This week the UK supermarket chain Morrisons agreed a deal with Amazon to provide food for the online retailer to sell. In essence Morrisons will become a wholesale supplier to Amazon. Products will be available via Amazon Pantry and Amazon Prime.
Amazon Pantry was launched last year and sells food but it does not sell fresh food. The deal with Morrisons, the UK's fourth largest supermarket, changes that.
Online grocery shopping — almost unheard of in the US — is huge in the UK and growing in France, Germany and the Benelux countries (NB: a chart illustrating comparable numbers can be found here. And the evolution of food retailing is relevant for those thinking about the future of travel distribution.
The UK has been experiencing 'price wars' among the existing supermarket chains but this deal will result in a new player, one from outside the industry, bursting into the sector and upsetting the existing equilibrium in which all the buyers purchased goods from the same kind of intermediaries holding content from the same group of suppliers. (The only one that is slightly different is Ocado, which sells products from both Waitrose, Morrisons as well as its own product lines.)
The online supermarket world should sound familiar because it's what business travel industry observers have been suggesting for years might happen to travel distribution, most characteristically with a look over the shoulder at Google.
Amazon is probably even more worrying for existing players than Google.
Google is effectively an advertising business due to the volume of visitors to its site and its ability to identify them.
On the other hand, Amazon is a B2C retailer which specialises in online transactional business. And that, on the surface, is similar to what happens on a self-booking tool or with a TMC. Competition in selling air travel is limited only because of the need for an IATA licence to ticket (hence why a TMC is needed for fulfilment) and the access to content, an effective oligopoly of the GDSs.
In the same way, Amazon had no direct access to food content but it can effectively now become a grocer because of a business agreement to access that content. This is an example of the received wisdom that innovation in travel technology comes via the retail industry.
There is a belief among TMCs and suppliers that travel managers focus disproportionately on the transaction fee in their TMC selection process. By the same token, the TMCs' focus on transaction fees and their online booking technology to attract business can cause travel managers to perceive business travel management as a largely transactional process.
If Amazon were to sign a contract with a content aggregator and apply for an IATA licence, would it attract business? Possibly. However, last year's attempt at dipping its toe in the travel industry proved short-lived.
Well, there is an old travel industry saying that "No one was ever sacked for choosing American Express". Amazon, like American Express, has built a global brand in the B2C space. A world in which the line between leisure and business is becoming blurrier and consumerisation is driving much business travel behaviour is the perfect environment for a disruptor from the world of B2C.
We all could learn a lot by watching what is happening in other industries.