Airbnb Market-Entry Case: Evaluating a Move Into Furniture Sales for Revenue Growth

Quick Overview

A product strategy case on whether Airbnb should move into furniture retail, with revenue growth as the stated objective and room to argue for a better one. It tests market and competitive assessment, fit with Airbnb's strengths, a comparison of entry models, rough sizing against the core business, and a clear recommendation.

Airbnb Market-Entry Case: Evaluating a Move Into Furniture Sales for Revenue Growth

Company: Airbnb

Role: Product Manager

Category: Product Design & Strategy

Difficulty: medium

Interview Round: Other

Airbnb is weighing a move into furniture retail. Decide whether it should go ahead, and make a recommendation. The objective you are given is to grow Airbnb's revenue. If you think a different objective makes for a stronger case, you may argue for it instead, as long as you explain why. ```hint What does Airbnb bring to furniture Before sizing the market, ask what Airbnb has that a furniture seller lacks: which of its users already need furniture, and at what moment. Then compare the size of any plausible furniture business with the business Airbnb already runs. ``` ### Clarifying Questions - What does "enter furniture retail" mean here: holding inventory and selling directly, running a referral storefront for other sellers, partnering with an existing retailer, or acquiring one? - Who would the buyers be: hosts furnishing their listings, guests who liked items during a stay, or shoppers in general? - Over what time horizon is the revenue goal judged, and how large would a new line of business need to be to matter next to bookings revenue? - Which market would it start in? ### What a Strong Answer Covers - An explicit objective, with a reasoned decision to keep revenue or to argue for a different objective. - An assessment of the furniture market and its competitors, set against what Airbnb uniquely brings, such as hosts who must furnish their spaces and the moment a new host signs up. - A comparison of entry models (own inventory, referral storefront, partnership, acquisition) on economics, capability fit and risk. - A rough sizing of the opportunity relative to Airbnb's core business, with every input labeled as an assumption. - A clear recommendation with a low-cost test, success and kill criteria, and the risks to the core product. ### Follow-up Questions - If a pilot with partner retailers succeeds, what evidence would you need before Airbnb holds its own inventory or acquires a furniture company? - Hosts hold Airbnb responsible when a partner's delivery arrives late or damaged. How would you manage that risk, and could it change your decision? - How would you tell whether furniture purchases actually caused more bookings, rather than simply attracting hosts who would have done well anyway?

Overview: A product strategy case on whether Airbnb should move into furniture retail, with revenue growth as the stated objective and room to argue for a better one. It tests market and competitive assessment, fit with Airbnb's strengths, a comparison of entry models, rough sizing against the core business, and a clear recommendation.

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Airbnb
May 25, 2024
mediumProduct ManagerOtherProduct Design & Strategy
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Airbnb is weighing a move into furniture retail. Decide whether it should go ahead, and make a recommendation.

The objective you are given is to grow Airbnb's revenue. If you think a different objective makes for a stronger case, you may argue for it instead, as long as you explain why.

Clarifying Questions Guidance

  • What does "enter furniture retail" mean here: holding inventory and selling directly, running a referral storefront for other sellers, partnering with an existing retailer, or acquiring one?
  • Who would the buyers be: hosts furnishing their listings, guests who liked items during a stay, or shoppers in general?
  • Over what time horizon is the revenue goal judged, and how large would a new line of business need to be to matter next to bookings revenue?
  • Which market would it start in?

What a Strong Answer Covers Guidance

  • An explicit objective, with a reasoned decision to keep revenue or to argue for a different objective.
  • An assessment of the furniture market and its competitors, set against what Airbnb uniquely brings, such as hosts who must furnish their spaces and the moment a new host signs up.
  • A comparison of entry models (own inventory, referral storefront, partnership, acquisition) on economics, capability fit and risk.
  • A rough sizing of the opportunity relative to Airbnb's core business, with every input labeled as an assumption.
  • A clear recommendation with a low-cost test, success and kill criteria, and the risks to the core product.

Follow-up Questions Guidance

  • If a pilot with partner retailers succeeds, what evidence would you need before Airbnb holds its own inventory or acquires a furniture company?
  • Hosts hold Airbnb responsible when a partner's delivery arrives late or damaged. How would you manage that risk, and could it change your decision?
  • How would you tell whether furniture purchases actually caused more bookings, rather than simply attracting hosts who would have done well anyway?