German University in Cairo Date: 04/12/2022

Faculty of Management Technology

MBA Department
Prof. Tamer Awad

Digital Marketing MRKT 703

Fall Semester 2022
Assignment 1

Submitted by: Lilian Michel Youssef Melek

ID: W2017545

Airbnb, Etsy, Uber: Growing from One Thousand to One Million

Customers

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Airbnb, Etsy, Uber: Growing from One Thousand to One Million Customers case study is a Harvard Business
School (HBR) case study written by Thales S. Teixeira, Morgan Brown. The Airbnb, Etsy, Uber: Growing from
One Thousand to One Million Customers case study provides evaluation & decision scenario in field of
Strategy & Execution. It also touches upon business topics such as - Value proposition, Marketing, Strategy,
Supply chain.

Case Summary
By 2016, two-sided online platforms (or marketplaces) were pervasive among the highest growing internet
startups around. These marketplaces sought to match suppliers of assets for rent, physical products or
services with customers demanding them. Among the most notable two-sided platforms in terms of their
tremendous early growth were Airbnb, Etsy and Uber. They offered short-term property rentals, handcrafted
goods, and car rides, respectively. As two-sided markets grew to scale, network effects kicked in as more
consumers bred more suppliers and vice versa. But how did these platforms ride the second wave of growth?
How did they grow from one thousand to one million customers?

In each case the strategies are different because of the company's situation at that time. Thanks to early
adopters Airbnb, Etsy and Uber has started thinking about how to expand their customer base with better
marketing methods. Digital marketing will help out, enabling different companies to get targeted customers
through different search ads or social media at the affordable rate.

Introduction
Startup companies usually compete against each other in order to increase their customers’ base. Over here,
the issue is significantly more difficult with new businesses in the sharing economy, which have been launched
as platforms in order to connect for providing independent services to customers.

Airbnb, Etsy and Uber have acquired thousands of customers in a very short period of time by using two-sided
online platforms, which were determined among the most noteworthy developing web or online startups
everywhere. These commercial centers tried to match the suppliers and demands of assets for rent, physical
products or online services with clients.

Among the most well-known two-sided platform shaving rapid growth were Airbnb, Etsy and Uber. They
offered short-lived property rentals, assembled merchandise, and auto rides, separately. As two-sided online
markets developed to expand, there was a significant impact on the system, which attracted more customers,
resulting in an increase in the suppliers for the company as they had to meet the demands of the customers.

If we consider Uber, then it could be said that its platform is two-sided, comparing people who need rides with
people who have rides to offer and same idea for Airbnb, which associates people requiring rooms with
property owners. In order to launch the platform services, these organizations need to discover clients on both
the supply side as well as the demand side.

Therefore, the objective is to determine the platform and marketing strategies of each company, which
would increase the number of customers so as to increase the demand. Along with this, it is also
important to know the risks and opportunities faced in two-sided platform and therefore, strategies
should be recommended for further growth to attract the customers by having as strong relationship
for a long period.

1. Airbnb
Airbnb was a two-sided marketplace to match people that owned real estate properties with people interested
in renting short-term lodging. Airbnb was founded in August 2008 and based in San Francisco, California, the
company was privately owned. By 2009, Airbnb had more than one thousand customers and by 2011 more
than one million. One of the major advantages of Airbnb was that it tended to be substantially cheaper,
generally 30% to 80% lower than hotels in the same location. In the summer of 2011 the company introduced
Airbnb Social Connections, which leveraged users’ social graphs via Facebook Connect. Social Connections. It
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also allowed guests to search for hosts based on other characteristics, like school of graduation. In 2012
Airbnb received $112M in a Series B funding round from Andreessen Horowitz, Digital Sky Technologies,
General Catalyst Partners, Jeff Bezos, Ashton Kutcher who also joined the company’s advisory board and
Crunch Fund. At 22th June, just three days after funding which valued Airbnb at over $1 billion. Another
important point is that; on August 1st, Brian Chesky issued an unconditional apology via the company blog,
announcing Airbnb’s updated guarantee to cover up to $50,000 in damages from vandalism or theft. Then in
May of 2012, Airbnb partnered with Lloyds of London to expand their guarantee even further, covering every
booking with their $1,000,000 Host Guarantee.  $1,000,000 Host Guarantee was an example of the company’s
commitment to trust. By moving quickly to address these concerns, Airbnb was able to continue growing,
despite these incidents, on an even sharper growth curve.

