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Travel Retail’s Positive Disruptors: SkyBuys shakes up the duty free shopping model

“We’re aiming to bring the passenger, the concessionaire and the airline into an ecosystem where they all benefit,” says SkyBuys Founder Alec Kemmery. Martin Moodie and Jason Holland report.

This article is the latest in our popular new series in association with Tito’s Handmade Vodka, which examines travel retail and airport sector ‘disruptors’ – focusing on companies and individuals that are challenging established models through innovation.

AUSTRALIA/INTERNATIONAL. Sydney-based technology start-up SkyBuys has recently been selected for Germany’s acclaimed global aerospace accelerator programme Airbus BizLab.

“The Airbus BizLab programme is an amazing opportunity for us, and will give us access to international airlines and other industry partners,” says SkyBuys Founder Alec Kemmery.

“SkyBuys works with airlines to grow ancillary revenue, and to improve the passenger journey. So I believe we are a great fit for Airbus BizLab, and we look forward to adding value to their clients, too.”

The SkyBuys app, currently in beta testing, aims to improve the passenger travel retail shopping experience by linking online duty free browsing and wish-lists with purchases online, inflight or in-store.

“SkyBuys changes the way airline travellers shop for duty free,” says Kemmery. After browsing and buying, goods can be picked up at different stages of the travel journey – or, in some cases, delivered to home addresses.

Kemmery says that SkyBuys is in discussions with online travel agents, concessionaires and airlines. He aims to progress existing trials to live fullscale business during the coming quarter.

“Partly our play with the airlines is to remove the duty free weights off their aircraft, because there is no way an airline can package a duty free offering and experience the same way as an airport,” Kemmery tells The Moodie Davitt Report. “You cannot fit an airport inventory onto a flight. However, an airline can put the global world of duty free into every single passenger’s mind, and they can also influence [an airport] sale.”

The 26-year-old entrepreneur says aviation is in his blood, having learnt to fly soon after he finished high school with the aim of becoming a pilot. He never realised that ambition, but he found another way into the sector by qualifying with an Aviation major degree and becoming an analyst at Asia Pacific’s largest financial technology hub, Stone & Chalk. There the seeds of SkyBuys were sown.

“I took a liking to doing something in mobile retail technology here in Australia, and I always had this concept of duty free in mind,” he explains. “I’d had a couple of clunky experiences with duty free, and I had this vision of trying to change that.”

Through Stone & Chalk he met the founders of successful Australian online shopping and payments platform RainCheck (now co-shareholders in SkyBuys). They worked with him to develop an app which allows passengers to search for and purchase duty free and other retail items.

For around a year the SkyBuys concept was bounced around with various travel industry stakeholders, including duty free retailers, airlines and travel agents. Predictably there was considerable pushback from some retail concessionaires; but instead of being discouraged by such reaction, Kemmery felt enthused by the opportunity to positively disrupt a legacy model.

“We knew we’d hit the nail on the head and we were going to go somewhere,” he says. “SkyBuys has really kicked off in the past six to eight months,” he states. Beta testing has gone well and through RainCheck’s own online shopping and payments mobile application platform (already in place with over 600 retailers across more than 10,000 local market stores in Australia), the payments mechanism is in place for the full launch.

How does SkyBuys work?

So how will travelling consumers access the SkyBuys app, and what will they find when they download it? The process starts once a booking is made and tickets are confirmed, explains Kemmery. “We would either have a direct relationship with an airline travel agent or distribution partner to push SkyBuys, or we would have an indirect opportunity later on.” Social media will be another key engagement point with the travelling consumer.

“Travellers download the app and have the choice of putting in their flight itinerary, or searching duty free based on the locations they are going to. The app then maps out that they’re going from Sydney to London via Singapore, for example. It’ll show them all the duty free items that we have onboard the app on their journey. They can save to a specialised wish-list inside the app, and then it will show prices for items on different legs of the journey.

“It’ll show a range of items, and offer price comparisons as well as options to purchase in-app or in-store. We have a wallet so that a user can upload their debit or credit card into the app, which will in turn give them access to rewards and incentives.”

If customers choose to pay in-store with a credit card, they’re still rewarded in the same way because their credit card is linked with SkyBuys’ app and profile. “It’s all the same whether the item is delivered to their flight, picked up in the airport or, in some cases, delivered to their home,” says Kemmery. “That’s completely down to each concessionaire in each market. But there are options for passengers to make that journey and transaction much more seamless than it is at the moment.”

Key to the app’s success will be collaboration with airlines and retailers, and Kemmery is convinced that SkyBuys can forge such partnerships. “Through this e-commerce and geofencing we can influence sales very successfully,” he claims. “If you’ve saved a bottle of bourbon in London before you fly, we know what airport you’re walking into through the geolocation and we know your ticket because of your flight itinerary. We’re able to hit you with real-time incentive offers.

“For example, you’re walking through Heathrow and we know you’ve saved a bottle of whisky in Changi, so as soon as you pass through Customs, we’re able to hit you with an offline communication that’ll buzz your SkyBuys app saying, ‘Hey, don’t worry about buying duty free now. We’ve saved the bottle for you and it’s -10% off.’

“That level of sophistication in retail technology hasn’t been seen in duty free, so it’s a huge step up.” If duty free retailers are prepared to provide their inventory lists then SkyBuys can provide them in return with a very valuable consumer base, Kemmery insists.

The result of collaboration will be to “grow the pie” for all parties, says Kemmery. “We might take a little bit of market share away from a particular region, but ultimately we’re going to grow the pool and grow, more importantly, the passenger spend per transaction.”

And the monetisation model? SkyBuys will earn a commission per transaction, explains Kemmery. “Then, if we’re working with an airline or an inflight entertainment group or a connectivity or travel group and they take the sale or refer the sale, they will be owed a percentage of that deal. We have a very structured business model and revenue model in our heads.”

Kemmery knows that the issue of percentage commissions, which will vary by category, is likely to be a hot topic. He’s sanguine that, in the initial stages at least, SkyBuys is likely to make considerably more money through in-app advertising. He also believes that the app will tap into a rich data mine.

“We’re going to have a global, real-time, transparent inventory feed of multiple international airports and multiple concessionaires,” he says enthusiastically. “We see multiple revenue streams, and not just click per ticket, which will keep us afloat and keep concessionaires happy as well.”

Kemmery is convinced that SkyBuys has a bright future. “It’s not the first player in the market, but SkyBuys is definitely the first with this sophisticated technology,” he concludes. “And after the first group gets onboard there’s going to be a domino effect. If one retailer is pushing for it, one which may own 20 different airport locations in the world, someone else is going to get onboard.

“So it will not be long until this model changes, and this whole transparency becomes normal. I don’t know how it’s not already come to the forefront of everyone’s minds, with Google and digital mobile; but it sure will happen in the next five years.”

- Jason Holland

Alec KemmeryPress, Media, Duty Free