Technology of the week: E-commerce B2C (Airbnb vs Uber) Team 17
The internet has changed the way of doing business, everything is faster and more efficient. These online markets are called E-markets, where buyers and suppliers can exchange information, products or services.
Airbnb and Uber
Airbnb is a platform where people in search of a hotel or hostel can connect with people who offer a room or an apartment. Like the name suggest it is an online bed and breakfast/marketplace for hosts and travellers. The next market creator is Uber. This online platform connects people who need a ride with people who have time and a car available to give them a ride in exchange for money. Compared to traditional taxi companies Uber is cheaper and because of the reviews on the Uber-driver you can see what kind of driver you are dealing with.
Although Airbnb is growing fast, the company is not yet profitable. The operating loss over 2015 is $150 million, due to its high spending to grow even faster. It is expected that Airbnb will become profitable in 2020 when their revenue is $10 billion, but in order for that to happen the market share needs to grow from 1% to 10% (Bizjournals.com, 2015).
Similarly to Airbnb, Uber is valued at $17 billion, with only about $ 300 million in revenue in 2014, and no profits. The reason Uber is also valued at such a high amount without profits, and a revenue much lower than other companies of similar value, is the rapidity of which their revenues and market share are increasing and the large scale disruption of the existing markets that the company caused.
Google CEO Eric Schmidt predicts that technology will change whole markets over the next decade, Uber and Airbnb are the frontrunners of this development, as software and technology focused companies having a wide scale effect on the existing industries (Venturebeat.com,2015)As more companies emerge that let people rent out their homes, we expect Airbnb and its competitors to take a larger stake of the hotel industry. As the amount of users will rise, so does the pressure for governments to work together with Airbnb to come to a solution to local legislative problems.The more these type of companies will be able to make the governments treat them purely as technology firms instead of taxi or hotels firms, the larger the opportunities for other companies to grow in the asset sharing, or platform only economy (theverge.com, 2015)
As technology advances and companies with similar services are also emerging, we expect the market to be disrupted even more by new concepts based on new technology. In the future, as technology advances and becomes cheaper, smaller assets may become part of the sharing economy as well.
Yorick van de Riet 357297yr
Maikel Ooms 341182mo
Mathijs Daalderop 360013md
Sjoerd Poppelaars 361339sp
Babet van der Giesen 363995bg
Bizjournals, (2015). [online] Available at: 16. http://www.bizjournals.com/sanfrancisco/morning_call/2015/06/airbnb-24-billion-valuation-revenue-forecast.html [Accessed 18 Sep. 2015].
Venturebeat, (2015). [online] Available at: http://venturebeat.com/2015/01/29/googles-eric-schmidt-has-a-10-year-prediction-of-how-tech-will-disrupt-whole-industries/ [Accessed 18 Sep. 2015].
Theverge, (2015). [online] Available at: 20. http://www.theverge.com/2015/7/27/9035731/future-of-uber-regulation-illegal-violations [Accessed 18 Sep. 2015].