From the beginning, it was clear to the founders of apartment-sharing site Airbnb that they would need to find
people willing to list their homes before finding people interesting in staying in them. The entrepreneurs figured
they could do a better job of making apartments appealing than the online classified site, but first they had to
away its customers. In order to do that, Chesky and Gebbia created software to hack Craigslist to extract the
contact info of property owners, then sent them a pitch to list on Airbnb as well. The strategy worked well. With
nothing to lose, property owners doubled their chances of finding a potential renter, and Airbnb had a ready
supply of homes with which it could attract customers. Chesky and Gebbia hired professional photographers to
go to property owners’ homes to take inviting pictures. The plan worked, making the site more attractive than
the competition, and setting a standard for photography that later property owners rose to match in order to
compete.

2. Etsy
Etsy was a two-sided e-commerce platform specialized in handmade or vintage items and supplies including
art, photography, clothing, jewelry, food, and toys. Etsy grew from one thousand to one million customers from
approximately 2005 to late 2008. Since 2011, organic channels have represented 87% to 91% of Etsy’s traffic,
while paid ads have been responsible for between just 2% to 7% of traffic. Etsy’s early support of artisans at
craft fairs helped bring buyers and sellers to the fledgling marketplace. As the company grew, it continued to
provide support for sellers, who marketed their wares and, in turn, marketed the Etsy platform to their own loyal
customers. In 2013 CEO Chad Dickerson, who took over after founder Rob Kalin stepped down in 2011,
attributed Etsy’s remarkable user growth, in part, to sellers promoting their own shops on social media. By late
2008, Etsy was growing faster than ever, racing past the one million customer mark.

Etsy also followed a decidedly non-scalable strategy. The platform, which serves as an online marketplace for
craft vendors, started its business with an offline strategy: scouring craft fairs across the country to identify the
best vendors at each, and pitching them on opening up an online store on the site. The company's strategy
was same like Airbnb and Uber: They first brought their customers, and then they brought sellers who followed
the customers.” Once Etsy had the first artisans on the site, the next tier naturally followed them.

3. Uber
Uber was an online two-sided transportation platform based in San Francisco, California. Uber developed,
marketed, and operated the Uber mobile app, which allowed consumers with smartphones to submit a trip
request which was then routed to independent drivers who used their own cars. Uber grew from one thousand
to one million users from approximately 2010 to 2012, using a very deliberate city by city approach. The reason
Uber expanded so quickly was because they acknowledged that growth was not one size-fits-all. Because of
local politics, regulations, and interests in each city, Uber needed to adapt their launch plans to suit the unique
characteristics of each new market.  It was this ability to go into a market, understand who the suppliers were,
who the special interests were, and account for those dynamics that made Uber successful immediately in new
cities. Special events and holidays provided as an opportunity to showcase Uber’s model. These events
created intense demand and pressure to get new users to take their first Uber ride, driving spikes in new riders
and total rides.

Uber followed similar strategy. The company started with black cars driven by professional drivers. That way,
they could ensure that customers would have a great experience virtually every time they used the service.

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They could then rely on customers to spread the news of that experience by word of mouth. The important
point was to get the supply side first. If you get the right suppliers, the customers will experience their high-
quality service. Uber ran promotions during large concerts or sporting events, when big crowds of people all
needed cabs at the same time. Uber company acquired a large group of customers in one move.

Airbnb, Etsy, and Uber’s strategy of short-term property rentals, handcrafted goods, and car rides are
respectively likely to be profitable? Why?

Airbnb strategy for renting the properties:

It is observed in the case that Airbnb, Etsy and Uber are making profits from their respective strategies, which
include renting homes, handcrafted goods and car rides. It allows renting the properties and the businesses as
the hosts allow the people to have extra time to use their income to payback their mortgages or loans or rents.
Along with this, in 2012, the apartments San Francisco used the renting option to make payment for expenses.
In 2009, when Airbnb was at its initial growth stage, it started analyzing the factors, which did not increase their
initial growth. The founders stayed at Airbnb’s flats in order to analyze the reason for less booking rates. They
recognized the low-quality photos as the main reason and chose to put time and cash in taking better
photographs. This support led to the development and growth of renting apartments. Along with this, in order to
increase the supply of the renting business, the company used email marketing and started to contact people
who were listed on the craigslist, which better explains the features and benefits of renting the apartments.

Etsy Strategy for hand crafted goods:

At the point when customers are searching for one of a kind or uniquely crafted products, the Etsy provides
trendy website for a business, which allows the customers to make and sell hand crafted or antique goods.
With sellers making their own unique products and building their brands on the site, more than 75% of them
consider Etsy shop a business.
Etsy, which was established in 2005 and now has 1.5 million active sellers and 21.7 million active buyers as
compared to its peers in the same economy. As indicated by the organization's late report, 86% of Etsy’s
sellers are ladies, and numerous sellers are custodians with kids at home as most of the sellers work at home
and run the business successfully.

