Please welcome co-founder and group CEO of MakeMyTrip, Rajesh Magow, in conversation with Skift Asia editor Pedan Bhutya.
Morning everyone and thank you very much for making it on time. I'm still getting messages that people are an hour and a half late. I think there's a traffic jam in Delhi and I hope we are the one causing it. Rajes, thank you very much. Welcome to this gift stage for a second time. Rajes, you know, in the last few earnings calls, I hear a lot about this concept of a connected trip that you've been talking about. So it's central to MakeMyTrip's transition into a travel super app, right? But whenever you are doing these one-stop travel solutions, execution is a recurring challenge, right? Because in these large digital ecosystems. So what are some of the execution challenges that you are facing or have faced and how are you working to address them?
Mhm. And yeah, it's a great question. And good morning everyone. It's good to be back here. So let's talk about this, right? So first, the easier part for us was there was a strategic decision flowing from the vision that we've been following, which is that we want to be a preferred platform first protocol for all the travel products and services in India for Indian travelers. So that was the easier part. So it wasn't like a difficult decision for us to take. But like you rightly pointed out, the challenging part in this is how do we execute it? How do we crack it? But it does not really sort of changed or pushed us to change that decision because it was going to be hard on execution. And there I think at the very core of it is driven from the consumer insights. Yes, the challenging part revolves around consumer behavior to be honest, because if you really go deeper and analyze the consumer behavior or buying behavior for travel services in India or I would probably expand it to say emerging markets, it's very different from an evolved western world market. Let me give you a few examples on that, and from there you start thinking about what could be the challenges. So in India, contrary to maybe a lot of people would intuitively think, not many people would end up buying a particular product in one session. There are multiple trips that they would make to the platform, shop around, and then they'll come and do their booking. And more importantly, let's say if the trip involves multiple products and services because you will have a transport service, you will have ancillary products, you will have eco-services, eco product, and different types of eco that you might want because now the market is emerging to a lot of the homestay sort of property types as well. You would not necessarily even for your own specific one particular trip buy that in one go. So from a connected trip standpoint, it is very important for us to understand that behavior first and then how do you provide the solution. So if we end up doing it in a traditional conventional way of doing cross-sell every single time on a thank you page and say, okay, can you just buy this particular one or buy that particular one? It's not going to work. It doesn't really work predominantly. And therefore, how do you make sure that you end up getting that customer back and provide a personalized relevant experience for you to be able to cross-sell upsell or provide a particular different service which is needed by the customer at some point in time but it's just the timing difference? So how do you stitch it together? Because it's easier for you to stitch it together in one session, but it's really hard for you to stitch it together when it is sort of broken. So that is just one example of product side challenge or consumer journey side of challenge.
Rajes, but how is that different from what your neighborhood travel agent does, the stitching of packages? Because that's what travel agents are doing, they give you an end-to-end experience through packages. So how is that different from that?
Yeah, interesting but very different. Let me explain it to you why. What I was trying to explain was the online buying behavior that you end up buying different products for your particular trip at different times. You are not necessarily looking to buy a customized package. There is a customer segment who ends up, and we have a packages product on our platform as well, who would want to be handheld from the word go for the entire trip. That is a completely different segment of customer because maybe new user, new destination, I'm less comfortable, I'm not necessarily as online savvy as I would like it to be. But the other online crowd is buying a la carte. It's just a question of at what time do I need to buy. The perception is that okay, let me just book the flight first, I'll come to the hotel closer to the date of travel. And by the way, this is despite the fact that India is a very last minute market. If you start comparing consumer buying behavior or planning behavior with Europe, we would be literally last minute because advanced purchase or advanced planning time for Indian consumers is just 7 days, 15 days, except there is a high season and then a very small percentage would end up doing it in maybe 3 weeks, 4 weeks in advance. But it's an a la carte buying behavior. So you have to make sure that you follow the journey and not necessarily only on the online channel but off the platform also. So if you follow the customer on WhatsApp, following your CLM journey, how relevant and personalized your CLM journey is? That's one part of it. How do you stitch together the consumer flow to be able to get the best out of it? Even at the global level, the single transaction attach rate will be abysmally lower, but if you start looking at the wallet share over a period of time, it'll be higher. But the other challenge is also, which gets grossly underestimated in my view in the marketplace model, is the supply side and the content side. Because for every little category or a service, let's say we recently invested in city cab use case, it's a fragmented market. And when you have to