With New Yelp Partnership, ReachLocal Puts (Some) Eggs in SaaS Basket

Less than a month after Yelp rolled out a partnership with Delivery.com and Eat24 to bring online ordering to the reviews site, the company announced on Tuesday the addition of ReachCommerce, ReachLocal’s newly launched booking software, to the Yelp Platform.

The partnership, which is the 6th announced thus far, will allow users to book appointments with service providers, which use the ReachCommerce software, without leaving the Yelp app or site.

For ReachLocal, the agreement marks a shifting of resources within the company to a software-as-a-service play, which enables service providers to take bookings, manage fleets and process payments, as the firm continues to tinker with its own local services brand in ClubLocal. Zorik Gordon, the company’s chief executive, says ReachCommerce, which spawned from the consumer play, is now the “focus” for the company.

“There’s going to be huge opportunity from a software-as-a-service (SaaS) perspective as well as in building a closed loop brand like an Uber or ClubLocal,” Gordon told Street Fight in an interview. “But our focus is on ReachCommerce as a company. That’s our entry into the market and it’s the business we’re trying to green light. ClubLocal is something we’re still figuring out.”

Pitched as an Uber-for-home-services, ClubLocal offers consumers the chance to review, book, and pay service providers like plumbers and electricians through a single platform. The project, which was launched in beta a year ago, remains in Dallas and San Francisco, and the company does not plans to expand into other markets in the coming months. Meanwhile, Gordon says the company plans to expand the ReachCommerce product beyond its beta markets to a general release at some point in the fourth quarter.

The decision by Yelp to work through partners to bring commerce functionality to its properties, an inevitable challenge for the company, has undoubtedly hurt the prospects for consumer commerce brands like Seamless/GrubHub. Core features like online ordering quickly become commodities, and now those brands are left competing with an efficient network of sites — each with its own strengths – rather than a fragmented collection of smaller competitors.

“There will be a place for brands to carve out their place in local [in a similar way] to the Amazon versus the directories model online,” said Gordon. “On the one hand, you might have a few dominant brands built that will be pure local commerce plays; and on the other, the directory players will enable these commerce capabilities [to reach a number of smaller players]. At the end day, both the brand efforts, and the directory initiatives folks like Yelp, will drive massive adoption on the merchant-side, and that’s what’s important.”

Gordon says the company is in the process of building its own lead generation network, looking to develop integrations with other search properties as well. He declined to share specific targets for the initiative, but it likely includes the handful of companies that own direct consumer traffic in local like Angie’s List, Google and Yahoo.

Steven Jacobs is Street Fight’s deputy editor.