Airbnb, etsy and uber definitely took advantage of a market opportunity. Two sided platforms had been making
a huge wave with things like uber, grub hub, Instacart and Airbnb. This method of sale has become a new
trusted and more convenient for consumers who are comfortable with technology and looking to cut out the
hassle of hotels or travel intricacies. Despite early controversy, they built a loyal customer bas and modified
their business model to accommodate safety concerns and bumps along the way.

An interesting aspect of Airbnb is how applicable the two-sided platform can be in multiple industries. These
companies are all similar in the sense that they don’t follow a normal business model and in the long run, this
contributes to lowering their bottom line. The article explains how Etsy was spending “next to nothing” on
customer acquisition. This model differentiates them from other online retailers because the responsibility falls
on other to make the sales. Those selling will usually do their own personal marketing or promotions which will
ultimately drive people to the site. Being able to successfully enter the market is almost as important as being
able to maintain market success. Getting your name out there is the first step in building the brand.

Airbnb market entry strategies

Airbnb was able to utilize many strategies which allowed the business to grow from 1000 to 1000000
customers in just 3 years (2009-2011). The primary advantage that Airbnb has over competitors such as hotel
chains that already have established markets is that Airbnb offers a much cheaper compared to hotels in the
area. By offering their rentals at substantially lower rates than hotels, Airbnb created large demand for their
product right off the bat. However, there were many concerns regarding the safety and security of the Airbnb
business model. Some concerns included customers not knowing the hosts, hosts not knowing who was going
to be living in their house, property damage and customers were often not given the best pictures of the house
therefore not knowing exactly what they were renting. To combat these concerns, Airbnb utilized unique

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strategies that give both the customer and the host a very engaged experience. Poor picture quality of rental
houses on Airbnb’s website led to slow start in New York. Most of the picture

By using the above frameworks for Airbnb, Etsy, Uber: Growing from One Thousand to One Million Customers
case study solutions, I can clearly draw conclusions on the following areas:
 What are the strength and weaknesses of Sided Etsy (SWOT Analysis)
 What are external factors that are impacting the business environment (PESTEL Analysis)
 Should Sided Etsy enter new market or launch new product (Opportunities & Threats from SWOT
Analysis)
 What will be the expected profitability of the new products or services (Porter Five Forces Analysis)
 How it can improve the profitability in a given industry (Porter Value Chain Analysis)
 What are the resources needed to increase profitability (VRIO Analysis)?
 Finally, which business to continue, where to invest further and from which to get out (BCG Growth
Share Analysis)

SWOT Analysis of Airbnb, Etsy, Uber: Growing from One Thousand to One Million Customers
SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses
are result of Sided Etsy internal factors, while opportunities and threats arise from developments in external
environment in which Sided Etsy operates. SWOT analysis will help in not only getting a better insight into
Sided Etsy present competitive advantage but also help in how things have to evolve to maintain and
consolidate the competitive advantage.

Strengths
- High customer loyalty & repeat purchase among existing customers – Etsy old customers are still loyal
to the firm even though it has limited success with millennial. I believe that Sided Etsy can make a
transition even by keeping these people on board.
- Streamlined processes and efficient operation management – Sided Etsy is one of the most efficient
firms in its segment. The credit for the performance goes to successful execution and efficient
operations management.
- Experienced and successful leadership team – Sided Etsy management team has been a success over
last decade by successfully predicting trends in the industry.
- Strong Balance Sheet – The financial statement of Sided Etsy looks strong and will help the company
going forward.

Weakness
- Low profitability which can hamper new project investment – Even though Sided Etsy financial
statement is stable, but going forward Sided Etsy 5-7% profitability can lead to shortage of funds to
invest into new projects.
- Little experience of international market – Even though it is a major player in local market, Sided Etsy
has little experience in international market. According to Thales S. Teixeira, Morgan Brown, Sided Etsy
needs international talent to penetrate into developing markets.
- Sided Etsy business model can be easily replicated by competitors – According to Thales S. Teixeira,
Morgan Brown, the business model of Sided Etsy can be easily replicated by players in the industry.

Opportunities
- Increase in Consumer Disposable Income – Sided Etsy can use the increasing disposable income to
build a new business model where customers start paying progressively for using its products.
According to Thales S. Teixeira, Morgan Brown of Airbnb, Etsy, Uber: Growing from One Thousand to
One Million Customers case study, Sided Etsy can use this trend to expand in adjacent areas
Marketing, Strategy, Supply chain.
- E-Commerce and Social Media Oriented Business Models – E-commerce business model can help
Sided Etsy to tie up with local suppliers and logistics provider in international market. Social media

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 growth can help Sided Etsy to reduce the cost of entering new market and reaching to customers at a
significantly lower marketing budget.
- Lucrative Opportunities in International Markets – Globalization has led to opportunities in the
international market. Sided Etsy is in prime position to tap on those opportunities and grow the market
share.

