Executive Summary
The Uber and Airbnb are companies that entirely depend on the internet to carry out business activities. The companies have grown from simple to complex online businesses that have a strong customer base. The two companies, alongside their competitors, have grown to more than 40 countries and offer very competitive prices. The Uber, Lyft, and SideCab offer ‘ridesharing’ services to customers across the US through the use of Smartphone technology.
On the other hand, the Airbnb, HouseTrip, and Travelmob companies offer customers opportunity to rent out lodging from the comfort of their homes, offices, and any other place that has internet connectivity. The companies have advantages such as competitive prices, convenience, expansive market coverage, low operational costs, and variety of products.
However, their internet model is a challenge to the traditional business model and government regulations since the online mode of operations are subject to challenges such as customer insecurity, vulnerability to abuse and manipulation, misrepresentation of products, and non-binding transactional relationship. As established in the research, companies stuck on the traditional business model oppose the two companies because of unsteady customer security and inconsistency in following government business regulations.
However, the benefits of the internet platform are better than that of the traditional platform. In order to address the concerns raised, the paper recommends integration of a Secure Online Shopping System (SOSS) to guarantee customer security and consistent government regulations.
Introduction
Purpose or overview
The purpose of this research paper is to establish the benefits of the internet business platform of the Uber and Airbnb, alongside their competitors such as Lyft, SideCab, HouseTrip, and Travelmob, to customers in the form of convenience, affordability, and diverse services. At the same time, the paper will establish the threats that the internet platform of the two companies poses to traditional business practices of their competitors and government regulation for customer protection.
Specifically, the research will attempt to explicitly establish the scope of online business for the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb, their method of business operation, the conveniences they guarantee customers, threats that their internet platform have on traditional business practices, and the fundamental consequences upon society and culture.
Background or the problem
The Uber and Airbnb companies have been very successful in their internet business models. Founded barely five years ago, the Uber Company has been very successful in expanding its customer base in the ridesharing service across the US and in more than 45 countries. Due to a large customer base and ability to serve many customers every day, the Smartphone technology-based ridesharing business has passed all the traditional taxi companies in the US and is currently valued at US$18.2 billion.
Specifically, the UberX program, which targets all drivers across the US, has vigorously increased the company’s market segment. Since the overhead costs are low, the company has managed to offer very low prices (Uber, 2014). Besides, the lack of government regulations, the prices offered by the company cannot match with those of the traditional business taxi operators.
As a result, there has been protest from taxi companies, taxi drivers, and different representative bodies who are convinced that the Uber Company, alongside its competitors such as Lyft and SideCab, are illegal taxi operators with an unfair and unethical business model, which has real threat of customer security compromise.
Founded barely six years ago, the Airbnb operates on a similar internet platform and has expanded to more than 192 countries. The company’s website provides potential customers with the opportunity to rent out their premises as lodging to any interested party. Same as the Uber model, the Airbnb and its competitors such as HouseTrip and Travelmob have tremendously benefited from the increased market, competitive pricing, and customer convenience.
However, the same concerns of compromised customer security and lack of government regulations have been raised by traditional lodging service providers, who believe that these companies are illegal lodging service providers with unfair and unethical business model since their low overheads have made them to lower prices to unreasonable levels (Airbnb, 2014).
Apparently, there are similar and serious complaints by traditional companies offering the same services as those of the Uber and Airbnb, alongside their competitors. The complaints are lack of proper government regulations and illegal business platforms which compromise competition through extremely low and unreasonable prices.
Therefore, there is need to establish the authenticity of these challenges in order to establish a middle ground business model for Uber and Airbnb, as a proposed settlement that will allow for uninterrupted continuance of the traditional enterprises along with the cooperation of the internet at the two companies.
Discussion
Methodology/Analysis
In order to establish the underlying problem with the internet platforms of the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb, the research was based on secondary findings from past academic researchers done on the challenge of internet business platforms to the traditional business platforms. The research was based on past findings in several academic articles, books, and reputable online journal.
