Sharing is the new having:
‘Key success factors of winning business
models in the shared economy’
Isabelle van Rongen University of Amsterdam Bachelor Thesis BSc Business Administration Supervisor: Willem Dorresteijn Date: June 29, 2016-06-27 Student number: 10356002 Academic year: 2015/2016 Semester 2, Block 3Statement of Originality This document is written by Isabelle Patricia van Rongen, who declares to take full responsibility for the content of this document. “I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used creating it. The Faculty of Economics and Business is responsible solely for supervision of completion of the work, not for the contents.”
Abstract
Sharing economy is an emerging economic-technological phenomenon, which has grown a lot during the past few years. For many companies the shared economy is still relatively new. Through this research, key success factors of the winning business models in the shared economy will be determined. The research focuses on two companies: The first company is the well-known Airbnb, arguably started the emerging shared economy and has booked great success over the last years due to its market value and expansion. Secondly, the Dutch company Peerby will be investigated, as its business model can be compared to Airbnb is some way. Besides that, the company is has received high valuations and is seen as a promising start-up.
Both Airbnb and Peerby are active in the shared economy and are seen as successful companies. By analysing their business models and doing qualitative research on the existing literature about the shared economy, the key success factors of both companies are determined. In conclusion, ten success factors are determined. Six of these factors are overlapping between the two companies, while the other four are individual success factors. Trust is the success factor that is most important for the success of the companies. The other success factors are presented in random order, as it is difficult to measure which factor is more important than the other. Key words: shared economy, business model, key success factor, trust
Table of content Abstract……….…….……….3 Foreword………..……….….………...7 1. Introduction………..………..8 2. Literature review 2.1 Sharing economy………..…………..…….11 2.2 Collaborative consumption………...………12 2.3 Growing shared economy………..………...…13 2.4 Changing business environment………..……….13 2.5 Business models………...………..….14 2.6 Key success factors……….……….………..15 2.7 Conclusion……….………..15 3. Conceptual framework 3.1 Customer Segments………...18 3.2 Value propositions……….18 3.3 Channels………..……….………....18 3.4 Customer relations………..……….………..19 3.5 Revenue streams………..……….………..19 3.6 Key resources………..………..20 3.7 Key activities……….…..………..20 3.8 Key partners………..………....20 3.9 Cost structure………..………..21 4. Methodology 4.1 Research design……….………..22 4.2 Research method………....23 4.3 Reliability and validity………....24 4.4 Acknowledgements………..………....25 5. Business Model Canvas 5.1 Airbnb……….…...26 5.1.1 Customer segments………26 5.1.2 Value propositions………...………..27 5.1.3 Channels………..………28 5.1.4 Customer relations………..……….28
5.1.5 Revenue streams………...29 5.1.6 Key resources………..29 5.1.7 Key activities………30 5.1.8 Key partners……….30 5.1.9 Cost structure………..31 5.1.10 Conclusion………..31 5.2 Peerby………...32 5.2.1 Customer segments………..…33 5.2.2 Value propositions………33 5.2.3 Channels……….34 5.2.4 Customer relations………..34 5.2.5 Revenue streams………34 5.2.6 Key resources………35 5.2.7 Key activities……….35 5.2.8 Key partners………..36 5.2.9 Cost structure………36 5.2.10 Conclusion………36 6. Success factors 6.1 Key Success Factors of Airbnb……….37 6.1.1 Trust……….37 6.1.2 Newness ………38 6.1.3 Pricing………..………..38 6.1.4 Earnings………..39 6.1.5 Ease of use………..……….…39 6.1.6 Intermediairy position………..………39 6.1.7 SoLoMo trend……….….………40 6.1.8 Insurance………..……….41 6.1.9 Scalability………..………41 6.2 Key Success Factors of Peerby……….……….42 6.2.1 Trust……….……….42 6.2.2 Ease of use ………42 6.2.3 Uniqueness & Innovation……….………….………..43 6.2.4 Scalability……….………..43 6.2.5 Intermediate position……….…43
6.2.6 SoLoMo trend ………..………44 6.2.7 Insurance …….………..………44 7. Discussion 7.1 Key findings………..……….45 7.2 Managerial and theoretical implications……….48 7.3 Limitations and further research……….49 8. Conclusion………..………...51 References………..52
Foreword
First, I would like to thank Ross Gardner for assigning me to this topic and making me enthusiastic about the shared economy. Second, I would like to thank my parents for their willingness when I was having difficulties seeing my vision. Third, I would like to thank my brother Gijs and my friend Iris for revising my English. Most of all, I would like to thank my supervisor Willem Dorresteijn for his guidance during the last couple of months in which I did my research. I hope you will enjoy reading my thesis.
1. Introduction
The business infrastructure has been undergoing great changes in who is taking the lead. The increasing importance of the Internet and social media has led to changing business models, namely the shared economy. In the shared economy the company leads a certain type of exchange between consumers (Botsman & Roger, 2011; Gansky, 2010; Labreque, 2013; Boyd & Ellison, 2007).
Shared economy has become a wide-known concept, an economy with a lot of potential, an economy in which many entrepreneurs and existing companies want to enter (John, 2012; John, 2013). Although shared economy is a relatively new phenomenon, history shows that in reality resource sharing is something human beings have done for more than centuries (Felsen & Spaeth, 1978).
Consumers also start to approach material goods in a different way. People do not need to possess the products, as long as they can make use of them (Chen, 2009). Through the Internet, the last couple of years there have been initiatives ‘to trade, share, rent, and swap stuff online’ (Postigo, 2003; Tan, Yen & Fang, 2002).
In the Netherlands a couple of websites bundle their forces under the name ShareNL (www.sharenl.nl). The promoters Konnektid, Peerby, Thuisafgehaald, SnappCar and Toogethr want to build a platform so the audience has a clear view on where to go when they need products or services. Also, these initiatives make it easier to exchange knowledge and be better at lobbying when they collaborate. Thus, the visibility of the shared economy will be increased and more people will be inspired and stimulated to participate (Belk, 2009; Belk, 2014; Benkler, 2004; Botsman, 2011; Friedmann, 2013; Hamari, Sjöklint & Ukkonen, 2015; John, 2013).
The reason for this is the successes that several companies in the shared economy have booked over the last years (Belk, 2009; Belk, 2014; Benkler, 2004; Botsman, 2011; Friedmann, 2013; Hamari et al., 2015; John, 2013; Owyang, 2014). Entrepreneurs see an opportunity in the shared economy, the opportunity for building a digital platform, for a peer-to-peer industry to grow fast; a ‘puddle for making a lot of profit’ (Botsman, 2013; Dervojeda, Verzijil, Nagtegaal, Lengton & Rouwmatt, 2013). But what is it that made these successes? What in the business models of a company such as Peerby or AirBnb led to its success?