Threats
- Home market marketing technique won’t work in new markets such as India and China where scale is
prized over profitability.
- Age and life-cycle segmentation of Sided Etsy shows that the company still hasn’t able to penetrate the
millennial market.
- Customers are moving toward mobile first environment which can hamper the growth as Sided Etsy still
hasn’t got a comprehensive mobile strategy.

Once all the factors are organized based on SWOT analysis, just remove the non-essential factors.
This will help in building a weighted SWOT analysis which reflects the real importance of factors rather
than just tabulation of all the factors.

PESTEL Analysis
PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that impact
the macro environment in which Sided Etsy operates in.

Political Factors
- Political consensus among various parties regarding taxation rate and investment policies. Over the
years the country has progressively worked to lower the entry of barrier and streamline the tax
structure.
- Little dangers of armed conflict – Based on the research done by international foreign policy institutions,
it is safe to conclude that there is very little probability of country entering into an armed conflict with
another state.
- Political and Legal Structure – The political system seems stable and there is consistency in both
economic policies and foreign policies.

Economic Factors
- Foreign Exchange movement is also an indicator of economic stability. Sided Etsy should closely
consider the forex inflow and outflow. A number of Sided Etsy competitors have lost money in countries
such as Brazil, Argentina, and Venezuela due to volatile forex market.
- According to Thales S. Teixeira, Morgan Brown. Sided Etsy should closely monitor consumer
disposable income level, household debt level, and level of efficiency of local financial markets.

Social Factors
- Leisure activities, social attitudes & power structures in society - are needed to be analyzed by Sided
Etsy before launching any new products as they will impact the demand of the products.
- Demographic shifts in the economy are also a good social indicator for Sided Etsy to predict not only
overall trend in market but also demand for Sided Etsy product among its core customer segments.
- Consumer buying behavior and consumer buying process – Sided Etsy should closely follow the
dynamics of why and how the consumers are buying the products both in existing categories and in
segments that Sided Etsy wants to enter.

Technological Factors
- Artificial intelligence and machine learning will give rise to importance of speed over planning. Sided
Etsy needs to build strategies to operate in such an environment.
- Proliferation of mobile phones has created a generation whose primary tool of entertainment and
information consumption is mobile phone. Sided Etsy needs to adjust its marketing strategy
accordingly.
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Environmental Factors
- Consumer activism is significantly impacting Sided Etsy branding, marketing and corporate social
responsibility (CSR) initiatives.
- Environmental regulations can impact the cost structure of Sided Etsy. It can further impact the cost of
doing business in certain markets.

Legal Factors
- Property rights are also an area of concern for Sided Etsy as it needs to make significant Marketing,
Strategy, Supply chain infrastructure investment just to enter new market.
- Intellectual property rights are one area where Sided Etsy can face legal threats in some of the markets
it is operating in.

Porter Five Forces

Porter Five Forces are used to analyze the industry in which Sided Etsy operates in and what are the levers of
profitability in those segments – differentiation, Marketing, Strategy, Supply chain.
 Competition among existing players,
 Bargaining power of suppliers,
 Bargaining power of buyers,
 Threat of new entrants, and
 Threat of substitutes

Porter Five Forces can help in answering following questions:

 How attractive is the industry described in the Airbnb, Etsy, Uber: Growing from One Thousand to One
Million Customers?
 Are some segments more attractive than others? Why? Identify, analyze, and evaluate the strategy of
the Sided Etsy featured in the Airbnb, Etsy, Uber: Growing from One Thousand to One Million
Customers case study.
 What are the pros and Cons of each strategy? What impact Sided Etsy actions will have on industry
and economy on whole?

VRIO Analysis
VRIO stands for – Value of the resource that Sided Etsy possess, Rareness of those resource, Imitation Risk
that competitors pose, and Organizational Competence of Sided Etsy. VRIO and VRIN analysis can help the
firm.
Competitive
Resources Value Rare Imitation Organization Advantage
Access to Yes Yes, as other Can be imitated Yes Providing
Critical Raw competitors have to by competitors Sustainable
Material for come to terms with Competitive
Successful firm's dominant Advantage
Execution market position
Global and Yes, as it diversifies Yes Can be imitated Yes, it is one of Providing
Local Presence the revenue streams by competitors the most Strong
and isolate company's diversified Competitive
balance sheet from companies in its Advantage
economic cycles industry
Marketing Yes, firms are No, as most of the Pricing Yes, firm is Temporary
Expertise within competing based on competitors also strategies are leveraging its Competitive
the Sided Etsy differentiation in the have decent often matched inhouse expertise Advantage
industry marketing know by competitors
how

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Porter Value Chain
It is primarily used for analyzing Sided Etsy relative cost and value structure i.e. disaggregate various
processes and their relative costs – the related costs and various sources of competitive advantages of Sided
Etsy in the markets it operates in. The process can also be done to competitors to understand their competitive
advantages and competitive strategies.

