Yelp Buys SeatMe for Platform Strategy

Yelp logoJust a few days after announcing its Yelp Platform transactions strategy, the company announced the acquisition of reservations management tool SeatMe. Terms were disclosed in this case:

Yelp will acquire SeatMe for approximately $2.2 million in cash and up to approximately 263,000 shares of its Class A common stock, for a total purchase price of approximately $12.7 million (subject to customary working capital adjustments).  The transaction, which has been approved by the boards of directors of both companies, is subject to approval by the SeatMe stockholders and the satisfaction of customary closing conditions.

Yelp plans to use the SeatMe to create online reservations and appointments for “thousands of currently unserved businesses.” SeatMe is a direct OpenTable competitor (Yelp has an affiliate relationship with OpenTable). My guess is that Yelp will seek to extend SeatMe into a range of SMB categories beyond restaurants.

Yelp could try and go head-to-head with OpenTable, which would be challenging. IAC/Urbanspoon at one time offered an online reservations system that sought to compete with OpenTable but failed (it could have been because of poor execution). SeatMe competes with lower fees and subscription vs. per-head pricing.

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Whether or not Yelp challenges OpenTable directly the SeatMe tool can be generically sold to SMBs to enable online scheduling and appointments. SeatMe can also be embedded in Facebook Pages, which (if continued), would essentially represent the first product Yelp sold to SMBs beyond its own borders.

What do you think about the acquisition, the outlook for competition with OpenTable and the prospect of extending SeatMe beyond restaurants and bars into other SMB categories?

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5 Responses to “Yelp Buys SeatMe for Platform Strategy”

  1. Service Central says at

    Does this mean that Yelp really is starting to verticalise itself into Restaurants only? What does this mean in regards to the other services that advertise with them?

  2. Greg Sterling says at

    I would argue that SeatMe was acquired (it was relatively cheap) to provide an in house reservations or scheduling capability that could be expanded beyond restaurants

  3. Greg Sterling says at

    I don’t think Yelp is refocusing on restaurants. However if by “verticalize” you mean build out features or capabilities specific to different SMB segments . . . that may well be part of its thinking. 

  4. Peniel Cronin says at

    Actually from your articles on the new genre of services that are “Demand Force like” (EX: Swipely, myTime, clublocal) this would seem like a smart & natural buy vs build strategy for Yelp to expand quickly into online scheduling & reservations. The natural starting place would be restaurants. But didn’t you mention that Yelp is pursuing deals with booking.com and perhaps other providers that focus on home services, professional services, etc? Really smart moves lately on Yelp’s part. And, yep I agree that the price tag was incredibly cheap. Certainly seems like SeatMe is banking on the Yelp stock upside.

  5. Greg Sterling says at

    That’s in the earlier, platform discussion. Clearly they’re not going to limit themselves to the restaurants vertical.  Wouldn’t make sense.  

  6. Yelp Introduces Free Restaurant Reservations says at

    […] into transactions. One manifestation of this is restaurant reservations. In July of 2013 Yelp bought reservations provider SeatMe. Today it’s announcing free restaurant […]

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