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What the future holds for Eurostar distribution

Eurostar and Thalys officially joined forces on 1 October 2023. This merger has prompted the two companies to take a closer look at their strengths and weaknesses in distribution to prepare for the group's future and attain the future sales growth ambition to reach 30m passengers by 2030.

Eurostar and Thalys, pre-merger, had 2 very differing distribution approaches. As both companies are railway undertakings, there is a balance as an operator and distributor, especially on routes where competitive pressures exist and the impacts of fair and equal treatment.

Pre-March 2020, the distribution of Thalys product to both B2C and B2B customers was largely controlled by its rail distributors. However, from March 2020, Thalys became a distributor servicing the B2C segments.

Eurostar by comparison has been distributing its own products since 2009 to both B2C and B2B customers through its own website but also has direct supply and commercial relationships with B2B2C companies.

As part of the merger preparation, our distribution analysis identified several key objectives:

- Create a distribution framework that delivered the 30m passengers by 2030.

- Allowed all channels to grow in a competitive environment.

- Simplification and removal of distribution layers to gain greater market and customer insight.

- Ensure companies, customers and partners have a choice of distribution access to inventory.

- Build direct commercial relationships where viable.

3 main models examined in detail:

Direct distribution while the current Eurostar direct distribution is >50% of overall sales through, this would imply that other partners would have to purchase through this channel which may not align to their procurement, technology, and commercial objectives.

The second model consists of a hybrid model involving both direct and indirect sales. Customers buy their tickets from another distributor who buys directly from Eurostar, establishing a contractual relationship between Eurostar and the third-party distributor. This allows the customer the choice of where to purchase the Eurostar product!

The third model demonstrates fully indirect distribution. In this model, the customer buys a Eurostar product from another distributor who buys directly from Eurostar, establishing a contractual relationship between Eurostar and the third-party distributor. does not exist and every part of the distribution is outsourced to third party distributors.

So, what are these distribution benefits that we wanted to ensure were delivered as art of the merger?

- Financial: Reducing opex but also increased control over sales and performance

- Operational efficiency. Ultimately allowing for improved processes when dealing with the end customer and fewer intermediaries and technical problems.

Based on the objectives, Eurostar’s distribution strategy is to balance the hybrid distribution model to attain our medium to long-term objective of reaching 30m passengers by 2030. This can only be achieved by balancing direct distribution though, with direct commercial and inventory supply with third party distributors, with Indirect distribution via nonproprietary technology!

Together we go further!