I think that becoming an industry leader is more than just being the first with an idea but rather staying first in the customer’s mind within that specific industry.
The secret to business success is picking a battle you can win rather than picking one you can’t lose. In other words, if you are not first you are last.
When you think of e-commerce you think Amazon, when you think of burger you think Mcdonalds, when you think of innovative computer design you think Apple.
Make no mistake it doesn’t happen by accident, but rather an intentional decision diligently executed.
Let’s bring this home.
Jumia dominated the e-commerce space in Nigeria back in 2012, trailed by Konga. In the flight booking arena, Wakanow leads the charge.
Wakanow is basically an online travel agency that focuses on East and West Africa, the company was founded back in 2008 and have received 2 funding rounds.
And I’m going to drill into their business and share a few things with you…
Before we get started you need to know the market potential that Wakanow is playing in and how feasible its profitability is and besides they also received a $40 million funding from Carlyle Group (an American Multinational Investment firm), the same company that invested $147 million in Diamond Bank before its acquisition by Access Bank in 2014.
We all know that Nigeria hasn’t fully capitalized on Travel and Tourism as Dubai and other nations have but we have made some progress as it has contributed immensely to the Nigerian GDP that gives us an idea of how lucrative this sector is.
Let’s take a brief look at that…
In 2017, the Nigerian GDP was at $357 Billion and Travel and Tourism contributed about 2% to it amounting to $7.14 Billion. At the same time, Travel and Tourism contributed 11.3% to the GDP of the UAE translating to $41. 95Billion.
In 2018, the Nigerian GDP experienced an upward bump to $397.3 Billion and Travel and Tourism contributed about 3% amounting to $11.9 Billion. At the same time, Travel and Tourism contributed 11.1% to the GDP of the UAE translating to $44. 8Billion.
By 2019, the Nigerian GDP grew by 2.5% with Travel and Tourism pegged at a 4.5% contribution to the GDP amounting to $18.1 Billion and that of the UAE at 11.9% translating to $48.5 billion.
Enough economics for now, but needless to say the Travel and Tourism experienced growth.
Now, it gets sweeter when you take a look at the activity within this marketplace. But, first it is important to add that regardless of the business you are going into there must be an existing leverage asides technology in the marketplace.
To explain my point, take a look at Uber; the leverage Uber needed was the availability of underutilized vehicles by individuals around the world, same with Airbnb; the leverage they had was underutilized space in properties around the world.
I always believe that the best way to achieve success in any business is to look for a market that already has a hungry buying audience that are acquainted with industry price points and make your service delivery faster, cost effective or easier.
And you’re good. Smiling to the bank.
Let’s get started.
Market Potential
To get a good picture of the potential of this you have to understand that the Travel and Tourism industry has experienced a massive growth between 2008 and 2017 and that is as a result of the travel routes open.
To buttress my point, I’ll share data showing how many people traveled in 2018 alone.
You see Nigeria has 33 airports; 13 International airports and 20 domestic airports and in 2018, FAAN recorded over 16 million travelers with Lagos Airports recording the almost 50% of that traffic
And according to the National Association of Nigeria Travel Agencies (NANTA) a total of NGN 525 billion ($1.4 billion) ticket sales was recorded in 2018 and drop in 2019 to about NGN 360 billion ($986 million) worth of ticket sales.
Now, while this post is not so much about the Aviation industry at large I felt it needful to show you how lucrative this industry is so you can understand why an investment firm will be willing to give Wakanow $40 million.
It is simple. It’s all about market domination.
And quite frankly, most ticket purchases are made online.
Let’s talk about strategy.
Market Strategy
Have you ever stopped to think about this…
Where do you go to when you want to plan for a trip?
Good ol’ Google.
Here’s how this works, billions of people make a ton of searches of Google every second, some are travel-related and others aren’t.
And every business owner should want to know how many travel related searches are made and position their brand to capture as many of this searchers as possible.
This works best if you understand your customer, how they think, what kind of problem they want fixed and how you can position yourself as the solution provider.
So let’s pretend I’m a wakanow prospective customer and I’m looking forward to traveling to Dubai, and as with all international trips you need 3 things:
- A Visa
- A Ticket and
- Accommodation arrangements
To Wakanow these are possible search phrases or touchpoints of entry any customer would come through
Let’s go to Google so I can show you how this works..
