Predicted headline date: 29/06/2020
“We decided to follow the strategy of Exaptation to double our profit in 2020”, said Omar Bein Ahlid, Chief Innovation Officer at Emirates Airlines. This was not an easy accomplishment for Emirates, as Airlines operate in an extremely cut throat business environment, with profit per seat as low as $7, the industry average in 2018.
What was the key to their success?
“We took a page out of Amazon’s business strategy book”, said Bein Ahlid smiling. Amazon created competences to serve their existing businesses, and then used this new competence to open up new markets that did not exist before. We used our unique competences at Emirates to do the same thing in launching Emirates SPL.
Any person who flew on Emirates since October 2019 will know about Emirates SPL. Two hours into the flight, just after the meal is served, passengers are made aware of a limited number of products that can be bought for up to 50% off the normal price, available on the SPL channel. A lot of products, one after the other, is made available on the SPL channel on the Emirates Multimedia service available on each seat. The offer is made available simultaneously to selected aircraft heading into Dubai International. A picture of the product, price, discount offered as well as allocated units and units still available is shown on each seats’ screen. In some cases, product lots of 500 are sold in a matter of seconds as passengers compete with each other to buy the products at these low prices, knowing that the duty-free options and absence of additional courier fees make this a true bargain. Consumer electronics, perfume and sunglasses have been found to be the most popular.
Emirates SPL, also commonly known as Groupon-in-the-Sky, allows Emirates to leverage their unique competences in a market segment different to which they traditionally competed in. They firstly leveraged their client base, which is affluent but not served by e-commerce providers in their country of origin. Emirates further leveraged their Hub-and-Spoke architecture, knowing that their clients will pass through Dubai International on their way home. The extra baggage capacity in their Boeing 777 and Airbus 380 aircraft, and their ubiquitous WiFi coverage were additional competences that they leveraged in creating this new service.
The lots on sale were normally end-of-line products that had to be cleared before their replacements arrived in the market. This allowed for the large discounts as Emirates had the market to shift large quantities of products in a very short period of time. Emirates SPL does not have to concern themselves with stock carrying costs, warehouse operations, retail operations or additional logistical and courier challenges faced by traditional retailers. During the trial phase of the SPL launch, passengers simply went to a centralized pick-up point staffed by the company that sold the products. Bein-Ahlid is planning a new update to the service where the purchased items are simply made part of a passenger’s in-hold baggage.
Emirates has also shown an 8% increase in passenger numbers solely due to the SPL service. Passengers are also over the moon with the fact that they can procure products at a great discount, and save on the courier and duty fees at the same time. A small, yet growing army of entrepreneurs are flying on Emirates simply to buy the products at lower rates, and then re-sell them in their home countries. Samuel Marera from Kenya takes the return trip to Dubai twice a week, simply to use the SPL service to acquire tablets and smartphones. “The cost of these products is less than the wholesale retail price we pay at home. I wait until I have an order from 30 people, which makes the trip to Dubai very profitable.”
When we asked Omar Bein-Ahlid what was the key to SPL’s success, his answer was “FOMO” – the fear of missing out. When you see the rate at which these products sell on your screen, and the frantic reaction of the passengers around you to try and secure one of these products, it wakens a primal fear that you may be missing out on the deal of the year. The sweetest part of the SPL trial is that they had to make a minor change to one of their entertainment channels, and had to allocate a small section of Dubai International to test the idea. Even Jeff Bezos ought to be impressed with this unique application of exaptation.