Airbnb is an online marketplace that allows users to rent or lease apartment rentals, vacation rentals, hotel rooms, hostel beds and homestays among others. Airbnb does not own any of these facilities but just acts as a broker. Airbnb makes money through commissions that it receives from hosts and guests for the bookings. Airbnb uses a platform business model.
A platform business model is one that creates value for consumers and producers by facilitating exchange between them (Mack and Veil 72). The exchanges happen by virtue of the fact that the platform creates, harnesses and leverages on the large network of users. The users create communities and a network effect within the market thereby allowing for seamless interaction with producers (Libert, Wind and Beck). There is a component of Amazon’s business model that may be considered to be a platform. This is because the company connects sellers and buyers through this platform. However, there is a difference in other components of the business model with Airbnb’s.
Airbnb’s business model is different from Amazon’s business model in the sense that while Airbnb does not own any of the hotels or apartments that are on sale on its website, Amazon has warehouses in which it stocks some of the products that are on sale on its website. This means that unlike Airbnb, Amazon has a large inventory of goods which it has to account for. Because of this, Amazon is directly responsible for the quality of goods and may be sued if the goods are not delivered in time or they do not meet the quality specifications. This is different for Airbnb which acts as an intermediary between prospective customers and apartment or hotel owners. Airbnb is not directly responsible for the quality of service that customers receive in these facilities. From this it is seen that Airbnb does not own any means of production of the product (Galloway 225). The company just creates a means of connection between users and hotel or apartment owners. However, Airbnb faces the risk of tenants destroying the property of its renters. This may affect Airbnb’s reputation with hotel owners. On the other hand, users of products sold on Amazon cannot carelessly destroy property. This is because they will be undergoing a loss since this is their property. If such a property is destroyed by the users, then Amazon does not suffer reputational or legal suit risks.
The other difference is that Airbnb can easily scale its operations. This is because the company does not have to spend millions of dollars to build warehouses. Rather, it just needs to have its website up and running and invite as many customers as possible to make bookings. Amazon, eBay, Alibaba and Airbnb may all be considered to be marketplaces. The difference between Airbnb with them is that Airbnb is a service marketplace while Alibaba, eBay and Amazon are product marketplaces. Amazon and IKEA sell their products directly to consumers meaning that they are applying a business to consumer (B2C) model in their operations. As has been mentioned, Airbnb does not own any of the services on offer on its site. The company simply connects buyers and sellers of these services.
The other difference between Amazon and Airbnb is that Amazon has a subscription-based business model. This is implemented through the Amazon Prime service where customers enlisting for this service have a Prime account. Customers pay an annual fee in order for them to secure free same-day or free two-day shipping on eligible products. The Prime account holders also have access to streaming media such as movies and digital music.
The platform model implemented by Airbnb is similar to the model implemented by eBay. This is because eBay also connects buyers and sellers. However, one difference in their business models is that Airbnb focuses mainly on a specific area: the online marketplace for hotel accommodations. The company has recently introduced online marketplace for apartments. This is different from the eBay model which is much broader and focuses on many products including clothing, electronics, baby items and motors among other products. This means that the transactions happening on eBay’s website are those related to customer daily lives. This is different from transactions happening on Airbnb’s website which are not necessarily related to the daily lives of individuals (Galloway 225).
The other difference with eBay is that eBay has implemented reputation points. This is where eBay has given its user the chance of giving feedback on sellers. The objective of this is to help buyers make an informed decision before they make their purchasing choice. This model may not be directly applicable to eBay as cautious homeowners would only rent their property to reliable tenants. Such homeowners may also provide incentives to tenants for the tenants to maintain the integrity of the property.
In conclusion, the advancement of technology has led to development of e-commerce. This has changed the manner in which buyers and sellers interact on the internet space. Airbnb has implemented a platform model in which it creates value for consumers and producers by facilitating exchange between them. Airbnb does not own any of the apartments or hotels that are enlisted on their website. This is different from Amazon that owns some of the goods that are listed on its website. Amazon is a product marketplace while Airbnb is a service marketplace. The difference between Airbnb and eBay is that Airbnb focuses on specific services while eBay provides a host of goods like electronics, fashion and motor.
- Galloway, Scott. The Four: How Amazon, Apple, Facebook, and Google Divided and
Conquered the World. Penguin, 2017.
- Libert, Barry., Wind, Yoram., and Beck, Megan. What Airbnb, Uber, and Alibaba Have in
Common, November 20, 2014, https://hbr.org/2014/11/what-airbnb-uber-and-alibaba-have-in-common. Accessed 10 September 2017.
- Mack, Oliver., and Veil, Peter. Platform Business Models and Internet of Things as
Complementary Concepts for Digital Disruption. In Khare, Anshuman., Stewart, Brian., and Schatz, Rod (Eds). Phantom Ex Machina: Digital Disruption’s Role in Business Model Transformation. Springer, 2016.