Atmospheric Qualities of Online Retailing - Case Study Example

CASE STUDY Airbnb Contents Contents 2 Introduction 3 Question 3 Question 2 5 Question 3 6 Conclusion 6 Introduction Airbnb was a premier online marketplace where home owners could rent their rooms to those looking for it. Potential guests had to log in the site and send request to the host seeking permission to rent the room. Both the guest and the host could check each other’s profile and decide for themselves whom they wanted to rent the room to. It had an online transaction system that also included reviews of rooms and the profiles of the guests and the hosts. This facilitated both the parties to make their decisions wisely. Airbnb was a failing organisation yet it managed to be a billion dollar business by way of implementing proper managerial decisions (Bidgoli, 2013). (Source: The Sups, 2014) Question 1 However a host EJ had a negative incident with a guest and she lost a lot of her belongings and suffered losses. She posted the incident in different networking sites and it soon became viral. The site was late to respond to the problems of EJ and did little to address the issues. Airbnb as a responsible firm should have made sure that the guests that it is referring to the hosts. Moreover even after the complaint was lodged by the host, it did not take initiative to look into the matter. In EJ’s case the site should have contacted the guest and asked for proper explanations. Proper probes that would have provided detailed insights into the matter should have been conducted such that the positions of both the parties can be properly reviewed. The results of the probe would have declared the guilty party and if proved guilty the guest should have been asked to pay for the damage done to the host. In case the host was found guilty defamation charges should have been filed against the host. But the site had taken no such initiative till the matter started getting widely publicised. There were repeated complaints regarding the site’s credibility and the firm should have taken initiative to resolve the issues such that it could ensure maximum customer satisfaction. Moreover customer review system is faulty in the case of the site and needs reviewing. The guests who decline requests due to inappropriate customer profiles are penalised by way of low rankings on the site. It also has a very dysfunctional customer service that failed to address the customer issues. On the site’s portal there are various complaints from the customers who have faced difficulty regarding registering their house and also from guests who had repeatedly found their bookings cancelled without any proper justification. The guests have tried to contact the customer care service centres in vain. In a competitive world when there are other sites providing better service at competitive rates, Airbnb should make serious efforts in order to improve its service to the customers. Moreover the rates charged by the site are higher than the competitors and is thus a potential threat to the site’s popularity. Online retailers should take great care such that the sites that offer service to the customers are easy to browse. Complicated sites discourage customers from reusing the site. Even after EJ’s incident the site did not take proper care to ensure reliability and there were other customers who were facing the same problems with such unscrupulous guests. Such repeated complaints have led to customer flight which is a very harmful incident for a firm (Tamimi, Rajan & Sebastianelli, 2003). (Source: Gigaom, 2012) Question 2 The customer profiles that the site uploads are often incomplete and require complete information such that there is a level of transparency between the guest and the host. Airbnb should be able to provide the guests with more accurate information and should also run background checks on new applicants such that the frauds can be detected in the initial stage and eliminated. Detailed information complete with pictures and location and competitive prices would help the customers decide according to their preferences. Complete profile information is of substantial help to both hosts and the guests. This way there would be a level of dependency between the guests and the hosts. Airbnb can also introduce greater cash discounts for those that would provide the company with the full information. Moreover the site should allow the hosts to decide whom they would want to rent their houses to. It had a policy of penalising hosts who declined offers from the guests by way of sliding down their houses down the search list. This was a disadvantageous condition as the guests complained that they often had to accept offers from guests whose profiles they did not like for fear of not being able to rent out their apartments. This is also a problem for the guests because in spite of the property being a good one, it often features in the lower rungs of the search list. The guests are thus unable to find good houses due to