-commerce. According to Liu (2018), an increase in sales does not automatically translate to an increase in the net profit. In some cases the increased revenue may be characterized by massive expenses that erode the firm’s profitability. This metric focuses on determine how profitable the firm is after making an entry into e-commerce platforms. It helps to determine the desirability of these platforms.

Average Value in a Transaction

Sometimes it may be tempting to focus on increasing the number of online transactions without considering their value to the customer. As Roberts (2017) suggests, it is advisable for a firm to ensure that every transaction is of value to the firm in terms of profitability and sustainability of its operations. The strategy of selling products in the online platform may increase the profit margin by lowering the cost. However, it may also require the use of other incentives that can hurt profits. Table 1 below shows how a firm can calculate value for every online transaction.

Table 1: Calculating average value per transaction

Source: Abbasov, 2020, p. 78.

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Rate of Customer Conversion

One of the fundamental goals of a firm’s website is to convert its visitors into regular customers. Such online visits should generate sales and increase revenue for the airline. The ability of a firm to covert visitors into customers depends on factors such as the use of images, choices of words, and description of the product among others. Of interest should be to convince the visitor that the firm is capable of meeting their needs in the best way possible (Roberts, 2017). Various online analytical tools have emerged that a company can use to assess the conversion rate. Camilleri (2018) argues that if the conversion rate is less than 4%, it is an indication that the website has major weaknesses that should be addressed.

The Rate of Cart Abandonment

The websites have a cart, which is a list of items that the customer wishes to purchase from the company after viewing various products and their prices. However, Wheeler (2019) explains that it is always not guaranteed that they will pay for these products. This metric focuses on the rate at which different customers abandon their cart after making their selection. A high rate of cart abandonment is an indication that the client might have gotten a better alternative.

Visitor Traffic

The size of traffic that a website has determines the likelihood of having a sustainable number of online customers in the market. According to Roberts (2017), companies are investing heavily on search engine optimization (SEO) tools to help increase traffic on their website. They help in increasing the visibility of a website based on the searches that one makes through various search engines. Figure 1 below shows how SEOs work to increase the visibility of a website.

 Promoting visibility through SEO (Singh & Duhan, 2016, p. 64).
Figure 1. Promoting visibility through SEO (Singh & Duhan, 2016, p. 64).

Strengths and Weaknesses of Social Media in Airline Marketing

The social media offers a perfect platform for local and international airline companies to expand their operations and increase their profitability. Yilmaz (2019) argues that it is advisable for these companies to understand strengths and weaknesses of these platforms before making investments into them. The knowledge will help in making appropriate investment decision.

Strengths

Social media platforms such as Facebook, Instagram, and YouTube have billions of regular users, making them appropriate for airline companies keen on reaching a wider audience in their promotional campaigns. Abbasov (2020) explains that these platforms are not subject to geographic barrier as they are used globally. Companies can also overcome the language barrier when using these platforms in different markets. Cost reduction is strength of using these platforms. The cost of promoting a product in the social media is comparatively lower than the use of mass media in terms of the population of the targeted audience. Swift communication is another factor that makes it necessary for a firm to use these platforms (Singh & Duhan, 2016). A company is capable of getting swift feedback from customers and responding to their concerns. A firm can use data and other analytical tools to understand market trends relevant when using e-commerce to facilitate growth.

Weaknesses

When using social media as a marketing platform, Yilmaz (2019) warns that it is important to identify and address various weaknesses. One of the main concerns when using social media marketing is malicious negative feedback and attacks. The reputation of Domino’s Pizza was harmed when a video of their employees handling food in unhygienic manner went viral on YouTube (Singh & Duhan, 2016). Although the company was able to address the issue, its brand image was significantly damaged. These platforms are demanding as customers expect immediate response from the company whenever they post a question. Security and privacy are major issues of concern as the number of highly sophisticated cybercriminals increase.

How to Optimize Total Airline Revenues Through the Use of E-Commerce

It is important for the airlines using e-commerce to ensure that their revenues through these platforms. According to Liu (2018), the use of e-commerce is a major shift from the traditional approach of using the brick-and-mortar model of operation. Companies must understand channels of the market, suitability of these e-commerce platforms, and their potential to enhance their revenue.

