Should Yelp Be Worried About Amazon?

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. Ma...
Should Yelp Be Worried About Amazon?
Written by Chris Crum
  • 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 website or use Amazon Payments; that’s why we guarantee purchases from third-party sellers when payment is made via the 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 – 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.

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