Starting from the bottom: what do the business models of these successful companies look like? And more interesting, what is it in those business models that led
to the success of the companies? The evaluation of the business models is done with the Business Model Canvas (Osterwalder & Pigneur, 2010). Research on these business models, in turn leads to the conclusion of this paper: the key success factors of the winning business models.
It is relevant because many successful companies turn out to have similar success factors in their business model, this can be seen as a lesson for starting entrepreneurs. Next to that, the company PricewaterhouseCoopers assesses the shared economy market to become a $335-billion market by 2025 (PWC, 2015). Also, PWC (2015) found that 28 million dollars is invested in shared economies daily. These numbers already show the relevance of this research, because the shared economy is expected to be an extremely fast-growing market opportunity and a profitable industry.
For example, Pine & Gillmore mentioned that many years ago people started by selling goods and services (Pine & Gilmore, 1998). The trend in giving a consumer an experience while buying goods became more and more important over the last years. Nowadays, companies know that when trying to differentiate them, a strategy could be to develop a certain consumer experience when buying a product. Brian Chesky, CEO of Airbnb, stated that it is also important to acknowledge the fact that people no longer simply want to buy a product, but an experience and a relationship with other people (Edelman, 2014). “The stuff that matters in life is no longer stuff,” he said. “It’s other people. It’s relationships. It’s experience.” (Airbnb, 2013, p.1)
The results of the paper have theoretical implications as it gives direction on what important factors a company should focus on in order to be successful in the shared economy. Summarized, this lead to the following main research question:
What are the key success factors of winning business models in the shared economy?
The research question adds further understanding to the shared economy. It is an extension of previous research by combining the winning business models of shared economies with the success factors that determined these winning models. Furthermore, specifying what factors belong to which part of the business model, enlightens what is important for a company to implement and focus on when entering the shared economy. The information retrieved from this research should be adapted into business strategies accordingly.
First, the research starts with discussing existing literature related to the shared economy is discussed to provide background information. In the next section the conceptual framework is discussed, explaining on what model the research is based. Afterwards, the methodology is discussed using qualitative research on the literature and in-depth interviews as a research tool. The Business Model Canvas is presented in the following section. The success factors of the companies are described in the next section. In the discussion section the key findings, limitations, and directions for further research are being discussed. Finally, a conclusion is given.
2. Literature review
This chapter starts by giving an overview of the existing literature on the concept of the shared economy. Second, collaborative consumption and the growing shared economy in the current business environment will be discussed. Third, the changing business landscape and the changing business models that go with it are explained. Fourth, the key success factors in business are explained. Finally, a conclusion of the literature will be discussed in order to obtain and define the topic of this research. 2.1 Shared economy While sharing is as old as humankind, the recent phenomenon of the shared economy was born out of the digital age (Belk, 2014). It is characterized by interactive businesses and consumptions practices that go by names as ‘collaborative consumption’ (Botsman & Rogers, 2011), ‘co-creation’ (Prahalad & Ramaswamy, 2004; Lanier & Schau, 2007), ‘the mesh’ (Gansky, 2010), ‘commercial sharing systems’ (Lamberton & Rose, 2012), ‘consumer participation’ (Fitzsimmons, 1985), ‘co-production’ (Humphreys & Grayson, 2008), ‘online volunteering’ (Postigo, 2003), ‘presumption’ (Ritzer & Jurgenson, 2010), ‘product-service systems’ (Mont, 2002), or ‘access-based consumption’ (Bardhi & Eckhardt, 2012). In recent years, the concept of sharing has progressed from a community practice into a profitable business model (Sach, 2015).
The shared economy was founded as a term in the early 2000s. Due to the Great Recession several trends arose. Technology was more important than ever, people felt the need to give something back to society, and innovation and growth became key concepts in business (Botsman, 2013; Dervojeda et al., 2013; Friedman, 2013; Hamari et al., 2015; Kreiczer-Levy, 2015; Nadler, 2015; Nordea, 2015; Schor, 2014; Zervas, Proserpio & Byers, 2015). Moreover, Forbes magazine was one of the driving forces behind the shared economy when they estimated the shared economy to grow and surpass $3.5 billion in 2025 (Geron, 2013). When companies Uber and Airbnb booked their success in the early 2010s, business was convinced: the shared economy was a new successful way of doing business and the developed economies of the Western countries started business after business in the shared economy (Sacks, 2011; Owyang, 2013; Owyang, 2014).
“Sharing is the new having” Rachel Botsman mentioned in her research (Botsman, 2011, p.4). The trend in creating business models in which consumers
interact, companies build platforms and bring digitalization to a next level, are a recent development in business. This recent change caught many researchers attention. Botsman (2011) argues that technology is key to build trust and to empower each other to make meaningful connections and eventually start sharing. In the ideal economy people would drive a car with SnappCar, take people with them on their journey through Blablacar, then rent a camera at Peerby, and rent a room at Airbnb. In twenty to thirty years, distribution will become more efficient, labour will become automated, and technology such as drones and robots will take over daily tasks such as driving a car (Peerby, 2014). 2.2 Collaborative consumption
Different types of sharing exist. A well-known mass-collaboration is the database Wikipedia where everyone can contribute with knowledge sharing. These forms of co-creation and mass-collaboration can be seen as true collaboration, which is a joint sharing of knowledge, free for both the contributor and the recipient (Tapscott & Williams, 2006). “The real magic and secret source behind collaborative consumption markets like Airbnb isn’t the inventory or the money. It’s using the power of technology to build trust among strangers.” Botsman (2012) says. Highlighting the importance of technology and trust, the question arises what is important for a successful shared economy business model.
Sharing is an alternative form of consumption based on collaboration in the production, creation, or use of products and services. People are now able to share, lend, swap, rent, and gift their property. “The shared economy allows owners to rent out assets such as a car, a home, a bicycle, or even pets to strangers using new forms of peer-to-peer markets” (Kreiczer-Levy, 2015 p.63). The shared economy is gaining momentum and appears to be a social trend in our society. Forbes estimates 3.5 billion dollars in revenue flowed through the shared economy in 2013 (Geron, 2013).
