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What is Yelp?Yelp is an American Company website that serves as

an online Urban city guide and helps people find popular places to eat, shop, drink, relax, etc. Yelp is based on the opinions of a community of locals and people who have experienced the place of interest before.

If one has a good or bad experience at a restaurant for example, they will “Yelp” their opinion for the public to read.

Yelp is a form of “Word of Mouth” marketing.Yelp’s Mission Statement: “To Connect People With

Local Businesses”

Here’s a Sample…

Yelp HistoryYelp was founded in October 2004 by Russel

Simmons and Jeremy Stoppelman to help people find great local businesses such as dentists, mechanics, hairstylists, etc.

In 2008, Yelp grew internationally into countries like Canada, United Kingdom in 2009, France and Spain in 2010, and Australia in 2011

Eco-System In Which the Organization Operates…

Decentralized Organization

Decentralization is a type or organizational structure in which daily operations and decision-making responsibilities are not made by one central figure, but is empowered by different levels of management.

There is much decentralization in a network of services within a company like Yelp. When it comes to innovation and new business ideas, which Yelp does much often, this comes from bottom up organization and different crowds within the company, rather than a specific member. Yelp innovates and makes its website better year after year.

Decentralization Examples

Yelp user’s can upload pictures of businesses, foods they ate at a local restaurant, etc.

User’s can provide tips to other visitors of the business

Users of course can write reviews and owners of the business can reply to the reviews to better their business.

User’s can rate businesses based on their experiences.

Key Competitors & Partners

1. FourSquare which is a “Check In” application where one would “check in” to any restaurant or business and allows you to write a tip or review about the business. It became a competitor to Yelp in 2009. In 2010, Yelp introduced the “Check In” feature to keep up with competition.

2. Tripadvisor is also a competitor to Yelp. Tripadvisor serves as a travel guide. It’s big when it comes to writing reviews about hotels, restaurants and vacation spots around the world.

3. Groupon: Groupon is a deal-of-the-day recommendation service for consumers. It became a competitor to Yelp once Yelp started to offer coupons and promotions.

Yelp is partnered with OpenTable which allows you to make restaurant reservations online, and now you may make a reservation through Yelp.

Customer BaseYelp’s main customer base would be all “Yelpers” so let

me first start off by defining what a “Yelper” is. A “Yelper” is one that usually trusts other people’s

opinions about a local business or restaurant before experimenting it themselves. This means that the “Yelper” will go on www.yelp.com, type in the restaurants name for example and read what people have to say about the restaurant and check its star rating out of 5.

In other words, Yelp’s main customer base would be every consumer and local business. Yelp does not have a main customer base, they simply try to connect people to local businesses around the world who take “word of mouth” opinions into consideration.

StakeholdersImportant stakeholders to Yelp is anyone who

affects or can be affected by the organizations actions. The main stakeholders include:BusinessesEmployeesShareholdersCustomersCommunity

Decentralization in Eco-System

With the use of a decentralized organization like Yelp, it allows the business to collaborate, coordinate, and compete in the eco-system

Decentralization allows for smooth collaboration between employers, managers, customers, partners, shareholders, and the community which leads to organized set of outcomes. Outcomes such as innovations and improvements within the company.

Decentralization allows an organization to be easily coordinated where knowledge, ideas, and information flows from the bottom to the top of management.

A decentralized organization leads to better services which is key when it comes to competitors in the ecosystem.

Yelp’s platformYelp’s platform and constant innovation is the

companies key asset. With Yelp’s IOS app (huge asset), it allows one to search a list of popular places nearby. This update provides local businesses with even more reason to maintain a presence on the Yelp platform.

Yelp says that nearly half of all searches on its platform come from the mobile app because consumers now want to discover new places while they are out and about.

Yelp FundingFunding: For Yelp to first get established, it

funded millions of dollars from venture capital agencies. In 2005, $5 million was raised from Bessemer

Venture Partners to expand into New York City, Chicago, and Boston.

In 2006, another $10 million was raised with Benchmark Capital.

In 2008 $15 million was raised with DAG Ventures In 2010, Yelp raised $100 million in venture capital

from Elevation Partners to fund an increase in sales staff.

How Did Yelp Make Money?

Yelp generates almost all of its revenue from advertising-90% of it’s revenue is from both local and brand advertising.Local advertising makes up 77% of its revenue

which is from businesses that want to be featured on Yelp such as restaurants and clothing stores.

Brand advertising makes up the rest of the 13% and brand advertising is display and text ads on Yelp.com which gets lots of traffic from search engines.

Yelp is currently not profitable, but they believe they will sustain future profitability.

Here’s What the Advertising Looks

Like…

CrowdsourcingCrowdsourcing is the process of getting work or

funding online, from a crowd of people.Crowdsourcing is done on Yelp where Yelp has

people writing reviews on businesses.Yelp involves crowdsourcing through a

commons-based production where people donate their time and effort to provide their opinions of their experiences to locals and businesses.

Yelp and RatingsYelp delivers highly relevant ratings to

businesses. It allows one to rate a business based on their personal experience. Each paid business listing result contains a filtered 5-point rating, filtered reviews from other site visitors, and details such as the business address, hours, accessibility, and parking and phone number.

Critics of Yelp may say that Yelp hurts local businesses because one may only Yelp if they had a bad experience, or competitors may create fake negative reviews

Effect of Ratings on Customer Decisions

In 2012, a study was done by students from University of California which studied 300 restaurant reservations and cross referenced them with Yelp Reviews. The studied found that:A half star rating increase from 3.5 to 4 caused an

increase from 30% to 49%, in the sellout rate for 7pm bookings.

This study showed what a huge impact just a half star rating had on a business

Yelp’s Revenue Model2011 Yelp Revenue Breakdown

• Yelp needs to invest in an enormous sales force to generate revenue fromlocal advertising.

• Yelp also generates profitsthrough open sourcing as shown as “other services” from the customers that go online on Yelp, use dealsoffered and by “Checking in”

Intellectual Property & Ownership

The intellectual property that comes within Yelp is the knowledge of the customers that put in their time and effort to write reviews about a business.

Once one writes a review on www.yelp.com about a specific experience they had at a local business, they capture ownership of the review. Managers of the business may reply back to the review whether it was good or bad in order to better their business.