Lastminute.com has announced lower-than-expected losses and a deal with Thomas Cook.
UK-based eRetailer Lastminute.com today announced its results for the last three months of 2000. Total transactions rose by 53% on the previous quarter to GBP20.2 million, while turnover rose from GBP1.5 million to GBP2.9 million. However, the company still lost GBP15.4 million, compared with just GBP6 million for the same quarter in 1999, because its expansion plans have driven up costs substantially.
Lastminute is in a better position than most pureplay eRetailers – it is getting closer to breakeven point and has a GBP70 million cash pile to last until then. Its recently acquired French subsidiary Degriftour has 50% of the French market – indeed, across Europe, Lastminute is one of the very few online travel agencies large enough to remain competitive as airlines roll out their own travel portals. Its diversification should also help it withstand this onslaught – 43% of sales are now not travel-based.
The deal with leading travel agent Thomas Cook should further enhance Lastminute’s position. It will widen Lastminute’s offering, allowing customers to book several months in advance, rather than within the six-week limit that Lastminute’s holiday booking system imposes. Thomas Cook, meanwhile, will license Lastminute’s products so that it can offer late tickets, presents and entertainment on its own thomascook.com website.
The Thomas Cook deal enables Lastminute.com to address a key criticism and weakness in its business model – the share of wallet lost to consumers who want to book some time in advance rather than at the last minute. Lastminute hopes that these consumers will then come back and buy its other products; this model has already worked well in Lastminute’s diversification away from travel towards a wider range of goods and services.
Overall, the combination of diversity, scale, and respected branding, with a heavyweight management team experienced in online and offline retail, should ensure Lastminute reaches profit – although admittedly the company is unlikely ever to meet the enormous revenue targets expected when it floated at the height of the Internet boom.
