Should Yelp Be Worried About Amazon?

    June 13, 2014
    Chris Crum
    Comments are off for this post.

This week, Reuters reported that Amazon is readying the launch of a new local services marketplace, which would not only compete with large chain stores, but also with local review sites like Yelp. Many businesses in a variety of spaces have had to contend with tremendous competition from the ecommerce giant. It appears that Yelp is next.

Should Yelp be worried about what Amazon’s building? Share your thoughts in the comments.

Here’s a snippet from the report:

A local services marketplace would extend Amazon’s role as a middleman for third-party vendors, which account for about 40 percent of Amazon’s sales.

The quality of the local services would be backed by Amazon’s “A-to-z Guarantee” which the company uses to vouch for items sold by third-party sellers on its website, the sources said.

That A-to-z Guarantee could be an important part of Amazon’s strategy in helping it compete with sites like Yelp. With Yelp, people are left to trust the opinions of random reviewers (including potentially fake ones) when they decide to obtain a business’ services. With Amazon’s, that guarantee could be a little more encouraging.

“We want you to buy with confidence anytime you make a purchase on the Amazon.com website or use Amazon Payments; that’s why we guarantee purchases from third-party sellers when payment is made via the Amazon.com website or when you use Amazon Payments for qualified purchases on third-party websites,” the company says of the guarantee as it stands. “The condition of the item you buy and its timely delivery are guaranteed under the Amazon A-to-z Guarantee.”

Presumably that also applies to the services you obtain from businesses going through Amazon’s forthcoming local marketplace.

It’s been well documented that a lot of businesses don’t care for Yelp, even if they feel it is a necessary evil. We’ve covered this numerous times in the past, and won’t get into it too much here. Will they like Amazon’s offering better? Keep in mind that some of these businesses will have probably already been on Amazon.

Do consumers trust Amazon more than they do Yelp? Perhaps that’s the better question.

Yelp has also been criticized plenty on the consumer side of things. Celebrity chef/TV personality Andre Zimmern recently blasted Yelp, saying he finds it to be “increasingly worthless” as a consumer. He was critical of its ability to maintain legitimate content.

He told Eater, “The last thing I want to do is utilize a service where millions of people are chiming in, and the results are tainted. Either it’s people who don’t know what they’re talking about shouting over the people who do … Look. There’s lots of people on Yelp whose opinions I would love to have, but you know what, I can’t use on Yelp, because Yelp to me is worthless.”

Another chef, David Chang, was in the news criticizing Yelp just this week. From FiveThirtyEight:

I’m just going to come out and say: Most of the Yelp reviews are wrong. They just are. Yelp is great for finding information if you forgot the address of a place. You Google it, you say, “Yes, that’s where it is,” and then maybe you spend some time reading reviews when you’re already on your way to the restaurant. And that’s useful. But for the most part, no chef is going to take a Yelper’s review seriously, even though they might read them.

[Yelpers] are just not professional critics. The best analogy I can give is fantasy sports or lawn-chair stockbrokers. For the most part, unless you’re really studying the stats and you’re a former football player or baseball player and know the industry inside and out, it’s most likely that your insights aren’t that great.

The problem with Yelp is it’s so personal; reviewers only think about themselves: “I don’t think anyone should go to this restaurant. It’s the worst.” There’s just not enough empathy to think about how other people might experience it. It’s only from their lens. Also, Yelpers don’t have any professional protocol. They sit down and say, “If you don’t do this, we’re going to give you a bad Yelp score.”

Regardless of any criticism of Yelp, the company continues to weather the storm with solid financial quarters.

The Street’s Kathryn Mykleseth writes, “Despite a potential market war with the online service juggernaut, analysts say Yelp does have some leverage against the scale and reach of Amazon – its content. Yelp’s seniority in the local services marketplace helps its case, as seen with other companies like Grub Hub and Open Table that have attempted to challenge Yelp in the past.”

Yelp and OpenTable are actually partners now. Priceline just agreed to buy OpenTable, and Yelp’s stock is on the rise as a result.

Yelp also has some significant search advantages. As The Motley Fool notes, Google’s Panda algorithm hasn’t affected Yelp, while it has one of its competitors – YellowPages.com. Yelp is also integrated into local search results from Yahoo and Apple’s Siri.

It’s not only reviews that Yelp and Amazon may find themselves competing in. Yelp has increasingly been interested in expanding its ecommerce offerings and “closing the loop” in business transactions.

Do you think Amazon’s forthcoming offering will pose a significant threat to Yelp? Let us know in the comments.

  • yelphater

    fuck yelp

  • Schreibmedium Andrea Kleinert

    Amazon looks for the money and this is a chance to get a big part of it, and yelp’s will be smaller……

  • http://wredlich.com/ny/ Warren Redlich

    Amazon’s reviews are more reliable than Yelp’s. Not perfect, but better. They have stricter controls on the reviews and you can see whether the reviewer made a verified purchase or not.

    I have seen so many reviews on Yelp that are completely off the mark.

    In the long run quality will win out. If Amazon moves into the space, it’s greater reliability will lead consumers to trust it more than Yelp.

    An interesting question will be how Google decides to rank Yelp vs. Amazon. Initially one would expect Yelp to rank higher because of tenure. But in the long run the Analytics will likely point to Amazon as more reliable. But will Google be happy allowing Amazon to move up?

  • rob

    why they should? arent they the same table?

  • Krandrew

    Yelp is a horrible, unethical business, My company has 4.5 stars on Yelp. However, I see many businesses with 1 star reviews on the the first page while their 5 star reviews are filtered. Yelp claims this is because their ‘algorithm’, I says it’s because Yelp blows.

  • http://www.starshiptravel.com Starship Travel

    Yelp is terrible, they only put up the “rare negative” review but the good reviews are up and taken down very quickly. This is not fair to a BBB Torch Award Winner for Ethics in Business! Yelp is hurting our Business reputation.

  • FuckYelp

    Fuck Yelp, too.

  • question

    hmmm, Amazon has waay toooo many bogus reviews. Just take any product with low number of reviews and pick an 1-star or 5-star reiew for that product and count the number of reviews that particular reviewer has done. Probably it is only one review!. Can you trust that review?

  • Demetrios Salpoglou

    YELP SUCKS – I am not sure how anyone with even the most smallest of moral compasses could work there – I mean how do you go to work each day knowing that they filter good reviews and unfilter fake reviews.
    Real people write real reviews. If you are afraid to post your picture – name and phone number – are you really a real person?
    Is anyone filtering me right now – anyone can call or email me at anytime….. Yelp would simply filter me…..