BCG Growth Share Matrix

BCG Growth Share Matrix is very valuable tool to analyze Sided Etsy strategic positioning in various sectors
that it operates in and strategic options that are available to it.

Product Market segmentation in BCG Growth Share matrix should be done with great care as there can be a
scenario where Sided Etsy can be market leader in the industry without being a dominant player or segment
leader in any of the segment. BCG analysis should comprise not only growth share of industry & Sided Etsy
business unit but also Sided Etsy - overall profitability, level of debt, debt paying capacity, growth potential,
expansion expertise, dividend requirements from shareholders, and overall competitive strength.

5C Analysis
5C Analysis is a marketing tool to do a situational analysis in which Sided Etsy operates in. It inculcates both
the macro and micro environment factors that impacts Sided Etsy. The 5C analysis allows marketing managers
to put probabilities to different types of risk exposure Sided Etsy is facing in the marketplace and design
marketing strategies accordingly. Marketing strategy is about making marketing decisions in the face of macro
environment uncertainty, competitive pressures & strategies, and other economic factors. The 5Cs of
Marketing Analysis are -

1 - Company,
2 - Customers,
3 - Competitors,
4 - Collaborators,
5 - Context.

Sided Etsy faces 4 major types of risk exposures – risk corresponding to technological innovations, demand
risks, production or delivery risks, and international risks.

Company Analysis - 5C of Marketing

Key Question Answered – What are the strengths and weaknesses of the company and how marketing can
improve the effectiveness of its core strength and alleviate the impact of its weaknesses.
Marketing managers at Sided Etsy needs to analyze the internal strengths and weaknesses of the company
before making marketing decisions. Each organization has different marketing budget, different skill sets to
execute marketing strategies and promotional campaigns. The company analysis will help the Sided Etsy to
optimize the use of the marketing resources. In terms of the four risks mentioned above –Marketing managers
at Sided Etsy needs to focus on risks corresponding to production and delivery risks. If the company fails to
match the consumer expectations then no amount of smart marketing can build a sustainable competitive
advantage.

Company Factors
Culture of the Sided Etsy – As the Airbnb, Etsy, Uber: Growing from One Thousand to One Million Customers
explains the firm has a strong culture of product and process innovations.
Quality of human resources to create and manage effective campaigns – Sided Etsy attracts some of the best
talent in its industry and the skill level of Sided Etsy existing workforce is very high. Sided Etsy has strong
marketing department which helps it to design effective and successful marketing campaigns.

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Financial position and availability of resources for marketing – The financial position of Sided Etsy is strong
and it can afford to spend significant amount of resources on marketing for – launching new products and to
better position existing brands.

Research and Development spending – As a leader in various product segments, Sided Etsy spends
significant amount of resources on research and innovation in field of – product design, process optimization,
marketing strategies, and building IT network to support all the promotion and distribution strategies.

Customers - 5C Marketing Analysis

Key question answered - How Sided Etsy can identify attractive market segments and choose a market
targeting strategy.
Marketing strategy of Sided Etsy needs to meet two broad objectives – carefully selecting target market and
designing marketing activities to achieve desired positioning in hearts and minds of the target market.
Customer analysis by marketing managers of Sided Etsy can include – growth rate of the industry, potential
market size of both the overall market and target segment, tangible and intangible product features desired by
consumers in the industry, core purpose of buying the products, frequency of purchase, recent purchases,
industry trends, income levels etc.

Based on our 4 broad risk framework for 5C analysis – marketing managers should focus on demand risk and
technology risk in customer analysis section.
Customers Factors

Who the target customer is – Should Sided Etsy go for a broader segment or position its product in niche
segment. My suggestion is that it should focus on the niche segment as it is highly profitable.
How to grow share of customers purchase basket – The decision marketing department at Sided Etsy needs to
take – How it can grow the customer purchase basket share with Sided Etsy products.
What is the Customer Life Time value – Rather than focusing marketing efforts around single purchase, Sided
Etsy should develop marketing strategy that can maximize customer life time value.
What is the level of brand awareness among target segment and general population – The brand awareness
among the target segment and among wider population is high. Sided Etsy can leverage on it to build sub
brands for niche segments within the target market and adjacent segments.
What is market size of the segment that Sided Etsy wants to target – I believe the market size will grow at a
steady pace and it will present various opportunities to expand into adjacent segments.

