RISE OF THE IN­TER­NET MID­DLE­MEN

New ser­vice industry gi­ants that own next to no in­ven­tory, but con­trol the shar­ing econ­omy.

HWM (Malaysia) - - THINK - JamesLu

by Airbnb is now the w world’s largest provider of ac­com­mo­da­tion with more than one mil­lion roo rooms avail­able world­wide world­wide. By com­par­i­son, the largest ho­tel chain in the world, In­ter­con­ti­nen­tal ntal Ho­tel G Group, has just 700,000 rooms. And yet, Airbnb doesn’t ac­tu­ally own any o of its rooms. Airbnb isn isn’t unique in its suc­cess either, Uber doesn’t own a sin­gle car and is on track rack to be­com be­come the world’s largest trans­porta­tion provider, and Alibaba, one of the wo world’s largest re­tail­ers, doesn’t own a sin­gle ware­house or even any prod­uct prod­ucts. So what do th­ese com­pa­nies ha have in com­mon? They’re all bro­kers.

Be­ing the e mid­dle­man ha has al­ways been lu­cra­tive. But thanks to the In­ter­net, it’s never been mo more lu­cra­tive. While the av­er­age ge har hard-work­ing real es­tate bro­ker can ar­range deals be­twee­nen dozens of buy­ers a and sell­ers ev­ery month, Airbnb ar­ranges deals be­tween thou­sands of buy­ers and sell­ers ev­ery day. In fact, ac­cord­ing to the com­pany’s most re­cently re­ported ted statis­tics, there are aroun around 40,000 book­ings made daily.

What ma makes th­ese com­pa­nies more suc­cess­ful mid­dle­men than oth­ers that have come be­fore them? They all have ave ex­cel­lent user in in­ter­faces. All three have easy-to-nav­i­gate web­sites,b it as well as smart­phone apps that make it easy to find what you’re look­ing for, and easy to pay for. Ad­di­tion­ally, all three are re­ally good at mak­ing you for­get that you’re ac­tu­ally in­ter­act­ing with a bro­ker.

The process of re­quest­ing an Uber ride, buy­ing goods from Alibaba, or rent­ing a room from Airbnb is quick, sim­ple and doesn’t come with any ob­vi­ous ser­vice charges or ‘caveats’, so it doesn’t even feel like you’re deal­ing with a mid­dle­man.

All three have also spent con­sid­er­able time build­ing con­sumer trust. Airbnb and Uber have han­dleded this by t ty­ing the trans­ac­tion n betw be­tween buyer and seller to a user’s real iden­tity (thr (through Face­book ok Con­nect) and through re­views and re­fer­rals, both for buy­ers and sell­ers, and with hars harsh reper­cus­sions s if that tru trust is bro­ken. Of course, it also helps that all three are gen­er­ally cheaper heaper th than tra­di­tional re­tail­ers, like ho­tel chains and taxi com­pa­nies. They are able to pro­vide a di­verse erse and re­fresh­ing take on th­ese tra­di­tional ser­vices too. E.g., ea each Airbnb home is com­pletely unique,niqu as op­posed to a tem­plated ho­tel room; Uber works orks wi with lo­cal busi­nesses inesses to of­fer ‘perks’ such as on-de­mand lion dance per­for­mances dur­ing Chi­ne­seinese N New Year, or free su su­per­car rides stocked with cham­pagne dur­ing the re­cent For­mul For­mula 1 race week­end in SIn­ga­pore.

But be­ing t the mid­dle­man man isn’ isn’t with­out its risks. With­out any ac­tual prod­uct or in­ven­tory, In­ter In­ter­net bro­ker­srs are very vul­ner­a­bleb to com­pe­ti­tion. Con­sumers are fickle, and while th­ese three comp com­pa­nies are firmly en­trenched as mar­ket lead­ers, all it takes is a bet­ter UI or ch cheaper pricesices fo for con­sumersers to jump ship. Just look at how fast MyS­pace col­lapsed af­ter the e laun launch of Face­book.ce­boo Com­peti­tors are just one good app away from steal­ing mar­ket share from om yo you, and small­er­maller lo­cal­ized com­pa­nies like MyTeksi can ap­peal to re­gional demo de­mo­graph­ics s and eas­ily over­take you at a lo­cal level while you fo­cus on global mar­kets. So while hile i it’s prob­a­bly bly sa safe to say that In­ter­con­ti­nen­tal Ho­tel Group will still be around ten ye years from m now now, it isn’t a sure thing to say the same is true for Airbnb. The bar­ri­ers to en­try forr bui build­ing a globa global ho­tel chain are ex­ceed­ingly high, but the bar­ri­ers to en­try for build­ing a bet­ter UI? Not as high.g

"All three are re­ally good at mak­ing you for­get that you’re ac­tu­ally in­ter­act­ing with a bro­ker.”

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