Yelp’s Move into ‘Commerce’ Both Smart and Inevitable

Yelp logoFor quite some time I’ve been writing about the shift — or rather the need for companies to shift — from merely delivering impressions or clicks to SMBs to getting more directly into providing services that are central to SMB “operations” (Demandforce was an early model).

Yesterday Yelp did that with the launch of “Yelp platform“:

We’ll be rolling out Yelp Platform category by category, beginning today with food delivery and pickup. Starting now, people can order food directly from a select number of restaurants supported by delivery.com and Eat24, like NYC’s Harry’s Italian Pizza Bar and Layaly Mediterranean Grill in SF. Eventually, consumers will be able to order whatever meal they’re craving for delivery or pickup at thousands of local restaurants across the US, directly from those businesses’ Yelp listings.

In adding transactions Yelp is following the lead of others. However Yelp’s visibility, brand and scale could turn it into a significant player in the “local commerce” segment and add a valuable new revenue stream for the company. I assume there is a per transaction fee involved; however these services could also be delivered on a subscription basis.

Yelp order screen

In launching online ordering and food delivery, Yelp is effectively mimicking Seamless Web. But the company said it will move into scheduling and, I assume, related CRM services in the near future. It has partnered with Demandforce and other third parties to deliver services.

Yelp has from the beginning struggled with making the case for advertising and getting businesses to recognize the value of buying ads on its site. If you’ve got great ratings why do you need to advertise? Yelp has an answer (greater exposure) but it’s not self-evident to SMBs.

By getting into transactions and services Yelp can deliver a much stronger value proposition to local business owners. Suddenly Yelp becomes a tool to run their businesses in a way that it never was before.

Roughly five or six years ago, I suggested something similar to Net Jacobson (who was then at Facebook): SMBs don’t want to pay for ads; they’d rather pay for services. Why not help them manage appointments and scheduling, etc. Facebook, however, was fixated on getting SMBs to buy Facebook Ads, which I told him at the time was very unlikely. (Promoted Posts makes it quite a bit easier today.)

I wouldn’t be at all surprised if Yelp acquired one of the lesser mobile payments providers in the not-too-distant future. Alternatively, without an acquisition, Yelp could become a payment processor for local businesses for transactions — online or off.

You can follow any responses to this entry through the comments feed.

5 Responses to “Yelp’s Move into ‘Commerce’ Both Smart and Inevitable”

  1. Exach says at

    what other local services apart from scheduling, appointments and payments are needed for small business? I am interested in building local commerce for that.

  2. Service Central says at

    Exach its pretty simple to work out all of the services that SMB’s need/want. Think of them as a large corporation and if they were a Fortune 500 company what “Divisions” would they have. Namely, Sales & Marketing, Finance, Operations, HR, IT, Legal, etc. Each SMB has to cover all of these elements in order to stay in business.

  3. Adam says at

    I wouldn’t be surprised if they pick up some other delivery services like Delivery For All. They’ll need more like that since GrubHub and Seamless merger. Eat24 was a food start for yelp.

  4. Service Central says at

    @Adam its a pretty big transition for Yelp to make. The skills that make someone a successful directory wouldn’t necessarily be transferable into the ecommerce space. Directories don’t have to consider payments, logistics, quality of goods/services, refunds, etc.

  5. Exach says at

    Thanks Service Central. I appreciate all your help. Are you on twitter?

Leave a Reply