Competitors - 5C Marketing Analysis

Key Question Answered – Who the competitors are, what their marketing strategy is, and how Sided Etsy can
design its marketing strategy in view of competitive pressures and limited marketing resources.
The core function of marketing strategists and marketing managers is to design marketing activities that can
help Sided Etsy to thwart competitive pressures from established players as well as potential entrants.
Marketing managers of Sided Etsy has to make decisions regarding –

Where to position the brands respective to Sided Etsy own brands portfolio and competing brands
What are the marketing strategies of competitors.
Should Sided Etsy competes directly with the competitors or find niche positions within the segments.
What type of competition there is in the industry that Sided Etsy operates in.

Based on our four risks exposure framework – In competitors analysis marketing managers of Sided Etsy
should closely analyze – demand risks and technology innovation risks.

Competitors Factors
Threats of new entrants to profits of Sided Etsy – Marketing efforts are often barriers to entry in the industry
and new entrants not only have to have huge marketing resources to compete with the incumbents but also
need high level of marketing know-how.

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Intensity of rivalry among existing players – if the intensity is high then the profitability is usually low in any
industry. Thus, it requires Sided Etsy to spend higher resources on marketing efforts.
Product Line Depth Decisions for Sided Etsy – Depth involves targeting different segments within the same
product range. Higher the depth, the more the company needs to spend on individual brands without putting
too much focus on the parent company.
Countering Marketing Campaigns of Competitors – Often one competitor campaign has to be matched with a
counter campaign to stop the product trial of the competitor’s product by the firm loyal customers. It has to be
done to control the churn of customers.
Threats of substitutes to Sided Etsy – The threats of substitutes often arise either from economic cycle or
technological innovation. It may require repositioning of certain brands on part of Sided Etsy in certain markets.
What will drive future growth and how competitors will try to take share of that future growth – technology
innovations can result in making present positioning less profitable so Sided Etsy needs to continuously
innovate and look for new opportunities.
Positioning strategy vis a vis competitor – The critical marketing decisions for managers at Sided Etsy is what
strategic position to choose which at same time is – different from competitors and relevant to the customers.
Product Line Breath Decisions – This not only pertains to Sided Etsy product strategy but also its distribution
and supply chain management strategy. Broader line requires more positioning strategies and higher
marketing spending.

Collaborators - 5C Marketing Analysis

Key Question Answered – How flexible & robust Sided Etsy supply chain is and how much bargaining power
the collaborators in the value chain have.
Collaborators include the supply chain partners both upstream and downstream of the value chain. For doing
Collaborators analysis Sided Etsy needs to critically evaluate the supply chain based on numerous factors
such as – bargaining power, what suppliers bring to table, flexibility & agility of supply chain, revenue sharing
at each step of the value chain.

Based on risk exposure parameters under the collaborators analysis Sided Etsy marketing managers should
focus on risk exposure to international risks (because Sided Etsy has international operations), and production
and delivery risks. For example, if the collaborators effectively able to meet the demand increased by effective
advertising of Sided Etsy marketing department then it will go a long way in enabling the company to thwart
new competition and devise premium pricing strategy.

Collaborators Factors
Position and bargaining power in the value chain – If the collaborators have strong bargaining power then
Sided Etsy will not able to sustain higher margins even with higher marketing expenditure.
Risks to intellectual property rights and patents – Operating in international markets can expose Sided Etsy to
theft of Patents, Copyrights and other Intellectual Property Rights. Any marketing and diversification decision
should be taken after evaluating these risks.
Number of suppliers and abilities of the suppliers – If there are too many suppliers then it will become
expensive for Sided Etsy to manage them but if the number of suppliers is too few then it will expose the
company to supply chain disruption risks.
Managing delivery and services in times of uncertainty – Most global organizations such as Sided Etsy are
diversifying rapidly to reduce delivery and supply chain risks. Sided Etsy should also focus on it.
Flexibility of supply chain and international risks – In international markets the critical question in front of Sided
Etsy is how much localize based on local preferences. Rest of the decisions from production to marketing is
based on this critical decision. Opportunities to localize the production and other processes to reduce risk of
organization wide supply chain risk in international market.

Context - 5C Marketing Analysis

Key Question Answered – Which are the macro economic factors that will significantly impact both the
business model and the marketing strategy.
Context Analysis encompass the diligent analysis of macro environment factors such as – political and social
environment, regulatory environment, economic conditions in the markets that the Sided Etsy operates in, rate
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of technology innovations in the industry, legal environment, environmental standards in the industry etc.

Two main forms of risk exposure in the context analysis are – International risks, and technology & innovation
risks exposure.