Airbnb is a website that allows people to rent out houses for short-term periods. Since its foundation in 2008 they have facilitated over two million room rentals according to one estimate. In addition, it currently includes more than 1.5 million listings in 190 countries and 34,000 cities (Airbnb, 2016r). Peerby, the second company that will be investigated in this research, is smaller than Airbnb with less than a million users and activity in only one country so far. The term ‘collaborative consumption’ that Botsman (2012) was one of the reasons for Weddepohl, CEO of Peerby, to start his
online platform. With this term that Botsman (2012) introduced, the environment changes from hyper consumption to the shared economy. 2.3 Growing shared economy A report from Crowd Companies estimated that in America 40 per cent of the population are already engaging in the shared economy or intend to within the year 2016. In the United Kingdom this number is 42 per cent. This made the UK Government set out a budget in 2015 with the objectives to improve economic growth and ‘make Britain the best place in the world to start, invest in, and grow a business (Treasury Budget, 2015).
High valuations have given the shared economy almost constant media coverage. Uber is valued at over $60 billion, while Airbnb is estimated to be worth over $20 billion. Both Uber and Airbnb belong to the list of ‘unicorns’. The unicorn list consists of private companies valued at $1 billion or more (Fortune, 2016). But actually, only 5 per cent of the population worldwide is visiting Airbnb or using Uber each month. There is definitely room for more growth in the shared economy (Airbnb, 2016q).
Moreover, 91 per cent of the consumers that have participated in shared economy would recommend it to friends and colleagues (Owyang, Samual & Grenville, 2015). In Denmark a study done for Nordea by TNS Gallup showed that the number of consumers participating in shared economy had tripled over the preceding year (Nordea, 2015).
A separate study examining 200 shared economy start-ups across the world revealed that around two billion dollars had been invested in shared economy by the time of the study (Owyang, Tran, & Silva, 2013). Along the same lines, Price Waterhouse Coopers reports that in 2013, the businesses within the shared economy generated revenues of 15 billion dollars, a figure they estimated will rise to 335 billion dollars by 2025 (PWC, 2015). This growth of the shared economy will have its impact on the current business environment. With the example of Dutch company Blablacar that is now worth over a billion euros and active in 22 countries with 30 million members, people start wondering whether they should be active in the shared economy as well (Airbnb, 2016p).
2.4 Changing business environment
In today’s rapidly changing business landscape, new sources of sustained competitive advantage can often be attained from business model, and in particular, from business
model reinvention, that is based on disruptive innovation and not on incremental change or continuous improvement (Voelpel, Leibold & Tekie, 2004). Proper business model configuration is broadly regarded as a valid proxy for general firm performance (Zott & Amit, 2007; George & Bock, 2011).
A business model can be defined as: “The particular business concept as reflected by the business’s core value propositions for customers; its configured value networks to provide that value, consisting of own strategic capabilities as well as other value networks and capabilities; and its leadership and governance enabling capabilities to continually sustain and reinvent itself to satisfy the multiple objectives of its various stakeholders” (Voelpel et al., 2004, p.261).
In today’s business landscape, it is therefore important to be innovative and imaginative in differentiating own and industry business model; reinvent existing business models or create new ones; realize the competitive advantage in proactively restructuring as a first- or second-mover; and finally, experiment with portfolio of strategies (Voelpel et al., 2004; Owyang et al., 2013).
Summarized, the business environment is changing rapidly and companies need to adapt to this change and redefine their business models (Owyang et al., 2013; Owyang, 2014).
2.5 Business models
When starting a company one of the first tasks is to have a business model (Zott, Amit & Massa, 2010). “Whenever a business enterprise is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and captures mechanisms it employs” (Teece, 2010, p.172). Business models serve a positive and powerful role in corporate management (Shafer, Smith & Linder, 2005; Zott et al., 2010). A good business model remains essential to every successful organization, whether it’s a new venture or an established player. But before managers can apply the concept, they need a simple working definition that clears up the fuzziness associated with the term (Margretta, 2002).
“The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit”, Teece argues (Teece, 2010, p.172). Thus, it reflects a management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a
profit. They help to capture, visualize, understand, communicate and share the business logic (Ostenwalder, Pigneur & Tucci, 2005).
A business model isn’t the same as strategy, Magretta (2002) continues, even though many people use the term interchangeably nowadays. When a business model is renewing and changes the economics of an industry, and besides that the model is difficult to imitate, it can by itself create a strong competitive advantage (Zott et al., 2010; Owyang, 2014). Business models serve as a powerful tool for executives to analyse and communicate their strategic choices (Shafer et al., 2005). Hand in hand with a successful business model is the term ‘success factor’. When a company books a success and its business model is built up properly, this model contains certain factors that led to its success, also known as ‘key success factors’. 2.6 Key success factors Important for the understanding of this research is the term ‘key success factor’. In this research, the term will be used as a combination of important facts that is required to order to accomplish one or more desirable business goals, the functions, activities, or business practices, defined by the market (not the company) and viewed by the customer, as critical to the company/customer relationship (Ebbers & Pruppers, 2012). Key success factors define what separates the winners from the losers (Ketelhöhn, 1998). The key success factors are directly related to what an organisation is, and how it operates in the world, according to Möller and Anttila (1987). Once you understand what an organization needs to survive, you can better understand the key success factors.
In general, there are five key success factors if we follow Tan, Yen and Fang (2002): The people in the organisation, the operations, the physical resources, the strategic focus, and the customers. For this research however, the key success factors will be pointed out in more detail. The key success factors will follow from looking into the company’s business model and search for important factors 2.7 Conclusion Altogether, there is insufficient research on what have been the key success factors of the business models in the shared economy that led to their success. For this reason, this research aims to enrich current knowledge by conducting qualitative research in the form of literature studies and analysing in-depth interviews performed by professional
journalists. Furthermore, the research investigates two companies in the shared economy, namely Airbnb and Dutch company Peerby, as an example of a winning business model.
3. Conceptual framework
After analysing all previous research on shared economies in the literature review, the next section proposes the framework that was used to answer the central research question. In line with earlier studies, we expect to find specific key success factors of Airbnb as well as Peerby, which correspond to each other.
Literature regarding the topic business models demonstrates the superficial approach when trying to understand its roots, role, and potential. Therefore, for this research the Business Model Canvas will be used in order to correctly review the business models of the shared economy companies whilst obtaining an overview on what the companies stand for (Osterwalder & Pigneur, 2010).
