Online retailer lastminute.com Plc said on Monday it was joining hands with travel agent Thomas Cook`s internet arm in an effort to lure more customers with a wider offering.
The late bookings firm, one of only a few British online retailers still in business, said it was on track for a profit by the end of 2002 thanks to a growing number of customers buying air tickets, theatre tickets and gifts on its website.
Lastminute said customers who visit its site to book a holiday more than six weeks before departure will be directed to a site showing millions of holidays available on thomascook.com.
In return, lastminute will provide last minute solutions to thomascook.com`s customers. The scheme will be piloted until May.
“Thomascook.com is a good example of a quality alliance in attempt to offer added value,” lastminute Chairman Allan Leighton told Reuters.
Analysts called the alliance a perfect marriage of an online retailer and traditionally offline business with a strong brand name. Thomas Cook was acquired recently by Germany`s C&N Touristic AG, owned jointly by airline Lufthansa and retailer Karstadt Quelle AG. “It`s an excellent link-up that helps them from a brand recognition standpoint and a cross marketing perspective,” said Michael Steib, a technology analyst at Morgan Stanley Dean Witter.
One of Britain`s best known Internet startups, lastminute floated in March just before high-tech stocks crumbled. Its shares have slumped dramatically from their day-one high of 555 pence. The stock was up 6.47 percent at 74 pence on Monday. In lastminute`s first quarter to end-December, net loss including amortisation of goodwill was 15.4 million pounds ($22.24 million), slightly lower than a market estimate of 15.7 million. Lastminute reported a 3.7 million pounds goodwill in the quarter on a 51.5 million pounds acquisition of French online travel retailer Degriftour last September.
Lastminute flagged a higher “conversion” rate of 8.9 percent of customers who actually bought air tickets, package holidays, entertainment tickets or other items on its website in the first quarter from 5.5 percent in the previous quarter.
“What`s most important here is that we`ve driven up the conversion rate,” Leighton said. “It`s not worth having three million customers and converting only a small percentage of them.”
“The reason our competitors are going rapidly bust is because they are playing the wrong game which is number chasing game for the number`s sake,” he said. Analysts applauded lastminute`s efforts to boost the rate.
“The conversion rate was something analysts were looking closely at because it has historically been an area the company has not been overly successful. It has improved significantly now,” said Morgan Stanley`s Steib.
Gross margin rose to 13.7 percent in the first quarter from 10.1 percent in the last. Transaction values for the quarter were 20.23 million pounds with registered subscriber numbers barely higher at 2.86 million.
Analysts agreed that lastminute was on course to turn a profit by the end of 2002 and said the company had enough cash on the balance sheet to see it through next year.
The cash position of the group stood at approximately 70.9 million pounds at end-December. Its audacious flotation in March - in which it hiked the offer price by two-thirds - gave it a cash pile other startups lack.