the faulty management policies of the firm. Moreover the guests and the hosts are not allowed to share personal information as well. Therefore the entire communication that passes between the guest and the host is through emails. The site automatically filters any phone number or address exchanged between the two parties. Such virtual communication makes it more difficult to develop the trust among the parties and leads to failed transactions or one by which the host would incur losses. Airbnb can thus facilitate face to face meetings between the two parties under its surveillance. Such a move would help the host be sure of the guest that he is renting the house to. There should also be suitable policies that would protect the owner’s belongings from damage inflicted by the guests. Before renting out the property the officials from the firm can make onsite inspections that would facilitate the avoidance of future confusion. The official would list the belongings that the guest is going to use and make proper documentations of the same. This would be done in presence of both the guest and the host such that there is no discrepancy in the system. The listings would be useful to match the belongings that would be present on the day that the guest would be giving the apartment up. Any damage done by the guest would be payable by him to the host. This way the interests of the hosts would be protected and the credibility of the site can also be maintained (McGoldrick, Keeling & Beatty, 2008). Question 3 Airbnb and eBay are both online retailers that offer the customers with a marketplace to buy and sell goods in a virtual world. However there is one major distinction that sets the two companies apart. Airbnb is a firm that focuses on one specific area implying the renting of houses and accommodations as against eBay that runs online marketplaces in greater number of areas such as books, fashion items, electronics and other items that are needed in the daily life. Moreover Airbnbs customer base comprises of primarily hosts (sellers) and guests (buyers) whereas eBay is ready to serve anyone who wishes to purchase its goods. There are instances when eBay facilitates transactions that involve physical sharing of goods that is when buyers are directly purchasing from the sellers. However Airbnb marketplaces provide virtual services of accommodations. There are lot of ways in which to describe concrete merchandises that is regular goods however the task is much harder in case of services like trading "virtual" commodities. There is a direct impact of such differences on the reputation of the firm since the customers will feel a level of ease and difficulty. Therefore Airbnb needs to take into account the special needs of its special customer base, other than the basic factors that ensure customer loyalty and one that holds true in case of both eBay and Airbnb (Mukherjee & Nath, 2007; Ahn, Ryu & Han, 2007; Korgaonkar, Silverblatt & Girard, 2006). While deciding accommodations, the guests want to know the condition of the room and whether it satisfies his needs. Hence Airbnb should provide its customers with a neutral system to rank the houses or apartments based on some standard criteria and accordingly certify the premier properties. Also eBay has implemented some customer protection policies and Airbnb should also do the same since the name in the market had already been tarnished in the past owing to bad experiences of the customers (Zervas, Proserpio & Byers, 2014; Eroglu, Machleit & Davis, 2001). Conclusion Therefore from the above study it can be seen that in spite of being a good venture with good clients Airbnb needs to review its system in a better manner. There should be more credibility to the system and the company should take responsibility for its clients. Proper client review systems should be put in place and strategies implemented such that it stays ahead of the competition. Studies have shown that Airbnb is losing out on its customers yet its customer statistics are still rising. However proper care needs to be taken such that it can prohibit the problem of customer flight. (Source: RJMetrics, 2012) References Ahn, T., Ryu, S., & Han, I. (2007). 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European Journal of Marketing, 41(9/10), 1173-1202. RJMetrics. (2012). Airbnb Data Analysis: 6 Million Users by Year-End, Only 20% Active. Retrieved from http://blog.rjmetrics.com/2012/04/27/airbnb-data-analysis-6-million-users-by-year-end-only-20-active/ Tamimi, N., Rajan, M., & Sebastianelli, R. (2003). The state of online retailing. Internet Research, 13(3), 146-155. The Sups. (2014). AIRBNB HAS CLOSED ITS $500M ROUND OF FUNDING AT A $10B VALUATION, LED BY TPG (SUPS SAYS THIS COULD BE YOU). Retrieved from http://www.thesups.com/news/airbnb-has-closed-its-500m-round-of-funding-at-a-10b-valuation-led-by-tpg-sups-says-this-could-be-you/ Zervas, G., Proserpio, D., & Byers, J. W. (2014). The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry Read More