In evaluating the business models of the companies in the shared economy, the Business Model Canvas will be used. The Business Model Canvas is a strategic management template for developing new business models, or to reinvent existing ones. Initially proposed by Osterwalder and Pigneur (2010), the Business Model Canvas is used world wide when business models are being analysed. The visual chart, dividing the demand and supply side of a firm, consists of nine blocks. The nine building blocks include: Customer segments, value propositions, channels, customer relationships and revenue streams on the supply side, and key resources, key activities, key partnerships, and cost structure on the demand side. When investigating a building block of the Business Model Canvas, certain factors will come up that in turn lead to the success of the companies. Completing the Business Model Canvas for the companies Airbnb and Peerby, will give an insight on the strengths components and focus points of the business models. When evaluating these strengths, the factors that lead to the success of the business model and thus of the company can be determined. When determining these success factors is done, the central research question can be answered. Next to that, the key success factors will be analysed. See whether there are any overlapping success factors between the two companies that have been investigated. Also, whether there are individual success factors that are not overlapping between Airbnb and Peerby. Besides that, investigate whether there is a certain order in which success factors are more important and decide which success factor was the most important for the companies. All success factors will be summarized in a table to get an overview of what a company should focus on when entering the shared economy.
The Business Model Canvas can be divided in two parts, namely the demand side and the supply side. Therefore, the nine building blocks will now be presented (Osterwalder & Pigneur, 2010).
3.1 Customer segments
The customer segments building block defines the different groups of people or organizations an enterprise aims to reach and serve. “Customers comprise the heart of any business model. Without (profitable) customers, no company can survive for long. In order to better satisfy customers, a company may group them into distinct segments with common needs, common behaviours, or other attributes.” (Osterwalder et al., 2010, p. 15). A company must take a well-thought decision on which segments to serve and which segments to ignore. Once this decision is made, a business model can be carefully designed around the understanding of the customers’ need. There are different types of customer segments. Some examples are: Mass market, niche market, and segmented markets (Osterwalder et al., 2010, p. 16).
3.2 Value propositions
The value propositions building block describes the bundle of products or services that create value for a specific customer segment. “It is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need.” (Osterwalder et al., 2010, p. 17). Each value proposition consists of a selected bundle of products and/or services that caters to the requirements of a specific customer segment. Some value propositions may be innovative and renewing, while other may be similar to existing market offerings, but with new added features.
Values may be quantitative (e.g. price, speed of service) or qualitative (e.g. design, customer experience). Some elements are: Newness, performance, customization, ‘getting the job done’, design, brand, status, convenience, and usability (Osterwalder et al., 2010, p. 18).
3.3 Channels
The channels building block describes how a company communicates with and reaches its customer segments to deliver a value proposition. Channels are customer touch points that play an important role in the customer experience. “Finding the right mix of
channels to satisfy how customer want to be reached is crucial in bringing a value proposition to market.” (Osterwalder et al., 2010, p. 22)
The trick is to find the right balance between different types of channels, to integrate them in a way to create a great customer experience, and to maximize revenues, Osterwalder et al. (2010) continues. The phases of a channel are: Awareness, evaluation, purchase, and finally delivery. Some argue that the final phase should be after sales.
3.4 Customer relations
The customer relations’ building block describes the types of relationships a company establishes with specific customer segments. We can distinguish between several categories of customer relationships, which may co-exist in a company’s relationship with a particular customer segment.
The first one is personal assistance, based on human interaction and real communication with a customer. Second, there is dedicated personal assistance. This relationship involves dedicating a customer representative specifically to an individual client. Third, there is self-service, in which a company maintains no direct relationship with customers and “provides all the necessary means for customers to help themselves.” (Osterwalder et al., 2010, p. 24). Fourth, there are automated services, which mixes a more sophisticated form of customer self-service with automated processes. Fifth, there are communities to become more involved with customers and to facilitate connections between community members. Finally, there is co-creation. “More companies are going beyond traditional customer-vendor relationship to co-create value with customers.” (Osterwalder et al., 2010, p. 24). 3.5 Revenue streams The revenue streams building block represents the cash a company generates from each customer segment. A company must ask itself what value each customer segment truly is willing to pay. “Successfully answering that question allows the firm to generate one or more revenue streams from each customer segment.” (Osterwalder et al., 2010, p. 26). Each revenue stream may have different pricing mechanisms, such as fixed list prices, bargaining, auctioning, market dependent, volume dependent, or yield management.
The type of pricing mechanism chosen can make a big difference in terms of revenues generated. There are two main types of pricing mechanism: fixed and dynamic pricing. Fixed pricing means having predefined prices that are based on static variables, while dynamic pricing are prices that change based on market conditions (Osterwalder et al., 2010, p. 27). 3.6 Key resources
The key resources building block is the most important assets required to make a business model work. Every business model requires key resources. “These resources allow an enterprise to create and offer a value proposition, reach markets, maintain relationships with customer segments, and earn revenues.” (Osterwalder et al., 2010, p. 29). Different key resources are needed depending on the type of business model.
According to Osterwalder et al., key resources can be categorized as physical, intellectual, human, and financial (2010, p. 30).
3.7 Key activities
The key activities building block is the most important things a company must do to make its business model work because every business model calls for a number of Key Activities. These are the most important actions a company must take “to operate successfully” (Osterwalder et al., 2010, p.31). “Like key resources, they are required to create and offer a value proposition, reach markets, maintain customer relationships, and earn revenues. And like key resources, key activities differ depending on business model type.” (Osterwalder et al., 2010, p. 32). Key activities include supply chain management. They can be categorized as follows: Production, problem solving, and platform/network (Osterwalder et al., 2010, p. 32). 3.8 Key partnerships The key partnerships building block is the network of suppliers and partners that make the business model work. There are many reasons for companies to forge partnerships. They have become increasingly important in a company’s business model. “Firms create alliances to optimize their business models, reduce risk, or acquire resources.” (Osterwalder et al., 2010, p. 34).
Four types of partnerships can be distinguished (Amit & Zott, 2001): (1) Strategic alliances between non-competitors, (2) coopetition: strategic partnerships between
competitors, (3) joint ventures to develop new businesses, and (4) buyer-supplier relationships to assure reliable supplies.
3.9 Cost structure
The cost structure building block is all costs incurred to operate a business model. It describes: “the most important costs incurred while operating under a particular business model.” (Osterwalder et al., 2010, p. 36). Creating and delivering value, maintaining customer relationships, and generating revenue all incur costs. These costs can be retrieved easily after defining key resources, key activities, and key partnerships.
Obviously, costs should be as minimal as possible in every business model. However, different costs structures exist. A division therefore is made between cost-driven and value-driven companies. Some characteristics of costs are fixed or variable costs, economies of scale, and economies of scope (Osterwalder et al., 2010, p. 36).