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Identify and Exploit Various Channels to the Market

The use of e-commerce should enable airlines to optimize their total revenue through increased sales. One of the best ways of achieving such a goal is to identify and fully exploit various channels to the market. Law (2018) advises that airlines should use multiple channels to increase the revenue streams. Some of the main channels to the market are already discussed in sections above such as the use of the company’s website and relying on various travel agencies. Social media platforms such as Facebook and YouTube are also becoming effective channels to the market that a firm can use (Camilleri, 2018). These platforms facilitate regular interaction of customers and its customers. Each of them should be effectively exploited to enable a firm to enhance its revenue stream.

Determine Suitability of E-commerce Platforms

Airlines are currently using multiple e-commerce platforms to optimize their total revenues in the highly competitive aviation market. However, Fisk (2016) believes that it is prudent to invest a company’s resources on platforms that are more effective in generating revenues for the firm. The platform selected should be capable of increasing sales for the firm within the shortest period possible and in a sustainable way. Social media is becoming a reliable platform that a firm can use to increase its sales. As the number of users of these platforms increase, airlines are guaranteed of an increased audience. Yilmaz (2019) also notes that it is advisable for a firm to invest in its websites by making them interactive and capable of addressing customers’ concerns. The significance of the online travel agents should not be ignored because they also command a significant segment of the market, as Erdemir (2017) observes. Diversifying these e-commerce platforms will enable these companies to increase their revenue stream in the global aviation market.

Determine the Potential to Enhance Revenue in Different Channels

The online market eliminates most of the physical barriers to expansion that companies faced before when they could only use the brick-and-mortar business model. Online platforms offer limitless expansion possibilities as long as a firm understands the right approach that it should employ. Different markets may require different channels based on various local factors (Camilleri, 2018). When using the social media channels, Facebook may be appropriate for the airlines companies when targeting customers in North America, Western Europe, and Africa where there is no censorship to the social media. In China, WeChat may be the most appropriate platform because it is the most popular social media platform in the country. Employing different channels based on their appropriateness in these local markets helps in ensuring that the company reaches as many people as possible. Some travel agencies may demand loyalty from an airline. However, Lee and Lee (2019) believe that it is more appropriate for a firm to avoid limiting itself to just one specific agent.

Conclusion

The aviation sector has experienced a massive growth over the recent past as air travel become the most convenient way of moving from one country to another. The growth of the industry has led to an increase in the number of players offering similar products. Local airlines have the opportunity to expand their market share regionally and internationally using e-commerce. The online platform creates unique opportunities by eliminating geographic and language barriers that these entities faced when they had to use the brick-and-mortar model of operation. The study shows that although online platforms offer huge potential for growth, companies should be keen on managing threats associated with them.

References

  1. Abbasov, I. B. (Ed.). (2020). Computer modeling in the aerospace industry. Scrivener Publishing LLC.
  2. Albers, S., Baum, H., Auerbach, S., & Delfmann, W. (Ed.). (2017). Strategic management in the aviation industry (2nd ed.). Taylor & Francis.
  3. Camilleri, M. A. (2018). Travel marketing, tourism economics and the airline product: An introduction to theory and practice. Springer.
  4. Erdemir, A. (Ed.). (2017). Reputation management techniques in public relations. IGI Global.
  5. Fisk, N. (2016). Framing internet safety – The governance of youth online. Mit Press Ltd.
  6. Langham, T. (2019). Reputation management: The future of corporate communications and public relations. Emerald Publishing.
  7. Law, C. C. (2018). A practical guide to airline customer service: From airline operations to passenger services. Brown Walker Press.
  8. Lee, E., & Lee, C. (Ed.). (2019). E-commerce, competition & ASEAN economic integration. ISEAS-Yusof Ishak Institute.
  9. Liu, H. (2018). A strategic analysis of Chinese airline industry under online environment: In the case of China southern airlines. Scientific Research Publishing, Inc.
  10. Roberts, D. C. (2017). Entering the civil aircraft industry: Business realities at the technological frontier. Dog Ear Publishing.
  11. Sales, M. (2017). Air cargo management: Air freight and the global supply chain (2nd ed.). Routledge.
  12. Singh, A., & Duhan, P. (Ed.). (2016). Managing public relations and brand image through social media. Pennsylvania IGI Global.
  13. Wheeler, A. (2019). Crisis communications management. Emerald Publishing Limited.
  14. Yilmaz, R. (Ed.). (2019). Handbook of research on narrative advertising. Business Science Reference.

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BusinessEssay. 2022. "E-Commerce in the Aviation Industry." January 15, 2022. https://business-essay.com/e-commerce-in-the-aviation-industry/.

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BusinessEssay. "E-Commerce in the Aviation Industry." January 15, 2022. https://business-essay.com/e-commerce-in-the-aviation-industry/.