Touchpoint #1: Visa to Dubai
So, I do a search on google with the phrase “visa to dubai” and I get a bunch of results but no Wakanow anywhere.
[IMAGE OF GOOGLE SEARCH ON VISA]
Touchpoint #2: Flight to Dubai
I’m going to do another search on google with a phrase “ticket to dubai”, and here is what I get at the top of the page.
Touchpoint #3: Hotels in Dubai
Lastly I’m going to do another search on google with a phrase “hotels in dubai”, and we find wakanow ranked on #6 on the first page.
To give a better context to this, let’s view these keywords in the Google keyword tool to know what amount of searches are made.
Here’s how much monthly searches are…
For monthly searches made on “visa to Dubai” we find that ranking keywords get between 1,000 to 10,000 people searching in Nigeria.
For monthly searches made on “flights to Dubai” we find that ranking keywords get between 1,000 to 10,000 people searching in Nigeria.
For monthly searches made on “hotels in Dubai” we find that ranking keywords get between 1,000 to 10,000 people searching in Nigeria.
But that’s not all, the more competitive a keyword is the higher the amount of money you’ll have to spend in google ad.
And that’s why on further analysis on the keywords Wakanow bids on we find most have medium and low competition with one of these keywords with 100,000 to 1,000,000 searches made on it which is like picking a battle you can win.
Based on all that we can then see It is quite vivid that Wakanow makes generates a good deal of their revenue from flight ticket sales than visa and hotel booking.
But, that’s not all we need to know how much traffic Wakanow gets on a monthly basis on their site.
For the month of March, Wakanow received over 308,590 visitors.
However, let’s not forget the impact COVID-19 has had on the travel and tourism over the past 90 days.
Drilling down into the traffic sources we can see that 50.73% of their traffic comes from people landing directly on their site and 36.44% from searches made on Google.
About 71% of their traffic comes from Nigeria, the rest is split between United States, Canada, UAE and Germany, as well as 41% of that coming from paid searches on Google.
With that being said let’s talk about the target market.
Target Market
As weird as it may sound all customers are not equal, and as a business owner you should know the most profitable segment of your customer, that is the customer that is more willing and capable of spending more with you.
Acquiring new customers has a high cost for any business, as a result of trust. You can’t circumvent the gestation period from the time you engage a prospective customer to when they eventually buy.
And that’s why focusing on repeat business is important.
Of all the 3 entry points discussed earlier, flight booking has the potential of generating more repeat business than the others, and domestic travel is the most likely entry point.
Judging by the number of traveler in 2018, we can clearly see that domestic travel gets more hits than international (almost triple the amount of international travelers)
So what does this tell us…
Its simple.
In the case of Wakanow, their entry point is domestic travel but their profit maximizer comes from international travels and complementary offers such as visa and hotel reservations.
Conclusion
Wakanow has been in business for over 10years and despite some financial hiccups in the past Owler has it that they rake in an estimated annual revenue of $100 million.
Considering the number of people that travelled in 2018 in Nigeria it’s not too far-fetched, as well as other countries in East and West Africa.
I think Carlyle Group investing $40 million is justifiable based on the market size and potential growth of the industry.
Here is what you can learn from this:
- Win More Little Battles And You’ll Win The War
You may not win all your battles, but you can win most of them because little battles added up together determine a victory in the war. There are over 145 travel agencies in Nigeria with an innumerable of agents all competing for the same customers and thus Wakanow uses a lot of online strategies to engage a prospective customer and make them see them as the preferred choice in the category.
- Lower Barrier To Entry For Customers To Do Business With You
Every transaction has its risks and for most businesses they want the customer to bear most of it, but Wakanow takes a spin on it by introducing a travel-now, pay-later and a pay-small-small strategy lower the barrier for prospective customers to do business with them and then increase the value of transaction on the back-end.
- Out Of Sight Is Out Of Mind
Wakanow may not have the best service but they definitely know how to create a good impression and this is crucial for market domination and so they invest heavily in their online marketing reaching their ideal customers where they are. The more present your business is as a solution provider in the marketplace the better your chances of getting customers to engage your services.