4. Methodology
In this section, several aspects on this method of the research will be outlined. First of all, the research design will be exemplified. Second, the research method will be discussed. This study will be conducted through qualitative research. The reason for this approach is that the answer to the research question primarily lies in the evaluation of the business models that already exist and are publically available.
The choice for doing qualitative research lies in the situation of the research. A certain type of economy, namely the shared economy, is being investigated. The relatively new phenomenon has been investigated in the past, but as researchers expext the shared economy to grow enormously more research is necessary. When exploring the shared economy, strengths of the business model are being determined. Also, this research tries to understand which success factors are key for a company in the shared economy. These situations are examples in which qualitative research is often used (Saunders, 2011).
Creswell (2013) also argues that qualitative research can be used to go deeper into issues of interest, to define a problem or to explore a new phenomenon. The shared economy is a relatively new concept and in order to investigate this phenomenon in detail, a qualitative approach seemed more suitable. Also qualitative studies generally focus on a much smaller sample (Saunders, 2011). Because of time constraints, this research only focuses on two companies in the shared economy. To make sure generalisations can be made in conclusion of this research, an in-depth research into the two companies was necessary.
Literature on this topic and other supportive sources of information are of sufficient knowledge to answer the research question. Searching for literature on the shared economy, the business models of shared economy companies, and successes of the shared economy will be combined in this research. The factors that are the reason for the success of the business models are the conclusion of this research. These success factors will be provided by the analysed literature and in-depth interviews performed by professional journalists. 4.1 Research design In order to fulfil the purpose of this research it was first necessary to establish a relevant theoretical foundation. The literature is collected online through previous research
published in journals. Literature of several different journals is used to increase the reliability of the research. The literature was found through digital instruments such as Google Scholar and JSTOR, one of the databases of the University of Amsterdam. The JSTOR database contains internationally leading journals.
Besides the careful search for relevant literature, interviews gave a deeper knowledge on the key success factors. As face-to-face interviews with employees of the company were not permitted during the period in which this research was done, interviews by professional journalists were analysed in order to gain a deeper knowledge on the companies’ success factors. The knowledge learned from the interviews revealed both insights in the winning business models, as a broader view on the shared economy and how it is build up.
Especially in the case of Peerby, in-depth interviews were necessary to gather data and in turn come to a conclusion. In contrast to the company Airbnb, literature on a company that was founded in 2011 is not easily available on a professional level. Therefore, interviews by VPRO, Sprout, Youngstartup, and other researchers are used as background information for this research (Peerby, 2012; Peerby, 2013b; Peerby, 2014).
As researchers see Airbnb as one of the leaders in the current economy, Peerby is relatively new and still exploring the shared economy. Even though the company is active for only five years now, the success of Peerby in the Netherlands is interesting to investigate and to compare to a company such as Airbnb. As their business models are can be compared, we expect that the success factors of the two companies are overlapping as well. This is important for this research to make generalisations. During this research, making generalisations and finding success factors of companies in the shared economy were relevant findings, which other researchers could continue with.
First of all, when performing this research the success factors of the winning business models will be determined. Second, these success factors can be compared between the two companies that have been investigated. Finally, a certain order of importance will be determined if possible to investigate whether there any factors that have been more important for a business model to be successful compared to other success factors.
4.2 Research method
In the conceptual framework the building blocks of the Business Model Canvas by Osterwalder et al. (2010) are explained. Filling in the Business Model Canvas for the two
companies that were investigated, Airbnb and Peerby, gives general impression on what is important in each building block. After analysing the existing literature about shared economies, business models and the in-depth interviews, the evaluation of each building block leads to the factors that made the company successful.
Two actions followed. First of all, the success factors of the companies were determined and discussed in detail. Second, the success factors were further analysed to see what the factors mean for the company and for the shared economy companies in general. The success factors of the two companies were compared with each other, a certain order of importance was discussed, and finally an overview of all success factors of the business model is presented.
The findings believed to provide a practical and relevant guide for companies who are planning to enter the shared economy or existing companies wishing to expand their operations to exploit the shared economy. As PWC estimated the shared economy to rise to 115 billion dollars by the end of 2016 and 335 billion dollars by 2025, this phenomenon is extremely interesting to investigate in more detail (PWC, 2015). Also, 76% of the US adults familiar with the shared economy agree that the shared economy is better for the environment and 78% agrees that the shared economy reduces waste.
Also, as is described in the introduction, the shared economy is growing fast and for many entrepreneurs and business people it is an interesting industry to enter. Next to that, Forbes magazine was one of the driving forces behind the shared economy when they estimated the shared economy to grow and surpass $3.5 billion in 2025 (Geron, 2013). Also, PWC found that 28 million dollars is invested in shared economies daily. Therefore, an investigation into this industry is relevant.
4.3 Reliability and validity
Although reliability and validity are difficult to measure for a qualitative research, in this research different journals were used to achieve reliability and validity. Using articles that were referenced often and therefore have a high impact shows the high quality of the articles and the usefulness of the paper (ISI Web of Knowledge, 2007).
Second, the research uses the Business Model Canvas by Osterwalder et al. (2010). This widely used business model gives a general perspective on what the company is about and the Business Model Canvas is therefore an appropriate model to determine the success factors of both companies.
4.4 Acknowledgements
The choice for the two companies that have been investigated was relatively easy. Airbnb is seen as one of the leaders in the shared economy and being one of the first-movers in the shared economy. Besides that, Airbnb has an interesting business model to investigate that has been copied by several other companies as well (Peerby, 2016g). They are an inspiration for many companies to shape their business model in a way that is similar to Airbnb. To get a deeper knowledge, a smaller and relatively new firm was chosen as well. Peerby is a Dutch company with an interesting business model to investigate as well. Although the companies are different and have another purpose in the shared economy, there are many similarities between Airbnb and Peerby’s business model. Therefore, the two companies are suited to compare and in turn, to make generalisations on what its success means for the shared economy. Further research could expand on the amount of companies investigated.
5. Business Model Canvas
The results of this research will be presented in this section. First of all, the Business Model Canvas of Airbnb will be presented. Afterwards, the important building blocks will be summarized and the key success factors of the company will be given. After Airbnb, the Dutch company Peerby will be analysed. The Business Model Canvas of Peerby will be given in section 5.2, followed by the key success factors in section six.