provide high quality on one platform, it's a world mature product on any of the other services that you've been servicing for many years, but you get into a new service and then you have to have that sort of benchmark because you're just one platform, one-stop shop, as you rightly pointed out. And how do I get to that position in an accelerated fast-track fashion is the challenge because now I've established my customer experience benchmark on a platform and I need to come to that speed. It can't be a 10-year long journey for me to be able to provide the same quality of service because guess what, on the other product the quality of service or the experience that I'm providing is far more evolved and matured. So how do you actually do that, especially in a fragmented market? You have to do a lot of heavy lifting on that front as well. But the most important part in this whole thing is, from a strategic standpoint, while execution could be a challenge, but when you crack it, it becomes a moat as well. Because at the end of the day, in an online marketplace business model, the biggest cost for you is the cost of customer acquisition. So if I have acquired the customer for providing one service, if I'm not able to, after making the right kind of investments, sell more travel related services... We are not going beyond travel. Exactly. And your acquisitions also show that you're trying to move beyond flights and hotels. Pretty much every travel service flows from the same theme. Because I have the customer, he's already liking a particular product or services that we've been selling over the year. It started with flights, it is hotels, the homestays, the ground transport, our redBus platform is doing a phenomenal job on the bus ticketing platform. Now infrastructure has improved in the country, why not look at even the intercity cab? And then the products like you rightly pointed out, forex or insurance, we've been selling, maybe even the consumer lending products through our TripMoney platform. So basically, make sure that you follow this vision to the T and do a good job on both supply side and the experience side, and keep improving it, keep enhancing it, otherwise it's just not going to work.
Rajes, when you see that you're putting all this together for one consumer and that's the Indian traveler right for now. Yeah. And so let's talk a little bit about the evolution of the Indian traveler. A few years ago there was this term called China ready. Everybody wanted to be China ready. Now destinations want a slice of the Indian traveler. I see tourism boards here. I see Raki from Ras Al Khaimah is here. I see Emma from Abu Dhabi. I see the Singapore Tourism Board. So if you have to talk about how do you cater to the Indian traveler, because there's been a shift from acquiring material possessions to seeking immersive experiences, how has that changed the Indian traveler and how can destinations and travel companies cater to that?
I think it's a great question again. At the core of it, from a broader economy standpoint, it's just the evolution of the country. The economy is doing well, which means incomes are rising, disposable income, you have more and therefore you can afford to have more buying power in your hand and therefore going towards experiences. And I think COVID also contributed very positively towards this. Some part of it is just very fundamental evolution of the country. And the other part is the buying behavior, the desire changing from the rising middle class, the rising middle class, upper middle class, even the higher middle class and the premium segment if you will. That is at the core of it, really fundamental. I don't think we should forget that. There's a sizable population that has really reached there. And a lot of people end up making a mistake. Since you mentioned China, we are a very large population country, but I don't think the focus has to be 1.4 billion. The focus has to be more 350-400 million people, the ones who have access to passports, especially in the context of the topic we are talking about, the discretionary spend, not necessarily the essentials. So when you look at that, it's a very sizable population and it is improving. Now what has happened is, when we look at the data on our platform, just to give you a couple of tips, about 45% of frequent travelers used to do two trips, now doing three trips. And about 50% of frequent travelers used to do five trips, now doing 6.7 trips. How do you count the 7? That's just mathematics, that's average. So round it off to say seven, just to make the point. So clearly the trend is showing that. And then you see the trend of rising middle class looking for more experience, exploring more options, ready to go offbeat location, ready in the international context. Since all the tourism boards are here, everybody's eyeing this population with more disposable income, looking for better experience and exploring other countries. So in many ways today, post-COVID, given the size of our country and we have a lot to offer in terms of experience and destinations, but for certain cohorts of customers, the Goa's of this world in India would be competing with other beach destinations which are 5-6 hour flying distance. You have a flying distance which is 2 hours maximum two and a half hours in India. Let's say motorable distance maybe 3 hours at a stretch, I will do even 4-5 hours journey as well, but I am suddenly competing with 5-6 hour flying distance, not necessarily long haul because that's a completely different cohort. So that is where Southeast Asia, the Middle East market, certain parts of Europe become very important. Campbell was here, I don't know whether he spoke about it, but a lot of the expansion coming in from, I know Peter is here in the afternoon and he will tell you, the international expansion is focused on this 5-6 hour flying distance. So I think it's just the evolution of the customer buying behavior and more income in your pocket and desire to be more exploratory in nature is driving all of this.
