E-Commerce: An Introduction

E-Commerce: An Introduction

        E-Commerce, which is short for Electronic Commerce, is the means of exchanging goods or basically doing business using electronic means. These means are what are known as the communication means used today, basically the Internet. Indeed, one of the most important advantages of the internet today is the possibility of transferring not only communication, but also funds, in a secure manner. Therefore thanks to the fact the people may transfer funds, they may also go upon doing transactions throughout the internet in an adequate manner. These transfer of funds allow the development of delocalized businesses. One person does not necessarily need to go to a store and have cash in order to purchase a product. Rather what they can do is to directly purchase a product over the internet and have it shipped to them directly. However this is only one type of B2C business model that exists over the internet. Indeed, people today are able to use the Internet in order to enter in contact with other people and have their business done.

There are several advantages in creating added value through the internet, but the most important one is seemingly the fact that the companies that do so remove several issues from the traditional way of doing commerce, mainly by reducing fees involved in transportation to the physical place where the business is located (bricks and clicks business model), but also by reducing the fees of companies to transport merchandise to the retailers, and instead by sending the merchandise directly to the customer from the factory. Another important aspect that we will see below is the fact that the company can vertically integrate its business model. Indeed, it does not need to have several retailers to whom they sell and whom which make their profit margin, rather they sell directly to the final customer (factory direct) which is a means of gaining more value.

In my research I have chosen to take the example of AirBnb. I have chosen this example as I think that it has taken full advantage of the use of internet technologies in order to make value. In addition to this, not only does it make value, but it allows people to actually have a better experience in the rental of short term housing. Throughout this analysis, I will first take the example of AirBnb and take it as an example of an excellent business model of internet technology. In addition to this I will investigate how the company can eventually evolve in the future. In the second part of this paper I will find a Moroccan company that does not take full advantage or any advantage at all of internet technologies, and I will attempt to show how it could go upon doing so in order to increase its profits and ameliorate the business experience of its customers and all stakeholders.

E-Commerce Business Model: A Case Study on AirBnb

Analysis of the Business

        AirBnb is a company that is specialized in the rental of short-term housing.  However, the interesting part is that it does not own any real-estate, rather it operates using the seller and buyer business model. It puts in contact owners of real estate who would want to rent part or all of their house, and the buyers which are people travelling to that particular spot and want to rent the house for a few days.

        The name AirBnb came from an initial idea of the founders, Brian Chesky and Joe Gebbia, who had decided to rent one of their rooms in their appartement in San Fransisco with an Airbed, and they also proposed Breakfast. They did so because they had just moved to the city and they knew that there was a fair occurring in the city but they also had knowledge that all hotels and motels were full at that period, and therefore they knew that they could make value out of it. This is how the first name of Airbed and Breakfast came in the first place. In the beginning of 2008, Nathan Blecharczyk, a graduate from Harvard, decides to join then and becomes the third co-founder of the company. They then concentrate on cities where large events occur and their initial website http://www.airbedandbreakfast.com.

        They then are able to get some funds by selling sponsor cereal boxes with the logos of the presidential elections of the time, Obama and Mccain. They are able to enlarge their business, and their content goes from casual Airbeds to complete houses and flats. The expansion of the company started to be extremely large by 2010, they had several flats for rent throughout the state owned by other people. In November 2010, the company founders claim that out of the 750000 nights reserved since the creation of the website, 80% of these reservations were done in the past 6 months. This shows how fast the company grew. Greylock Partners and Sequoia Capital give $ 7,2 million in funds for the expansion of the company. In addition to this, well renown actor Ashton Kutcher claims he is interested in investing in the company.

        In 2011, AirBnb goes upon the acquisition of Accoleo, which is one of its European competitors, making their offices the first European office of AirBnb. Several offices are later on purchased in several cities worldwide, and they chose their European Capital to be Dublin.

        The main goal of AirBnb today is to provide space for its users. In fact it uses the internet to leave space for its users in order to post their apartments’ pictures and location. When people need an flat or even a room in a city, they will enter the website, choose their city and the duration of their stay. Then they will have several options to choose from with pictures posted of the different options. There are several different features to choose from like if they want to share a room, if they are a single traveler or more than one traveler, if they want the whole property or just a single room, and a price range they can choose from.

The options are very thorough as a substantial amount of detail is given to the person that is a traveler. Indeed, the equipment within the house is written down by the host, the price, the additional price for an extra bed, or for breakfast/dinner, a description of the location and details of what facilities exist next to it are all detailed. Also, the internal rules of the host are also depicted such as if they accept having pets at home, smoking regulations, and the minimum stay period. Past travelers in a particular stay can also leave comments, and also people have the ability to get into contact with these people if one would also like to rent that place. This shows a C2C business model that enhances a great deal of trust amongst participants, which allows people to move forward in initiating their use of their website for their travelling stays. In fact, the whole user experience is quite similar to booking for a hotel room, however it gives even more options to the user, in addition to increasing the human interaction between the host and traveller, which are interchangeable position within this website as a host can also be a visitor somewhere else, which is the main principle of C2C business models.

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