Specifically, the scope of the study was to establish the scope of online businesses, their method of business operation, the conveniences they guarantee customers, threats that their internet platforms have on traditional business practices, and the fundamental consequences upon society and culture. The findings were then related to the internet business platforms of the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb companies against their competitors who operate the traditional business model.
The research was based on theoretical perspective, such as the contingency paradigm, organization culture, customer centricity, and regulatory benefits in the business environment. The contingency paradigm describes a company’s ability on the basis of situational possibility. There are two kinds of contingencies according to this theory. The first develops a good relationship with the customers in the process of task delivery. The second assists those that are only oriented towards the task at hand.
They make the accomplishment of the task as their primary aim and take all the steps towards achievement of this goal (Amit & Zott, 2012). On the other hand, government regulations in the business are significant in managing unethical business practices such as accountability, value for money, and following the due process in serving customers.
The aspect of customer centricity guarantees customer safety in transaction since there are physical structures or frameworks that are tangible and visible to the client. Lastly, organization culture ensures fair competition through observance of the acceptable pricing or competitive advantage strategies in a business (Coulson, 2013).
Presentation of data
According to Kashmanian, Wells, and Keenan (2011), the major part of the success puzzle for the online business management delivery operates on the periphery of the soft skills involving the timeless vision of organizational principles, defining value of the business, determining requirements, and clarifying the vision. Besides, the success puzzle is proactive in building teams, mitigating task, resolving issues, and providing direction as incorporated in the operations management system.
The management of the online businesses operates on the B2C strategy, which should be modified to function on the customer satisfaction. The traditional businesses are based on the traditional marketing, localized human resource, and efficiency of the monitoring units, especially in interacting with the customers. On the other hand, the internet platform is not modified to guarantee the localized experience among its customers, who have to carry out everything online (Kashmanian, Wells, & Keenan, 2011).
The traditional businesses have a very unique organization structure. These businesses exhibit distinctive and unique organization configuration that is shaped by the organization’s goals. In advancing organizational learning, the system helps the businesses avoid compromising customer safety besides being proactive in responding to the needs of customers, since every form of interaction is physical.
For instance, the traditional taxi companies have strategies to ensure that the customers directly and positively associate with the businesses due to services such as the premium service experience through physical interaction (Amit & Zott, 2012). However, this is not the case in the Uber and Airbnb companies where there are very weak structures of ensuring that the customer is protected from scrupulous sales and service agreements.
The benefit of the internet business platform is that a company can roll out an interesting entry into the market by concentrating in the most affordable methods of advertising, unlike the traditional business model. This strategy ensured that such an internet business platform company is sustained even when it is offering free services within the first three years of operation (Coulson, 2013).
The affordable and visible internet methods of advertisement ensured that the targeted market is in a position to distinguish the business from its rival. Besides, an internet based business can introduce very low charges for its services, which cannot be matched by its traditional rivals. The administrative costs of the internet business platforms are less costly as compared to the same costs at companies based on the traditional business platforms.
Despite the numerous benefits associated with internet platforms such as that of Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb, there are several underlying challenges such as minimal government regulations and unrealistic competitive advantage. Apart from the US and some few nations in Europe, the government regulations on internet business platforms are very weak and unsuccessful in tracking fraud or persecuting unethical business practices.
For instance, the Uber and Airbnb cannot be held responsible by the government business regulatory bodies in instance of customer complaint since all the transactions are held online.
Besides, it is almost impossible to regulate the unethical business practices such as pricing games since the overhead for the internet business platform is very low. As a result of lack of government regulations, coupled with the pricing games, traditional business platforms find it very challenging to compete with the online business platforms (Coulson, 2013).
From the discussion, it is apparent that the internet business platform is more efficient in knowledge and experience in uniqueness of products and services due to faster interaction with customer, unlike the traditional business models.
The experience is in terms of standardization in order to present high quality services to the market. In order to improve on the internet business platforms of the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb, there is a need to revise their operational efficiency, customer centricity, functional teams, and revision of online content to guarantee customer security and minimize pricing conflict.
The recommendations for improvement on the internet business platform to minimize customer insecurity are discussed in the next section. The recommendations are meant to ensure that the internet business platform guarantees the same level of customer safety as the traditional business platform.
