Airbnb Value Chain Analysis
Airbnb value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the global rental and experiences platform. Figure below illustrates the essence of Airbnb value chain analysis.
Airbnb Value Chain Analysis
Primary Activities in Airbnb Value Chain Analysis
In traditional businesses inbound logistics involve receiving and storing raw materials to be used to manufacture products. Inbound logistics is different in service industry in general and online service in particular due to differences between products and services that include inseparability, intangibility, perishability and heterogeneity.
From this perspective, Airbnb inbound logistics can be divided into two groups:
1. Inbound logistics related to core services. Core services for the company comprise peer-to-peer listings of accommodation, experiences and adventures. Airbnb inbound logistics for its core services takes a few minutes thanks to purely online nature of its business. Specifically, hosts can list their properties or experience services on the website of the lodging colossus on a matter of a few minutes. Therefore, inbound logistics of each new addition to its website comes for no extra cost for Airbnb.
2. Inbound logistics of resources and items that are used to aid the facilitation of core services. The global hospitality service brokerage company also uses a range of physical resources such as stationary items for its offices. Moreover, products like pillows and mugs, distributed to hosts occasionally to motivate them can also be mentioned as resources acquired by the travel industry disruptor to aid the facilitation of core services. Economies of scale can be specified as the main source of value addition in Airbnb inbound logistics of items that aid in facilitation of core services.
Generally, operations involve the transformation of raw materials into finished products in manufacturing industry. In service industry, operations relate to the process of providing the service. Specifically for Airbnb, operations involve a range of activities such as handling of keys, cleaning and providing amenities within properties. Thanks to Airbnb’s platform business model, these activities are done by hosts, not the company and platform business model allows the company to scale the business worldwide. Accordingly, today Airbnb operates in more than 191 countries and regions worldwide and there are about 100000 cities with Airbnb listings and 500 million Airbnb guest arrivals all-time.[1]
New start-ups are emerging within Airbnb ecosystem with an increased rate of frequency and they assist in various aspects of peer-to-peer lodging industry. Guest check-in services provider Urban Bellshop, on-demand dry cleaning services company FlyCleaners and temperature controlling company Nest can be mentioned as a few examples to illustrate this point.
To summarise, online platform business model is a main source of value creation in Airbnb operations in a way that the majority aspects of operations are undertaken by hosts. The global hospitality service brokerage company only has to maintain the attractiveness of the system to both types of its customers – hosts and guests via technological integration and other means.
Outbound logistics is associated with warehousing and distribution of ready goods. Popular sources of value creation in outbound logistics activities for businesses include direct deliveries to customers without intermediaries, cooperation with other businesses to share distribution costs and technological integration into the distribution process.
Outbound logistics relates to service industry to a much lesser extent compared to manufacturing industry because in services production and consumption takes place at the same time. Moreover, outbound logistics relates to Airbnb operations to even lesser extent because the services of accommodation, experiences and adventures are provided to guests by hosts, not the company.
Marketing and sales activities relate to the formulation and application of marketing strategy. Airbnb value proposition for guests is associated with huge range and competitive costs of accommodation and experiences, as well as, the opportunity for guests to live like local in any place where the company operates. This value proposition is integrated into Airbnb marketing message communicated to target customer segment through a range of marketing communication channels in an integrated manner.
Airbnb marketing strategy integrates the principles of successful brand partnerships, celebrity endorsements and benefiting from social influencers. Moreover, the global hospitality service brokerage company has its own community that benefits the company as customer loyalty platform, source of marketing intelligence and many other ways.
Airbnb Service
Service primary activity within the framework of value chain analysis relates to the level and extent of support customers get after the sale. High level of customer services is one of the solid sources of Airbnb competitive advantage. Airbnb customer service team comprises hundreds of agents available via phone, chat and email, 24/7, in every time zone and in 30 different languages.[2]
Both, hosts and guests rate each other after the completion of stays and this practice encourages hosts to improve the level of the service. The most highly rated hosts are awarded the title of Superhosts, to be aspired to by other hosts and superhosts have greater earning potential.
There are cases of Airbnb going to extreme lengths in order to please their customers. These include but not limited to sending a guest Pearl Jam T-shirt after learning she had booked with Airbnb in Seattle to see a Pearl Jam concert, sending a host a stroller after she tweeted that she wished she had a stroller for their upcoming guests and sending a user a bed tray and a get well card upon user cancelling her reservation because she needed to look after her sister, who hurt her leg.
Airbnb Inc. Report contains a full version of Airbnb value chain analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Ansoff Matrix and McKinsey 7S Model on Airbnb. Moreover, the report contains analyses of Airbnb leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of Airbnb marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
[2] Edwards, J. (2013) “Check Out The Extreme Lengths Airbnb Will Go To In Order To Please Customers” Business Insider, Available at: https://www.businessinsider.com/insane-lengths-airbnb-will-go-to-in-order-to-please-customers-2013-8