The Business Model Canvas, as presented by Osterwalder et al. (2010), contains nine building blocks as is mentioned earlier in the Conceptual Framework. The principle of the model is that all nine building blocks are important for a business model to succeed. Filling in the Business Model Canvas for Airbnb and Peerby was necessary to get an overview of what the company stands for an to find its success factors. However, not all nine building blocks contain success factors. Nevertheless, all building blocks should be taken into account when determining the success factors so no exclusions of building blocks are made. All in all, no distinction will be made in which building block is more important. 5.1 Airbnb Image 1: Airbnb logo
Airbnb is a company that was founded in 2008 in the United States. Starting with a website to rent out rooms, in eight years they have grown from the US to 190 countries and over 1,500,000 listings (Airbnb, 2016a).
5.1.1 Customer segments
There customer segment building block exists of Airbnb’s customers. The customers of Airbnb are two groups, namely hosts and guests. Hosts rent out their rooms, apartments, and properties etcetera. Guests on the other hand book these rooms. This makes Airbnb a two-way platform handling multiple transactions as hosts are both a supplier of room, as a customer of Airbnb making money themselves (Airbnb, 2016).
The profiles of hosts and guests are publicly available on the Airbnb website, and these user profiles can contain information about previous guests that they have hosted and hosts they have stayed with (Zervas et al., 2015). Showing these profiles online is a way for Airbnb to generate the trust of the consumer. People do not rent or share things when they do not know someone (PWC, 2015). Therefore, the level of trust for Airbnb is extremely important. These hosts have restriction and strict laws are made by the government to rent out rooms, but still hosts are the most valuable customer segment for Airbnb (Airbnb, 2016f; Airbnb, 2016o; Edelman et al., 2014; Geron, 2013). Airbnb set up strict rules for the hosts and a guarantee by Airbnb is given when these hosts do not follow the rules accordingly (Airbnb, 2016f).
Finally, Airbnb serves multiple customer groups. They use a niche and mass-market approach combined. Guests can apply filters to make a specific choice on the type of house they want to rent. In this way, some guests can stay in luxurious villas while other stay in an apartment in the center of a city.
5.1.2 Value proposition
The new concept of Airbnb is the most interesting value proposition the company has. As mentioned with customer segments, Airbnb functions as an intermediary between consumers and functions as a multi-sided platform. They have succeeded to create a new type of demand even though the offers of room for rent (think of hotels and bed-and-breakfast) was already relatively large. Next to that, no demand for a new type of renting was needed (Cave, 2013; Carr, 2014; Chen, 2009). Besides the new demand, Airbnb also takes a stand as an intermediary. With two customer groups, Airbnb only functions as the platform that provides the properties for rent, instead of being responsible for the actual property itself (Airbnb, 2016).
Another important value proposition is trust. Gebbia (2016) shows in his research that people trust each other most when they have similar characteristics. Also, researchers Kim, Xu & Koh (2004) describe the importance of one-time customers and loyal customers. The level of trust in maintained when a company creates loyal customers that have trust in the company. This trust is generated through multiple factors. First, Airbnb uses reviews to make sure trust does not decline even though possessions are being shared. If a host has a positive reputation, a positive level of trust is created. Next to that, Airbnb designed their website in a way that hosts and guests
both can communicate in a pleasant way and both website and application are user-friendly (Airbnb, 2016). The ease of using the website and application is another factor that stimulated the level of trust.
The third value proposition is customization. Your stay, or renting out your property, can be customized in many ways. Budget, location, duration of stay and many other features can be applied when renting a room. Airbnb contains a great variety of different accommodations from a simple room in an apartment to a luxurious villa (Airbnb, 2016).
5.1.3 Channels
In the case of Airbnb, the channel phases are all operating online on the company’s platform. Airbnb’s pushes itself to be strong in the awareness phase. Their online marketing and campaigns are satisfying to watch, but the word-of-mouth that Airbnb has is their most important source of awareness. This word-of-mouth is generated through the encouragement to share Airbnb’s experiences online. Again, the reviews online and word-of-mouth are Airbnb’s way to generate trust amongst its users. The company presents several tools to share these experiences through social media for example with Facebook (Airbnb, 2016g). Again, all of Airbnb’s activities are online. Secondly, Airbnb has a strong technology department. The website, as well as the application are free of charge and user-friendly. Next to the online reviews of customers, the Question and Answer page of Airbnb is relatively strong as well so customers can easily approach the company when experiencing any problems (Airbnb, 2016l). Also, all transactions are done online (Airbnb, 2016d). All in all, the technology that Airbnb has in-house is a strong and valuable asset of the company as the customers mention the ease of using the website and application as one of Airbnb’s best assets (Airbnb, 2016p).
5.1.4 Customer relationships
Airbnb establishes its customer relationship with the hosts and the guests through customer service, social media, and promotional offers (Boyd et al., 2007). As described in the Customer Segment pillar, Airbnb has two important groups to build a customer relationship with. The relationship with the host is mainly built through Airbnb’s website (Airbnb, 2016). When people rent out an apartment for the first time, Airbnb provides a detailed overview on how to rent out an apartment (Airbnb, 2016k). Next to that, Airbnb also has mentors that guide new customers (Airbnb, 2016j). On the other
hand there is the relationship with the guests. This relationship is all based on trust, described in the customer segment building block (Airbnb, 2016c).
The customer relationship and the pillar of value propositions of Airbnb are connected. The value delivered to both the hosts and guests is mainly based on trust. This trust is build through the customer relationships, which are being established through the channels.
5.1.5 Revenue streams
The price the guest has to pay for the booking consists of the rate of renting an accommodation, cleaning costs, and additional fees added by the hosts. In this way Airbnb acts as a intermediating platform between both the hosts and the guests. This mediating position results in two different revenue sources for Airbnb, which are the commission received from the hosts and the service costs received from the guests. The intermediating position of Airbnb is positively received by its users and seen as a successful factor of the company.
First of all, Airbnb charges 3% over the booking costs from hosts by each confirmed booking (Airbnb, 2016p). Second, Airbnb charges 6-12% service costs from guests on every booking confirmed through the platform. Again, all revenues that Airbnb gets from the transaction are displayed online on their website (Airbnb, 2016h). All in all, The Wall Street Journal estimated the revenue of Airbnb last year at $900 million, earned over 78 million nights booked (Winkler, 2015).
5.1.6 Key resources
One of Airbnb’s key resources is its newness. Airbnb created a new demand and besides that, have a first mover advantage in focusing on customer service and satisfaction. Their reputation of personalization, trust and reliability attracted users that truly believed in the company (Edelman et al., 2014; Geron, 2013). Airbnb changed the behaviour of the customer in the hotel industry (Olsen & McDarby, 2015).
