Versus Facebook
Last year, Facebook released its “Nearby” feature for Android and iOS mobile devices. This modification to its “Check-In” function located nearby businesses, and sorts them according to those that friends have liked, recommended or checked into. Users can also sort businesses by category and view additional details, such as their Facebook business pages. Facebook recently re-designed its business pages, streamlining them for mobile platforms and integrating them into its “Nearby” features.
The most significant function in Facebook’s “Nearby” feature is its star rating system, which is similar to Yelp. This adds a new dimension to Facebook’s “Check-In” ability, which had been previously considered a superfluous sharing function. “Nearby” now makes check-ins and ratings an essential part of the mobile experience, which will grow over time and become a major threat to Yelp’s core business model.
The beauty of Facebook’s Yelp-like features is that the company doesn’t need to rely on this segment to even make money. It can simply be used to draw traffic to its main site, which can boost overall mobile ad revenue. Therefore, Facebook could be considered a more neutral platform than Yelp, which needs revenue from local advertisers to survive.
Most importantly, Facebook’s new home screen launcher replacement for Android, Facebook Home, could bury Yelp so far under its own ecosystem that it eventually becomes forgotten and irrelevant.
Versus Google
Google is an even bigger problem for Yelp. Google Maps are now the most commonly used mapping service on both Android and Apple Inc. (NASDAQ:AAPL) iOS devices. Google now integrates its Places feature, which allows users to search and rate local businesses, directly into Maps, which combines the two previously separate applications into one seamless experience.
In addition to user reviews, Google pulls data from review site Zagat to produce a Yelp-like experience within Google Maps. Android users only have to search for an item like “sushi,” and star-rated red dots appear, directing users to suggested Japanese restaurants nearby. Meanwhile, Google Maps/Places is directly integrated into the Android system, so another click will allow users to directly call the restaurant to make reservations, and another click maps out driving directions. Users can also use Google Street View to check out the surroundings so they can recognize the exterior upon arrival.
In contrast, Yelp users have to leave the mobile app to find the directions to the business, and only offers either a list view or map view, unlike the seamless, combined nature of Google Maps/Places. Meanwhile, Yelp also lacks the social component that Google+ adds to the Maps/Places experience.
Google attempted to acquire Yelp two years ago for $500 million. Although it was rejected at the time, Google might have the last laugh after all, as its Maps/Places app continues to marginalize Yelp.
In closing, I’ll reiterate what I said two months ago:
Yelp needs help. Perhaps Yahoo or will swoop in to purchase the company to integrate into a larger ecosystem, but I doubt that Yelp can last much longer in its current state.
Although Yelp was built on a solid, innovative idea, that company simply has no competitive barriers. Meanwhile, Facebook and Google have the user base, the mobile presence, and capital to bury Yelp for good.
The article Yelp Still Needs Some Serious Help originally appeared on Fool.com is written by Leo Sun.
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