Why is onboard/inflight shopping still a thing?

Items I have personally bought from the on-board duty free:

• Last minute gifts (especially for ladies, they have some excellent choices)
• A multi-outlet portable plug (as I had forgot to pack my own)
• A stuffed toy for the cute baby in the next aisle on a long haul flight that was always smiling and giggling (when not napping) – really made my day.

The best part is I used some of my miles to buy the items.

Delta and Qantas definitely are the exception. The major carriers I fly with all have an active and sometimes exclusive catalog. It no longer “As Seen on TV” and “Sharper Image” catalog.

There’s an inflight shopping magazine in the pocket of the seat in front of you – that no one reads.

False.

The crew come through with a trolley of merchandise – that nobody buys.

Also false.

I don’t know what airlines you fly, but on SWISS, easyjet, Ryanair and Wizz flight there certainly are many people buying from the onboard staff. Logically, then, it is a source of profit for the airlines, and that’s why it continues to be a concept in operation.

Actually, contrary to a few answers here, inflight shopping is increasingly not a thing, since more and more airlines no longer find it profitable. Delta was among the first to drop it in 2014 and Qantas just followed suit:

http://www.news.com.au/travel/travel-advice/flights/end-of-an-era-for-dutyfree-shopping-on-qantas-flights/news-story/e850d300f3260869e19abe6d5a4de98b

Good riddance if you ask me: having aircrew trundle through the cabin hawking overpriced perfumes on red-eye flights when everybody is trying to sleep has long been one of the more pointless annoyances of commercial aviation.

When a large number of passengers are flying to a holiday destination and are in a mildly manic state, eager to have “fun”, shop and wear silly sombreros, in-flight spending may be motivated by a desire to kick off the holiday NOW!

As already mentioned in numerous comments, people do buy stuff on board airplanes and that’s reason enough for airlines to keep doing it. The fact that even low-cost carriers who ruthlessly optimize their operation haven’t ditched it is prima facie evidence that it must be profitable.

In fact, trying to add incidental revenue is a big trend across all modes of transportation. In the last decades, I have seen train stations turned into shopping malls, ads appearing on the back of airliners’ seats and inside buses, booking sites pushing “partners” (say an hotel when booking a flight or a car rental when booking an hotel) increasingly aggressively, and several airports I use regularly being redesigned to force passengers to go through shops on the way to the gate or even when landing. From that perspective, in-flight shopping isn’t a leftover of a bygone era (like free meals on short-haul flights) but fully in line with the way air transport is going.

As to why it works, I have seen a lot of patronizing speculation in other answers on why people might buy things (boredom, inability to compare prices, falling for aggressive marketing) but there are simpler explanations: Prices on high-margin items like watches can actually be quite good and there is a lot of added value in being able to buy travel items (battery charger, plug adapter, etc.) when you need them, even if it’s at a premium. In some situations, it might even be possible to benefit from some tax exemptions (which is particularly relevant for highly taxed goods like cigarettes).

Besides, it’s not even clear to me that higher margins are necessary to make this worthwhile for the airlines. How many people enter a shop and buy something after walking by? How does the cost of carrying a cart and a few minutes of the cabin crew’s time compare to the costs of prime commercial real-estate and full-time staff to maintain a luxury store front?

In addition to what has already been pointed out (that the perception ‘nobody buys’ is not correct), I would add that the sales people are already there and, as required by the aviation safety regulations, there are quite many of them. Now that you have the sales staff anyway, why not put them to work. The additional cost of stocking some merchandise is relatively small.

When you don’t have time to buy the items that you want at the duty free, this is very helpful.

Last summer I went to Japan with my girlfriend, and she wanted to buy cigarettes at the duty free during the transfer. We didn’t have enough time since we only had 45 minutes between the first and second plane, so she bought her cigarettes during the second flight.

This is my personal experience, I’m sure there are other uses for this service.

The crew come through with a trolley of merchandise – that nobody buys.

I did a quick price comparison for alcohol – I live in a locale whose sin taxes are among the top 10 in the world – in the following places:

• In flight shopping
• Airport duty-free shop
• Local store

And surprise, the in flight option was the cheapest, followed by the duty-free shop! Granted, the item was on special in the in flight catalogue and they probably have deals with the airport shops to avoid competing with each other, but between being duty-free, the convenience, and the exclusive items often sold, I can see how a few people on each flight keeps this industry alive.