Trust is Airbnb’s second key resource. Trust is obtained through many different was, for example the reviews of hosts and guests as is mentioned earlier. Research found that participants agreed that “Airbnb has been more user friendly and reliable and overall it has made good use of the Internet and social media to create an experience that feels closer and which consumers can relate to” (Olsen & McDarby, 2015, p. 9). Secondly, trust is also generated by offering host guarantees to protect the properties of
the hosts and by its communications and word-of-mouth (Airbnb, 2016e). All in all, Airbnb is built on trust and it is seen as its most valuable asset.
Third key resource of Airbnb is its technology. The ease of using the website and application is something Airbnb focuses on they spend large amounts of their budget on innovation and technology to keep this level of satisfaction maintained (Airbnb’s cost structure 5.1.9). Next to that, Airbnb is active on social media and their emailing with personalized promotional offers attract customer to book again and create loyal customers.
5.1.7 Key activities
One of Airbnb’s key activities is its product development and management. This activity is crucial for Airbnb as they continuously need to manage a high quality of trust between different parties. They manage this trust through their website and application with updates and new information available and use their intermediate position to maintain the relationship between host and guest. Secondly, Airbnb focus on managing their customer relationships as they are a customer-to-customer platform, and the company wants to avoid abuse of this platform (Airbnb, 2016m).
Besides that they are actively managing product segmentation in improving the customer journey and make offers more personalized. Also, they manage dynamic pricing for demand and supply fluctuations (Airbnb, 2016h). Finally, one of Airbnb’s important activities is their marketing as their advertising has lead to a high level of awareness and positive word-of-mouth (Airbnb, 2016r). 5.1.8 Key partners Airbnb has several partners who they work closely with. Firstly, the hosts and the guest are a partner of Airbnb per se, but next to that, Airbnb also has investors. In June 2015, Airbnb raised $1.5 billion in June 2015, which is one of the biggest funding rounds ever (Airbnb, 2016r). The investors involved in this deal were private equity firms ‘General Atlantic’, ‘Hillhouse Capital Group’ and ‘Tiger Global Management’ (Crunchbase, 2015). Besides the investors, there are other companies that are not direct partners of Airbnb, since they do not work for or with each other and they are not connected through a revenue stream. An example of this is the cleaning companies that work for for Airbnb apartments such as cleanbnb.com or the people giving the key to the people
who are renting an apartment such as keybnb.com. Cleaning companies and keybnb.com followed the success of Airbnb can be seen as an indirect partner of Airbnb.
5.1.9 Cost structure
The costs of Airbnb has several groups of costs: employee salaries, technology costs, sales and marketing, costs of insurance, and costs of transactions are the general costs of the company (Airbnb, 2016r). Airbnb is a cost-driven company that tries to keep costs as low as possible. However, their business model is focused on value creation, which can be seen in the design of their website and application (Airbnb, 2016). Besides the costs of labour, employee costs are Airbnb’s biggest expense (Airbnb, 2016r). Another fixed cost is the cost of insurance that Airbnb guarantees. Next to their costs of transactions, a large expense of Airbnb is their advertising. In 2015 Airbnb has spent 18.9 million dollars on online advertising alone (Statista, 2016). Although Airbnb has its costs covered, the company still manages to be less expensive than the other demand of apartments for rent (PWC, 2015). The pricing of Airbnb is appreciated highly by its users because peope feel they get value for their money (Airbnb, 2016p). Pricing is also seen as one of Airbnb’s success factors.
5.1.10 Conclusion
After analysing the nine building blocks of the Business Model Canvas, it is evident that all Airbnb operations are based around e-trust because without trust, Airbnb simply cannot exist. Furthermore, the following value propositions are also important: newness, ability to adapt the design of the platform and customization. The two groups of Airbnb’s customer segment, its hosts and guests, are central in their business model.
5.2 Peerby Image 2: Peerby’s logo “Sharing is the new owning” Daan Weddepohl argues in an interview with YoungStartup (Peerby, 2013b). “Some things you only need once, or once in while, so why buy, if you can borrow for free?” he continues. The perception on ownership has made a change (Peerby, 2013a). Interesting fact Weddepohl (Peerby, 2013b) points out in his interview is that “80 per cent of the things you own, are used not more than once a month” and “a drill machine is used on average 13 minutes in its entire lifetime”. Weddepohl, CEO of Peerby, mentions it is important that we make overcapacity available. “We created a way of consuming in the last decades in which we have a lot of surplus. This surplus has a lot of value that is not being used. The shared economy is the possibility to make this surplus available” (Peerby, 2014). Only recent, Weddepohl mentioned in an interview with Sprout (2016) that his dream is “making sure everybody in this world starts sharing, with or without payment and besides that I want products to have a longer lifetime and making them easier to prepare”.
Giving the change in economical conditions and environmental issues, people start to value access to products and service more that actually owning them (Chen, 2009; Nadler, 2014; Grémillon, 2014). PWC mentioned in their research that 43% of the US adults familiar with the shared economy agree that owning today “feels like a burden” (PWC, 2015, p.17). Peerby therefore introduced a platform of a whole new way of interaction between people (Peerby, 2014). With its online website and application, Peerby gives people the opportunity to borrow things from another, within the same neighbourhood. Besides that, it is free of charge as well. Peerby is active since 2011 and has grown extremely fast over the last five years (Peerby, 2015).
The Business Model Canvas of Peerby will now be presented. Afterwards, the important building blocks will be summarized and the key success factors of the company will be given.
5.2.1 Customer segments
Peerby is what the economy nowadays calls it, a typical P2P, or peer-to-peer market (Dervojeda et al., 2013; Philip, Ozanne & Ballantine, 2015). This new form of segmentation has its roots in financial lending and after the successes of Uber and Airbnb it is becoming a real disruption to existing customer segments. Similar to Airbnb, Peerby take the intermediary position. The lenders ‘rent out’ their properties, while the borrowers have a need for a certain good and find this good on the website or application of Peerby (Peerby, 2016a). Similar to Airbnb, the issue of trusting each other is large for Peerby. Properties are being rented out for free and besides that, the benefits for the lender are relatively small. ‘The ordinary shopper is becoming a part-time, social entrepreneur’ (Nadler, 2014). Both groups, borrowers and lenders, are considered as environmentally aware people since they want to engage in a company such as Peerby, and borrow and share items instead of buying new ones (Chen, 2009).
