yelp business plan

Yelp business plan

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Million at the high end of that note is from bi intelligence, business insider's market research service.

Has grown by getting users to write reviews of businesses, engaging them through social networking features, and piggybacking on search engine users can not only search for and review businesses, but they can create a profile, ‘friend’ other users, chat in online forums, and even go to offline uses facebook to find and connect with your friends as soon as you sign up (see screenshot below).

Million mobile devices, and has collected a total of 25 million reviews since its inception in 2004 (see breakdown of reviews by business segment in the chart above).

It's primarily two kinds of advertising:Local advertising from businesses that want to be featured on yelp, which is 76.

Restaurants, clothing stores, or beauty salons pay yelp for the right to prominently appear first on any given search, with the review of their choice as the teaser (see screenshot).


So if a yelp user searches for “thai food” in san francisco, they will first be directed to the advertising restaurant before being shown organic remainder of the company’s revenue is largely from yelp deals, a groupon-like daily deals business which yelp is scaling down.

Yelp is not currently profitable, the company believes that its user-generated "network effect" will drive revenue growth and sustain future 's a network effect?

San francisco

According to the s-1:Our platform helps people find great local businesses to meet their everyday needs.

This increase in consumer traffic improves our value proposition to local businesses as they seek low-cost, easy-to-use and effective advertising solutions to target a large number of intent-driven other words, yelp thinks its depth and breadth of customer reviews create a network enters a new market and begins creating profiles for local businesses (what they call ‘claimed business locations’).

Users then begin to write reviews, which in turn spurs user adoption and more reviews, creating a snowball effect until yelp becomes the definitive guide to local businesses in their market. At this point, yelp can pitch itself as a cost-effective advertising platform for local gh it may sound a bit far-flung, this can and has worked in certain markets. In san francisco, its first and most developed market, yelp is widely accepted as the most effective way to search and find local businesses—even my luddite parents have become avid yelp users.

Bay area

Once it has a critical mass of reviews, yelp can deliver much more relevant results on hyperlocal searches than traditional search engines (see screenshot at right of hyper local search; users can drag the map to change results).

Mean-spirited or weird online reviewers stop being a problem if businesses have over 100 reviewers (as is commonly the case for businesses in yelp’s most developed markets).

It remains to be seen if yelp will be able to duplicate this success in other markets.

They have seen impressive year-over-year growth in several key metrics: reviews (64 percent), unique monthly visitors (67 percent), claimed local businesses (97 percent), and active local advertisers (118 percent).


In other words, yelp is excellent at search engine optimization, but has not yet succeeded in becoming a stand-alone web destination in most of its while yelp's user growth is impressive, we don't think they have a real network effect and they have a long road ahead to become as central in most markets as it has been in san also has the classic problem that local advertising businesses face scaling their business: it is a heavily sales-driven needs hundreds of salespeople to sell its local advertising products to local businesses, many of whom are probably not the most tech-savvy.

Applying that ratio to its current headcount of 918, yelp might currently employ 643 salesmen and women.

At 24,000 active local business accounts, this means every salesperson handles over 37 active accounts a is a big reason why yelp is not profitable, and should not expect to be for a while: yelp needs to invest in an enormous sales force to generate revenue from local 's more, though yelp has changed its advertising products and methods, it has had an adversarial relationship with merchants in the past, and still has a bad reputation in some we think that yelp’s local review platform is great product, we have reservations about their business model because:It's not clear that user reviews give yelp a sustainable comparative advantage, let alone a network effect;.

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