As Mark Mayo points out, the on-board retail industry is growing at a fast rate. Some airlines generate a significant fraction of their revenue from add-on sales, e.g. 20% in case of Ryanair. Also note that airports are generating a large fraction of their income from their duty free shops, about 50% to 60%, 25 years ago this used to be about 30%. So, within the airline industry there is a trend toward lower income from only operating the flights and more from passengers spending money to buy stuff. It’s gone so far that Ryanair thinks it can offer free of charge flights within the next 10 years.

As other answers have pointed out, the mere fact that airlines still do it proves that it earns them money. But why would it make money even if most people don’t buy?

You have very good conditions inside an aeroplane for perfect marketing leaving the customer at a severe disadvantage. I’ll admit that they are getting worse, especially if more airlines and more destinations offer on-board Wi-Fi, but they are still there and the market is obviously growing.

• There are a lot of people with little things to do. You present them with a complimentary magazine. A nonzero fraction will take it and look through it.

• Inside this magazine, you can essentially advertise anything with any words you like. You can write duty-free everywhere (even if that specific product may not be eligible for duty-free at all; some products will be). You can print imaginary prices and then offer 50 % off (although many, especially European laws will prevent you from doing this if you land or are based in their country so this specific technique is not available everywhere). You can make things shiny and glittery and golden. A nonzero fraction of the first bullet point will want to buy something.

• I’ll admit, some people don’t care about how much something costs. If it looks exclusive enough to them, they’ll bite the hook. Others may want to compare. ‘Darn, comparing prices in an aeroplane is really hard, the Wi-Fi is weak/not working/not offered and this is a type of item that I don’t usually buy. And it’s duty-free. And they’re offering another 10 % off. Damn, the price doesn’t look cheap, what does that actually cost in regular shops? It must be an expensive, exclusive item. I should go for it, it’ll never be as cheap again as now!’ A nonzero fraction of the former bullet point will choose to buy something.

This final number is undoubtedly a lot smaller than the number that would frequent a normal shop. However, many of the things in a normal shop just won’t work: come back later after comparing prices, the product will likely still be there. Thus, the margin of goods sold in-flight is going to be larger than that on-ground, and this difference in margin is why it is worthwhile even for a relatively small number of customers.

The above is only one set of marketing techniques proven to work — for all types of customers, indiscriminate of intelligence, social standing or other differences. Only the true absence of desire is a game-breaker (i.e. I’ll never buy cigarettes).

It’s by far not the only way how airlines can get a margin out of selling goods. As was pointed out in the comments (thanks!), some on-board prices are genuinely cheaper that off-board. The absence of taxes can, seemingly paradoxically, give a cheaper product a higher margin, as was also pointed out (thanks!).

For busy executives (and other travellers) who would like to bring back a gift or present, this is heaven-sent. Also, some airlines offer exclusive items you simply cannot buy anywhere else. And it’s more popular than you might think. On a recent British Airways flight out of London, my wife was disappointed when she could not purchase a certain kind of chocolates on-board because they had sold out and not yet had time to restock.

I really like Mark’s answer. And while certain passengers may not find value in airline shopping the fact that it is profitable for the airline should make us all happy. As long as such profit centers exist, it makes flying cheaper for the rest of us.

I’ve not been exposed to the “trolley”, but have flipped through the magazine as I was bored. Keep in mind that the airlines are probably receiving a fee for merely offering things for sale as well as a percentage of sales. In some respects it does not care if anything is sold.

It is probably going to get worse. In-flight entertainment will become more common on air frames. How will that be paid for? A key funding source will be advertisements.

So in the immortal words of The Tick: “Brace yourselves while corporate America attempts to sell us its wrenched things”.

From the media release on guestlogix.com:

The airline onboard retail industry has been growing annually at an
average rate of 12.9% since 2012, and totaled more than $5 billion in
sales in 2014…

Basically, it works, and makes the airlines more money. If it didn’t, the airlines wouldn’t do it (sidenote: Qantas is going to stop doing it this month). Captive market, bored passengers (customers), and duty free, even if some travellers might think they can get better deals elsewhere.

• Tobacco, wine/spirits and fragrances/cosmetics account for 70% of
  DFTR sales
• Region-specific DFTR trends exist – i.e. tobacco and
  wine/spirits are a larger percentage of overall sales in EMEA (44%)
  compared to Asia Pacific (12%)
• With sales growth of 25%,
  short/medium haul and long haul flights could outpace X-long haul
  flights in the future, despite relatively even DFTR sales at present