Yelp isn’t merely a review platform, but a one-stop shop that provides a comprehensive set of services for consumers through vertical expansions from the upstream (information & review seeking) to the downstream (product purchasing).
Although we likely still agree that Yelp remains a top choice for restaurant search and reviews, the company is facing slowing growth due to increased competition and less success in expanding its platform into other categories
Yelp connects users, local businesses, and developers through an online platform to provide what the Yellow Pages used to: a comprehensive directory of businesses. Yelp has grown through encouraging community generated reviews, and developing value added services on top of the original platform to drive usage, traffic, and advertising revenue. Since 2004, users on the platform have generated over 148M reviews across the globe.
Lulu created a community where five million women were willing to “rate” their dates. In a world where online reviews guide everything from hiring a handyman to picking our pizza, where does the wisdom of crowds cross the line?
How adding value to both sides and using network effects to their advantage, Yelp has become the go-to-place to discover local businesses. But is that sustainable?
Yelp ratings cluster almost entirely between 3.5-4.5 stars and tend to slow down the discovery process. This leaves the door open for more user-friendly alternatives and new curated services.
No flies or fictional characters were harmed in the making of this post. All names of cast and crew have been disguised, but our story reflects real events that occurred on October 31st.
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Yelp was an early, prominent pioneer of online crowd-sourcing, but now that it’s established, the value creation vs value capture balance might be off for its most loyal users.