travel distribution revolution,
possibly as far-reaching and important as the emergence of the
online channel, is occurring. Retailers are recognizing in
increasing numbers that being a retailer and a wholesaler -- a
wholetailer -- is far better than being one or the other.
And just as importantly, they're seeing that they're in a better
position to claim this coveted ground than wholesalers.
To be sure, it's not a completely new phenomenon. The
longstanding Liberty/Gogo operation is figuratively and
chronologically the granddaddy of all wholetailers, but until
recently, others have joined its ranks only in dribs and drabs: The
acquisitions of Travel Impressions by American Express, Pleasant
Holidays by AAA Southern California and Classic Custom Vacations by
Expedia all have occurred within the past six years.
But the pace is picking up. When Virtuoso axed Classic from its
preferred-supplier list last month, Classic chairman Ron Letterman
chided Virtuoso CEO Matthew Upchurch in a letter, saying, in
effect, that there are classier ways Upchurch could have gone about
announcing his intention of getting into the wholesale end of the
business.
Indeed, Upchurch is intending to get into wholesaling but
couldn't resist poking a stick at both his rival distribution
channel (online) and a future rival wholesale operation. It was
probably of little comfort to Letterman that Leisure Travel Group
was upfront about its intention to move to wholetailing as the
rationale for cutting Classic from its preferred list.
What's becoming clear is that not only is the speed of
wholetailing's evolution quickening, but it's making
retail/wholesale relationships increasingly complicated as
suppliers become competitors. Channel bias plays into the equation:
Classic was an easy target because it's not only a competitor, but
it's linked to the online revolution that has so upset traditional
agents.
This is bound to change. Consumers are forming into two camps,
those who book online and those who book offline. When traditional
agency-cum-wholetailers realize they're competing primarily with
other traditional agency-cum-wholetailers for offline business,
will they still want to offer wholesale products owned by offline
retail competitors?
Further easing the transition of retailer to wholetailer is
dynamic packaging, which puts wholetailing within the reach of even
the smallest retailers. And as this online functionality penetrates
the traditional agency community, the lines between offline and
online are likely to blur as much as the line between wholesale and
retail. And then, perhaps, the revolution will be complete: Just
about everyone will be competing with just about everyone else at
some level.
The common wisdom of the past was that any movement toward
vertical integration would be led by the wholesale side -- the
rollups of the '90s assumed that the first step of a successful
wholetailing operation required lining up the supply, rather than
distribution, side of the equation. But as Wal-Mart and Home Depot
have shown, retailers can become much more important than the
brands on their shelves. Especially when they happen to own the
brands.