Yelp Presses Into Commerce With New Local Delivery Product

Yelp launched a new product Tuesday that will allow customers to order food from participating merchants directly through its site or its mobile app. The move marks a seminal point in the company’s history, as the local discovery firm transitions from an information provider to an integrated local commerce service.

“We view this as an extension of our local discovery business into a commerce platform,” Mike Ghaffary, VP of business development, told Street Fight in an email. “Yelp has always been a discovery platform and we would like to continue to transform it into a site and application that helps consumers not just find great local businesses, but also transact with them. “

The product, which CEO Jeremy Stoppelman announced during MobileBeat 2013, will launch initially in San Francisco and New York through partnerships with Eat24 and Delivery.com before expanding into other markets and verticals by the end of the year. The company has also inked partnerships with Booker and Intuit’s DemandForce, which set the company up to expand beyond delivery into a burgeoning local services space, which Ghaffary expects to roll out by the end of the year.

Over the past few years, Yelp has stayed clear of commerce, focusing instead on expanding its footprint abroad while carefully managing its migration to mobile. The company has dabbled in scheduling through a partnership with OpenTable and helped “close the loop” for merchants through its static deals product and a newly released call-to-action feature, but the efforts have been fragmented at best. While Yelp will still not process the transaction with the new product, it provides the consumer experience needed to defend its search and discovery business.

The new rollout signals a more concerted effort by the company, and one that comes just as a number of companies have emerged to rethink the way local services, in particular, are bought and sold locally. Startups like MyTime and larger firms like ReachLocal have invested heavily in local commerce, aiming to bring an integrated, Amazon-like shopping experience to service providers. Meanwhile, companies like Uber have disrupted other, traditionally offline, industries by consolidating a formerly fragmented and disjointed buying experience.

With over 100 million unique visitors a month, Yelp’s entry could tip the young market . The space has traditionally split between consumer-facing firms like MyTime and Seamless/Grubhub, which charge merchants on a per-lead basis, and back-end plays like Booker and DemandForce that sell scheduling and CRM software as a service. By entering the market, Yelp effectively validates the back-end model, pouring huge amounts of traffic into the systems of merchants who use these tools.

With a nearly insurmountable lead in search and discovery, save Google and maybe Foursquare, it will be tough for the consumer-facing commerce plays to generate enough value in the buying experience to compete. Seamlesss and Grubhub have a substantial user base and sizable discovery content, but they still pale in comparison to the reach and breadth of Yelp, and more importantly, Google.

Now, the ball’s in Google’s court. The search giant has been piloting its own local delivery and shopping services, but now the impetus is on the search giant to start connecting the dots in its local commerce strategy. For many verticals, Yelp’s local search and discovery experience is on par or exceeds Google’s, and the ability to order and buy directly through the service could tip the scales for some consumers.

Steven Jacobs is Street Fight’s deputy editor.