Conclusion/Recommendation
Customer relationship management
The level of activity for the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb has remained relatively stable despite threat of competition and constant change of taste and preference. Customer relationship management is the first step towards customer relationship and to expand the distribution channels that attract near markets.
Reflectively, the concept revolves around a comprehensive review of ‘push and pull’ factors which determine the functionality of a retail business to offer an alternative strong marketing tool in the quest for quality, reliability, and trust among clients (Rai, 2012). A properly CRM is crucial in presenting brand knowledge, awareness, penetration strategy, and passing information to target audience.
For instance, adoption of the hybrid system of management by the Uber and Airbnb will ensure direct contact with customers within the shortest time possible through an active customer care initiative. The hybrid system is very successful in contact management and positive attitude reassurance (Rai, 2012).
Consumer centricity
Properly designed online marketing and product distribution management facilitate the success and sustainability in online marketing. To increase credibility and maintain professionalism, the current channels of reaching the consumers at the Uber and the Airbnb should be tailored to encompass processes and features that flawlessly facilitate a healthy and a lifetime relationship between the business and its clients.
Among the new development elements that the companies should incorporate include trust, liability acceptance, distribution, fair retribution process, and passing accurate information to target audience to restore confidence within these networks. This strategy will ensure that the businesses are sustainable (Coulson, 2013).
As opined by Amit and Zott (2012), the desired awareness created in the online platform and different distribution packages is essential in sustaining online trade. For instance, the safety and security of the customer over the cyberspace trading platform have become such an important issue in determining consumer behavior (Amit & Zott, 2012).
Thus, introduction of a Secure Online Shopping System (SOSS) is vital towards survival of the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb businesses. Secure online shopping system is a platform where consumers are able to make orders on particular product and make payments using their credit cards. Introducing the modified SOSS platform at the two companies will ensure the safety and security of clients interested in the company’s product.
Functional team
Reflectively, the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb companies should introduce a functional team with the essential knowledge in social media and tools used in marketing via the Internet. Besides quality in service, delivery and customer satisfaction depend on the support team as indicated in the distribution channels of the traditional business platforms.
Therefore, customer retention is achievable through the creation of reliable, informed, and the passionate support team at the two internet platform businesses to ensure that complaints of clients are proactively resolved (Amit & Zott, 2012).
Creation of content and integration of government regulations
Creation of content is extremely essential when dealing with internet business platform within the industries that the companies operate in. It is necessary to determine the online behavior of the target market before selecting the best channel for internet service provision to minimize the issue of changed consumer preference. The new content on the two internet-based businesses should be aligned to the terms and conditions of trade are stipulated by the regulatory laws.
This will cushion the businesses against eventualities such as conflict of interest and pricing games. In order to successfully implement this recommendation, the companies should create a legal branch within their internet business model to update the regulations and solve any case of unethical practice as a means of ensuring sustainability through customer safety guarantee (Coulson, 2013).
Conclusion
Apparently, there are differences in perceptions between the traditional business model and the internet business model. The operators in the traditional business platform disagree with the unhealthy competitive business strategies and compromised customer safety, which are common in the internet business platform due to minimal government business regulation.
In order to survive these challenges, the internet-based businesses should implement several recommendations ranging from improved customer centricity strategy, operation efficiency strategy, and integration of different ethical business practices and laws within the online platforms.
Through adoption of a highly structured and broad differentiation strategy in designing market segmentation policies, the Uber, Lyft, SideCab, HouseTrip, Travelmob, and Airbnb are positioned to improve on their customer safety standards and delivery of quality and competitive services.
References
Airbnb. (2014). About us. Web.
Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41-49.
Coulson, C. (2013). Implementing strategies and policies. Strategic Direction, 29(3), 33- 35.
Kashmanian, R. M., Wells, R. P., & Keenan, C. (2011). Corporate environmental sustainability strategy. The Journal of Corporate Citizenship, 2(44), 107-130.
Rai, A. (2012). Customer Relationship Management: Concepts and Cases, London, UK: Kogan Page.
Uber. (2014). About us. Web.