Flocations, a Singapore based online travel startup, has just shared their latest update: the recently (and quietly) pivoted startup now sends more than S$1.5 million (US$1.2 million) business value to its travel partners monthly. In the past month, the company has also “grown 120 percent organically”. The exact growth is unclear: it could be traffic growth (which could be either page views or uniques) or revenue growth.
We have been keeping a keen lookout for Flocations, and they have come a long way: What started off as a Startup Weekend idea took off all the way to raise a seed round of funding from TNF Ventures. Initially branded as a visual plane ticket meta search play has since pivoted to a tour package aggregator earlier this year, on 25th March.
We wanted to do a piece back then when Flocations did the pivot, and sought some words from CEO and cofounder Tudor Coman.
- What motivated the change in business model to travel packages?
- Why the change in decision to exclude visual search, which the company has been working on for the past 2 years?
- Travel package space is a competitive space. Any thoughts on that and how is Flocations aiming to differentiate itself?
- Does the “pivot” (for lack of a better word) require any clearance from TIS? What is the “paperwork process” like when dealing with TIS when you guys pivoted?”
We did not get a response, though, as Tudor asked us to wait for the official release. “How about you hold off so we can get a proper PR?” he emailed back. We have received no word yet from Flocations after one follow up in April.
What motivated the pivot?
One of the questions we asked Tudor was what motivated the pivot. While we have yet to hear from Flocations since April, it might be motivated by revenue. As Bernard Leong wrote in SGE, “if you want to win in Southeast Asia, you have to be revenue-first, period.” Its previous flight search model has a much weaker revenue model than the current tour package aggregator model.
Why? Typically, airlines do not work with or sell their inventories to third party websites because of various reasons, primarily distribution cost and merchandising. Though this might change in the future (here’s a fascinating report on that), until that happens, it will be hard for companies like Flocations to run any affiliate models based on travel meta searches.
Hence, it makes much more sense for Flocations to pivot to a tour package listings website, which I assumed to be running on an affiliate model. Other than the revenue model, what Flocations was focusing on with their flight price search was merely just a feature and not a business model. This is echoed during Startup Asia 2012 by Eric Koh, co-founder of Travelogy as well as current CTO of JobsCentral. Eric was one of the judges for the final Startup Asia pitch where Flocations was pitching then.
“My comment was that searching for flights by budget was just a feature and not a business model. There are no barriers to entry, if they proved that consumers do want to search by price, expedia and the flight companies could add that feature in a matter of days. Furthermore, these flight companies will have accurate data, whereas flocations had to scrap the prices and therefore their data may be outdated.” – Eric Koh
It was a matter of time before Flocations figured that out, which might explain the recent pivot into a tour package aggregator.
Of course, the tour package space is not without its competition. One of the players in this space quietly focusing on serving the needs of its customer is Travelogy. Travelogy runs tourpackages.com.sg and tripzilla.com, both which provide direct competition to Flocations.
Who’s thriving better?
Here’s a quick overview of both companies. Back in 2011 during the Web in Travel conference, while both pitched to be part of the bootcamp, Travelogy got into the finals, gaining the recognition from one of the main conference focusing on the travel space. Travelogy then went on to take the iJams grant with SiTF (zero equity) while flocations joined the JFDI accelerator, giving up some equity to refine their flight search. Following that, Travelogy went ahead with the iJams Reload scheme with Crystal Horse (S$250,000 or US$198,444). Flocations subsequently raised a S$700,000 (U$555,643) seed round from TNF Ventures and SingTel Innov8.
Bear in mind that Flocations has spent almost two years refining their flight search idea, and decided to pivot to a tour package listings site at the end of March. In just 3 months, Flocations currently provides more than 2,850 tour package listings on their platform, sends more than S$1.5 million (US$1.2 million) business value to its travel partners monthly. This clearly is a good sign of traction. Assuming a 5 percent conversion rate and then a 10 percent commission cut, that’s easily S$7,500 (US$5,950) of income per month for Flocations, and the number grows proportionately with the number of listings on its platform (until it reaches saturation point).
Tripzilla, on the other hand, currently lists over 5,500 tour packages on their Singapore site. TripZilla’s Malaysian portal has been in the works since October 2012, and now has 69 travel agencies on board with over 3,000 packages and itineraries.
So who is performing better? We will let you be the judge of that.
If Flocations didn’t enter the space, other competitors will come anyway
Is Travelogy worried about Flocations entering the space? Cofounder Winnie Tan told us that she is more “inclined to view this in a positive manner.”
“Having more players will help to educate the local travel industry faster and move the advertisers online. In effect, I believe collectively we may be taking bigger bites of the travel advertising dollars that were going into traditional marketing channels (like print, outdoor advertisement, tv & radio etc.). Furthermore, we believe our business model and the online advertising channel is vastly superior to traditional media channels for travel. If Flocations didn’t enter the space, other competitors will come anyway.” – Winnie Tan, cofounder of Travelogy
So while the reason behind Flocations’ pivot remains unclear, one thing’s for sure: there is definitely enough room for two players (probably more out there) in the multi million dollar travel industry.