Weekly Update

What Twitter Airfare Sales Tell Us About Real-Time E-Commerce

JetBlue and United are giving their Twitter followers first crack at discounted airfare in an effort to fill seats that would otherwise go empty. Though airlines have already been doing this through email, Twitter fares (“Twares” or “Cheeps,” depending on which areline you follow) are a whole new ballgame. First, they likely allow airlines to reach a broader audience. But more importantly, since email is generally not engineered for real-time interaction, Twitter’s dynamism – and more broadly, that of the real-time Web in general — could enable new ways of selling time-sensitive products and services.

For example, what if vacant seats could be filled the way overbooked flights are emptied? Discounts could be offered via Twitter with an expiration day/time. If there are no takers, airlines could drop the price a bit and tweet the new offer. If only a few of the empty seats become filled, the airline could drop the price again for the remaining seats. Just as the compensation for relinquishing seats on overbooked flights keeps rising until it finds a taker, ticket prices for empty seats could drop over time; buyers willing to wait might get a better fare, but they’d risk losing the seat to a more interested bidder.

Companies like Virtual Auction are already proving the power of real time in auction selling. Launched earlier this year, the Miami startup has sold its real-time auction software across multiple industries, trumpeting its superiority over the fixed-time model of sites like eBay. “Timed auctions can be slow and uneventful until the final few moments,” the company says on its web site. “Live auctions add the emotional component of the sale.” In another example, renowned auction house Christie’s, which already allows iPhone and iPod touch users to follow auctions in real time, has plans to allow remote bids via those devices soon.

But as JetBlue and United demonstrate, real-time auctions may be particularly useful for perishable products — that is, products whose value races toward zero at a particular moment. That’s why the real-time auction model might well be extended beyond airplane seats to a range of other perishable products, from meat and produce in local grocery stores (which would likely find a lot more impulse buyers than airfare) to resort and hotel rooms to – let’s face it — any window of service time that, if unfilled, represents a loss to the provider: massages, hair and beauty salons, etc.

Obviously, this approach could clash with consumers’ aversion to spam (of the email variety, that is; I’m pretty sure the canned meat product is not perishable and therefore wouldn’t apply here), but consumer behavior may be more pliable in harsh economic climates like this one. And users’ participation would be more opt-in than it is with email offers, since real-time auction bidders would participate more dynamically, based on relatively current interests, rather than because they were added to an email distribution list the previous year. Also, as Virtual Auction points out, real-time auctions evoke an emotional component that shouldn’t be underestimated, as opportunities go once, twice, and then disappear.

Question of the week

Where might real-time auctions be most successful?