Context Factors
Economic – The consumer behavior during boom time and recession time is often totally different so marketing
managers at Sided Etsy has to decide how the consumers will behave in the present economic situation.
Employment – Given the employment crisis in Western Europe and emergence of Gig economy and
employment in US and all the major western economies – employment has become a critical factor in
designing marketing strategy. Employment not only impacts the purchasing power of the customer but also
impacts the self-esteem and brands she can associate with.
Foreign Exchange Exposure – International operations not only bring risks of marketing strategies that are not
relevant to specific market but also risk of foreign exchange exposure. In last 10 years most, US organizations
have lost money because of FX exposure in countries such as Venezuela, Argentina, Turkey, Russia &
Indonesia.
Regulatory Framework – It not only impacts the type of the advertising and marketing campaign a company
can run but also the type of products Sided Etsy can sell. For example, the standards & regulations for Sided
Etsy products in US and European Union are vastly different.
Inflation & Diversification – Inflation impacts the pricing strategy of Sided Etsy as high inflation can result in
lower income from the present sales.
Political Risks to Sided Etsy – Geo-political risk have increased over the last three to four years with
developments such as US-China trade situation, Brexit, and rise of yellow vests in France.

Recommendations:
To get from zero to 1,000 customers, the three startups faced a chicken-and-egg problem: How could they
attract suppliers if they didn’t have any users? For example, how could Uber recruit drivers with only a few
customers, and at the same time, attract customers if there were no drivers? How could Airbnb convince
potential room renters to join its platform without a large catalog of potential places to stay?
To overcome those challenges, the startups followed similar strategies, initially focusing more on the supply
side than on the demand side.
In addition, they worked hard to find early customers by matching them “by hand” with early suppliers (e.g.,
Etsy scoured craft fairs to sign up artisans); acquiring them in bulk (Uber ran promotions during concerts and
events); and doing whatever it took to make their offerings attractive, even if it wasn’t scalable (Airbnb hired
professional photographers to take inviting photos of hosts’ apartments).
Following those guidelines, they were able to gradually improve their products and identify what made them
resonate most with customers and suppliers. Only after that was scaling a possibility, requiring a gradual—not
abrupt—shift from catering to the supply side toward catering to the demand side.
Building on The Initial 1,000
After surpassing 1,000 customers, organic opportunities for the companies to acquire more customers and
suppliers in bulk became increasingly rare. So, Uber and Airbnb turned to digital marketing as a targeted way
to reach new people. Unlike traditional mass media advertising such as local TV commercials or print ads,
which are expensive and time-consuming, paid digital media such as Google search ads, Facebook ads, and
YouTube video ads offer many benefits that make them better suited for platform startups.
Among them are low setup cost, allowing companies to start advertising for as little as $10 a day; precise
targeting—to specific demographics, or based on life events such as birthdays or similarity to current
customers; short creative development time and deployment of ads within minutes; and ease of
experimentation.
Taking all these factors into account, a startup can create dozens of ads within just a few days, and learn
quickly and cheaply what is most effective to attract suppliers.
Uber, for instance, made extensive use of online advertising in various social media platforms to recruit more
drivers. It created a model to understand and identify factors that caused individuals to be interested in signing
up to be an Uber driver. Were they part-time workers? Did they own a car? Were they in cities with low wages

