Full interview at inpractise.com
We interviewed a Former General Manager of both Airbnb and eBay on how he runs and what he has learned running online marketplaces.
In the full interview we cover:
- eBay's approach to building supply and merchandising vs Airbnb's host community
- Comparison of the pricing model at eBay and Airbnb
- How Airbnb can compete with OTA's for traditional properties
- Potential evolution in the pricing strategies for Airbnb
- How Airbnb built a purpose-driven community
- Potential regulatory risks for Airbnb
How would you compare eBay, versus Airbnb, as a marketplace?
There are, certainly, some similarities and lots of differences. I think the community aspect of both organizations and both businesses, played a significant role in their success. I think, also, how the businesses were set up, to achieve either the mission of each of those, at different times. I think with the mission of Airbnb, we're still very early days in that story. In 2014, Airbnb did a really good job of articulating what that was and that was the belief that, in Airbnb, the mission is a world where people can belong anywhere and how they were able to have that manifest itself.
In terms of the differences, in the marketplace, one key difference, particularly from an economic perspective is, at eBay, all of the fees were, effectively, charged to the seller. Whereas on Airbnb it's, effectively, the guest that pays the fees. On Airbnb, it's free to list, there are no service fees that are charged to the host. As Airbnb has continued to evolve, that's been different, from the experiences side of things. As Airbnb has moved more into the traditional hospitality and hotel space, there have been pricing differences that have arisen, on that side of things. But a really big difference was that, on eBay, the seller paid all the fees and, obviously, they did pass those onto the buyer, in some ways. eBay really became beholden to the seller community, if they were trying to extract more revenue, through listing fees, success fees, as well as feature fees. Whereas on Airbnb, it's the guest that's making that choice to book that listing and incur the service fee and know what they are getting, as a result of that.
How does that change the way you manage the marketplace?
From an eBay perspective, you are always beholden to the sellers and the sellers, themselves, became a very powerful part of the eBay community. Of course, eBay activated their community, annually, through their eBay Live event. I'm not sure if it's still going on. That was a significant event that the sellers were a big part of. Sellers on eBay were also able to, sometimes, become so successful on the eBay platform that they could then leave the eBay platform, because they had acquired their customers and they could continue to run their business successfully and, potentially, incur marketing costs that were less than their eBay seller fees. You would sometimes see that, particularly where you had a seller that may dominate a category or a product.
On the Airbnb side, in terms of how you'd manage the community, it's about keeping it all very simple, a great user experience, from a guest point of view and also simple to be a host and to list a property. By not necessarily relying on the hosts, for the revenue, even though it's their properties and their homes that they're sharing, how Airbnb has been able to engage the host community and, effectively, bring more and more guests to their properties, I think, has really been their key thing that's helped define Airbnb success today.
How do you think this could evolve, as we see more traditional properties be brought into the platform, with different pricing structures?
I think it certainly creates an opportunity for Airbnb. They've traditionally charged the guest a service fee and I think there are significant opportunities for Airbnb to monetize their business model and to evolve their business model, to elevate a host listing and provide an opportunity for the host to pay for that. Airbnb has recently introduced some other services. Plus is one of those, where there are certain criteria that the host meets, that means that the listing can be shown in an elevated way. Again, that's an opportunity for Airbnb to monetize its platform, more significantly than it maybe has in the past. I think there will continue to be those opportunities, in the future.