5.2.2 Value propositions
Peerby’s largest value proposition is its platform where one can borrow and share products with people who leave in the neighbourhood in a safe and fun environment. In this way, items are better utilized. Next to that, the sharing of items enables people to meet new neighbours and engage in new relationships through the platform (Peerby, 2012). PWC (2015) reinforces this when they mention that the shared economy is less expensive than owning. Second, PWC (2015) also mentions that consumers agree that the shared economy reduces waste.
Cost conscious customers cannot only save money through the platform, but create new social living areas, whilst contributing to more environmental awareness and improvement (Sheth et al., 2011). Consumers experience the creation of the community in a positive way, according to PWC’s research (PWC, 2015). The original suppliers and fabrics of the products are stimulated to make longer lifetime products that are used more intensively. In this way, a more sustainable economy is created (Peerby, 2014). Co-creation is more important than ever with Peerby as customer’s wishes need to be taken into consideration by producers now more than ever (Peerby, 2015b). This human interaction comes from the problems in business models where the ‘lack of human connectivity in neighbourhoods’, and ‘the absurdity of everyone owning the same items but not using them often’. Thus, the ‘neighbourhood lending system’ was the perfect solution to this problem, Weddepohl argues (Peerby, 2013b).
5.2.3 Channels
Peerby works online, and online only. The website and application are the central driver of the company and make the peer-to-peer sharing possible (Dervojeda et al., 2013). However, a good transaction between borrower and lender is more important than ever (Philip et al., 2015). The downfalls of platforms such as Marktplaats.nl were that people tend to dislike buying items from other people they do not know (Peerby, 2014). Again the transaction between the two parties is based on trust.
The channel is user-friendly and has an inviting approach that encourages many people to become lenders or borrowers. Their marketing mission is the creating of a network in which people borrow and lend even more in order to scale up (Peerby, 2015b).
5.2.4 Customer relationships
Similar to Airbnb, the customer relationship of Peerby is an important for the company. Through customer service and social media, Peerby builds its customer relationship with the borrowers and lenders (Boyd et al., 2007). Clear descriptions on how to lend out you items are being provided through the website of Peerby (Peerby, 2016a).
The customer relationship is closely related to the value propositions of Peerby. The value delivered to both the borrower and lender is mainly based on trust. Trust is build through the customer relationships, which are being established through the channels.
5.2.5 Revenue streams
A clear disruption in Peerby’s business model is their way of making money (Peerby, 2016g). Until September 2015, Peerby had no earnings besides funding (Peerby, 2016c). CEO Weddepohl mentioned in interviews that he thinks advertising on his website and application, on the bases of making money, is a bad business model (Peerby, 2014). Weddepohl immediately ignored a subscription model during the interview at VPRO Tegenlicht (Peerby, 2014). He argues that a business model for Peerby to earn money will come, but for now the companies has other ways of making money (Peerby, 2016b).
The company gets funding from three areas. They call the funding areas the three pillars of Peerby vision (Peerby, 2016b). The first one is social cohesion. Stichting Doen is one of the initiatives that funded the company from the beginning. Secondly, there is sustainability. Peerby has won prizes in the United Postcode Lotteries and Clinton
Global initiative. The final pillar is social entrepreneurship. One of the big investors of Peerby is media partner Sanoma Media.
Next to the three pillars, Peerby raised $2.1 million with crowdfunding. On their website they mention the following: “The investment round is led by French XAnge Private Equity. Netherlands-based Sanoma Ventures invested for a second time. TechStars and angels from Canada and the United States also invested. Dutch founder Daan Weddepohl is going to use the funds for product development and and international growth, with a specific focus on the United States.” (Peerby, 2016e).
In september 2015, Peerby Go was launched in which they experiment with charging a small percentage for each lending transaction (Peerby, 2016f; Peerby, 2016g).
5.2.6 Key resources
The trend nowadays to see resources not as a personalized good but as an exchangeable commodity shows the change on how people think about ownership. An item is rather a public good, or an item someone is willing to share and in return help others. Sustainability and willingness to share is therefore Peerby’s largest resource (Sheth et al., 2011; Peerby, 2013a; Peerby, 2014). ‘People give away items for free’, Weddepohl argues, ‘and they do this out of unselfishness’ (Peerby, 2014). Next to that, they become part of a community, Weddepohl continues, and in return people tend to be happier from giving to others than from receiving items from others (Peerby, 2014).
5.2.7 Key activities
The key activities describe what kind of activities Peerby performs. Similar to Airbnb, Peerby’s key activities are product development and management, management of customer relationships, and innovation and growth.
The first activity concerns product development and management. For Peerby it is crucial to continuously manage a high quality trust between different parties. First of all, they are doing this through their distribution channels (website and application) by platform update and maintenance. Their homepage has to stay innovative to attract more customers and provide updated information.
Second, they focus on managing their customer relationships as Peerby is a peer-to-peer platform, and the company wants to avoid abuse of this platform (Peerby, 2012; Peerby, 2013b).
Third activity of Peerby is their willingness to grow. The company has been growing enormously over the last couple of years and is performing pilot versions in the US already, planning to go international as soon as the platform is profitable in the Netherlands (Peerby, 2014; Peerby, 2016a).
5.2.8 Key partners
Peerby’s most important partners are its borrowers and lenders, similar to Airbnb. Without the people willing to share their possessions with another, Peerby would be nowhere (Chen, 2009). The company therefore makes use of the fact that people get a sense of satisfaction from sharing with others.
Second, Peerby is still existent because of its investors. Financial investors such as Sanoma, insurance companies such as Centraal Beheer, and foundations such as Stichting Doen and United Postcode Lotteries, are the funding behind Peerby (Peerby, 2016e). Centraal Beheer is seen as one of Peerby’s most important partners because the insurance Peerby provides when using the platform is their way of keeping the level of trust constant (Peerby, 2015a; Peerby, 2016d).
5.2.9 Cost structure
As mentioned above, Peerby only just launched their profitable business model with Peerby Go (Peerby, 2016f). As costs remain low for the company, the sharing model can support the enterprise in the long term. However, for the company to be able to grow and have a long-term experience, real earnings have to be made. This could mean that Peerby needs to find investors or expand in their profitable business model (Peerby, 2016e).
5.2.10 Conclusion
After analysing the nine building blocks of the Business Model Canvas, it is evident that all Peerby’s operations are based around e-trust because without trust, Peerby simply cannot exist. Furthermore, the following value propositions are also important: newness, ability to adapt the design of the platform and customization. The two groups of Peerby’s customer segment, its borrowers and lenders, are central in their business model.