11
or in cities with high unemployment? (In fact, given its extensive data on drivers, Uber today is arguably as well
informed about low-wage workers as the US Department of Labor.)
By gathering this information, Uber was able to use the online ads to identify the right drivers.
Etsy followed a different track. Rather than market through digital media, it let suppliers do the advertising. To
do this, it provided support to the sellers to market their crafts and in turn, market the Etsy platform to their
loyal customers. Etsy created a “Seller Handbook” and other internal management tools for sellers to better
process orders and stay in touch with customers through integrated social media. Eventually, Etsy fostered an
ecosystem of more than 150 third-party apps and tools to empower and support the sellers.
Shifting from Supply to Demand
As these platforms began acquiring new customers using digital marketing and social media, those customers
started behaving differently from the early adopters who had been acquired in bulk or by word of mouth. In
particular, they were not as forgiving of lower-quality products and services, and not as willing to pay premium
prices for anything less than perfection.
To retain these new customers, platform entrepreneurs needed to deeply understand their needs and wants—
and how their offering was differentiated from others in the market. One obvious way to do that was to ask
customers what they wanted. As Airbnb cofounder Joe Gebbia put it, “People told us what they wanted, so we
set off to create it for them.”
Airbnb maintained a culture of testing many features on its website and soliciting feedback from its most loyal
and vocal customers. What the Airbnb team learned: If you provide a channel and listen, people will tell you
what they want once. But to get that a second time, you need to quickly respond to their prior requests.
Very quickly, they learned that cleanliness mattered, so a cleaning and laundry program was created to
support the hosts. Trust, they realized, was another issue, so Airbnb Social Connections was introduced, which
leveraged customers’ social graphs via Facebook Connect so that hosts were no longer anonymous. Finally,
they realized that price was important, so they concentrated on growing in cities with high priced hotel rooms,
where hosts could charge from 30 percent to 80 percent lower prices than hotels in the same location.
While that kind of direct feedback was helpful to Airbnb in shaping its offering, it wasn’t enough for Gebbia and
cofounder Brian Chesky. In order to uncover more opportunities for improvement, they made the unusual move
of using their own services, envisioning a perfect experience and working backward to see what needed to be
changed to meet that vision.
Those two paths—asking customers what they wanted and building it forward, and envisioning the perfect
experience and creating it backward—aren’t an either-or decision. As Airbnb’s experience shows, both
approaches should be followed jointly.
By first going after the supply side and then shifting to the demand side, all three platforms gained traction in
the markets they initially entered. At that point, however, they faced a critical decision in the life of every
platform business: where and how to expand. Few startups answered that question better than Uber, which
ramped up its business incredibly fast.
Having proven the original business model in San Francisco and New York City, Uber’s founders realized that
in order to choose their next target cities, they needed to understand the “accelerants” that worked as tailwinds
to catalyze adoption by customers in a particular locale. Analyzing their successes, they distilled the factors
down to a few, among them density of restaurants and nightlife, destination for holidays and events, availability
of strong sports franchises, and temporary bad weather.
Together, all these factors ensured a steady stream of people who went out at night either to drink with friends
or to attend concerts and sporting events and wanted to avoid the hassle of parking or looking for a cab on a
rainy or snowy night. That was the case for Chicago—a city with a great nightlife, intense weather, and tons of
sporting events—where Uber’s initial viral growth was double that observed in other cities.
These accelerants became the basis of Uber’s market expansion playbook, and were some of the factors it
looked at to drive its launch as it expanded into new locations. CEO Travis Kalanick explains: “After a platform
finds a formula that works, it needs to distill the formula into principles, catalysts, and a to-do list to transfer the
formula to managers it hires to expand in different regions or industry verticals.” His advice to startups: creates
that playbook as quickly as possible.
Going from zero customers to 1,000 customers can be a slow process for platforms because of the need to
acquire both providers and customers of products and services in a balanced manner. By contrast, going from
1,000 to 1 million can be a fast ride—but only if companies are willing to shift their tactics to try something new.

12
The strategies that incentivize early users to join are fundamentally different from those required to scale up
the platform.
The hardest decision faced by any growing startup is when to abandon the actions that made it successful in
the first place in order to achieve more success in the future. Failure to do so at the right moment may result in
a strong reduction in the momentum of the company. By contrast, having the courage to change in favor of
new marketing strategies can help a company succeed in the long run, and position it for even greater growth
going forward.

References
- https://www.hbs.edu/faculty/Pages/item.aspx?num=51100
- https://hakkiokanozkan.blogspot.com/2017/04/airbnb-etsy-uber-growing-from-one.html
- https://hakkiokanozkan.blogspot.com/2017/04/case-airbnb-etsy-uber-acquiring-first.html
- https://www.thecasesolutions.com/airbnb-etsy-uber-acquiring-the-first-thousand-customers-2-69666
- https://embapro.com/frontpage/marketing5ccase/16739-sided-etsy
- https://embapro.com/frontpage/casestudysolution/16739-sided-etsy
- https://www.forbes.com/sites/hbsworkingknowledge/2016/11/16/how-uber-airbnb-and-etsy-turned-one-
thousand-customers-into-one-million/?sh=690dbe615da9
- https://www.studocu.com/en-us/document/bryant-university/business-policy/bus400-assignment-
6/37898215

it. As explained in the case, two

sided platforms had been making a
huge wave with things like
uber, grub hub, Instacart and Airbnb.
This method of sale has become a
new trusted and more
convenient option for consumers
who are comfortable with technology
and looking to cut out the

13
hassle of hotels or travel intricacies.
Despite early controversy, they built
a loyal customer base
and modified their business model to
accommodate safety concerns and
bumps along the way.
An interesting aspect of Airbnb is
how applicable the two-sided
platform can be in multiple
industries. These companies are all
similar in the sense that they don't
follow a normal business
model and in the long run, this
contributes to lowering their bottom
line. The article explains

14
Airbnb, etsy and Uber definitely took
advantage of a market opportunity
when they saw
it. As explained in the case, two
sided platforms had been making a
huge wave with things like
uber, grub hub, Instacart and Airbnb.
This method of sale has become a
new trusted and more
convenient option for consumers
who are comfortable with technology
and looking to cut out the
hassle of hotels or travel intricacies.
Despite early controversy, they built
a loyal customer base

15
and modified their business model to
accommodate safety concerns and
bumps along the way.
An interesting aspect of Airbnb is
how applicable the two-sided
platform can be in multiple
industries. These companies are all
similar in the sense that they don't
follow a normal business
model and in the long run, this
contributes to lowering their bottom
line. The article explains

16