Opinion | Baidu's Qunar hit by merchant revolt
A revolt by agents on Qunar's online travel platform will get settled in the next one to two months, but could delay the company's IPO plans by a year or more
Former high-flyer Qunar is quickly discovering the risks of using third-party agents to provide many of its travel services, as many of those agents are suddenly leaving the platform in a mass uprising. The revolt in many ways looks similar to what happened two years ago to e-commerce leader Alibaba, which saw a similar uprising of smaller third-party merchants on one of its B2C e-commerce platforms after changing some of its pricing policies.
All of this underscores the dangers of operating an online platform where third-party merchants and agents supply the actual products and services being sold to consumers. By comparison, more traditional players like travel services leader Ctrip (Nasdaq: CTRP) deal directly with hotels and airlines to offer room reservation and ticketing services, in a process that requires more labor but cuts out third-party agents.
Qunar's model works well by allowing website operators to focus on building and running efficient online platforms, while industry specialists get to provide actual goods and services. But the model also can backfire if conflicts develop between the platform operator and its third-party merchants, which appears to be what's happening with Qunar.
Local media have written about this latest conflict several times in the last week, including the latest report that says a number of major third-party agents that provide hotel booking services have abandoned Qunar's platform after the company changed its operational model. Qunar confirmed the exodus, but said it is talking with the parties about returning to its platform.
There's no explanation on why the agents have left Qunar, but in this instance the obvious reason is money. Qunar has been talking about making a New York IPO since last year, and wants to show investors some nice profits before making its first public filing for such an offering. I suspect the company recently raised prices for agents that use its platform in a bid to squeeze more money out of them to puff up revenue and profits.