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Yelp will fail in Japan

I am an active Yelper. I signed up for an account in 2007 and started writing reviews in 2009. I hit my 500th review last year  and so far have managed to review a place in every single country where Yelp is available (Japan is the 26th country).

Back when I started, Yelp was only available in the U.S. (and I think select cities as well). They started expanding internationally in 2008, and in 2012 they acquired the European powerhouse Qype, cementing their dominance in the Western world.

Japan on the other hand seemed off their radar, and that didn’t surprise me. There are already very established restaurant review sites and they operate very differently, fit for the different culture that Japan is.

Now that Yelp has launched in Japan, I can’t help but think that it’s going to fail, miserably.

Yelp’s success in the U.S. was a result of coming at the right time and aggressively building up a reviewer base. When Yelp entered the market, Citysearch was the main player, but the user review web industry was still growing rapidly, and Yelp managed to quickly gain dominance. I remember hearing about their epic parties hosted for the “elites,” the hand-picked heavy contributors to the site.

This became their strategy in expanding their user base. In many of the major markets (cities, not countries), Yelp placed a community manager to promote the service and host events to bring people together. I knew the community managers in Paris when I lived there and scored multiple free meals through Yelp. Frankfurt, my current city, recently got a community manager even though I haven’t made it to any of their events yet.

Yelp, however, never caught up to Qype in Europe, which most likely led to their acquisition, and this is problem number one for Yelp in Japan: it’s too late. There are multiple established players in Japan already, namely Tabelog (short for “eating log”) and gnavi or Gurunavi (which is actually short for Gourmet Navigation). Not only do they have a large user base and immense amount of reviews, they also have incredible amounts of information catered to the Japanese audience such as walking time from the closest station and exit or which cellphone companies have reception in the establishment. Take for example this restaurant page from Tablog:

Tabelog-Screen

 

Yes, that is one page. The information density is incredible, something very unique to Japanese web design and it even lists information like the closest parking lot, the number of seats, and the fact that the ramen restaurant closes once the broth runs out for the day which is typically 18:00-19:00. To collect all this data for Yelp would be an immense undertaking for Yelp, and it won’t fit in their current design, which is problem number two.

Yelp has kept the same interface for all countries even though there are certain things have been locally adjusted like categories (e.g. “Catalan” probably doesn’t make much sense outside of Spain). Even if Yelp were to acquire one of the major players, they won’t be able to fit the data in their existing interface. Yelp with their interface designed for a Western audience is at a huge disadvantage.

At the same time I doubt Yelp would be able to acquire any of the Japanese companies like they did with Qype. While I can’t find the info on Tabelog, gnavi’s revenue is close to that of Yelp (~$250 million) even if it is only available in Japan. In other words, the Japanese sites have already developed a strong monetization scheme through promotions, advertising, coupons, online booking, etc. that Yelp would have to develop in order to catch up, which is problem number three.

The more I compare Yelp’s Japanese offering to the Japanese website, the more I feel like Yelp is a joke. The search engine barely works for for the Japanese language, there is no public transport integration which is critical in Japan, addresses and categorizations are wrong in many instances, and even the announcement on their blog was so transliterated that it felt awkward (the Japanese version was pulled after a few days then overhauled to make it less weird).

I don’t think Yelp is actually that serious about entering the Japanese market but simply placing a flag and seeing what happens. It doesn’t take much to translate the website for the Japanese audience and pay some “Scouts” to start reviewing places in major cities. Most likely their biggest investment was getting the data for Japanese businesses to seed their service (and I have no idea how much something like that would cost). They don’t have any job openings in Japan so they are probably running everything from the Silicon Valley office and not starting an office in Japan for now.

Unless Yelp does something radically different from their previous strategy (and I can’t imagine what that would be), Yelp is going to join eBay in the list of web companies that failed in Japan or Google in the list of companies struggling in Japan (half the market share of Yahoo! Japan). In fact, the comparison with Google is fitting as Google takes a simple one interface for all markets approach while Yahoo! Japan localized heavily from the beginning (Yahoo! Japan is actually an independent joint venture between the American Yahoo! and the Japanese internet and telecom giant Softbank).

One wild card, however, for Yelp may be that they are actually a local business review site and not just focused on restaurants. While I can’t find what percentage of searches or reviews on Yelp are for restaurants (my guess is most), they may find success in Japan as the review site for other businesses such as stores, doctors, or the very popular after work hobby schools (anyone watch Shall We Dance?). I still have my doubts though.

Despite all the negativity, I am glad Yelp has come to Japan. Now I can review my most favorite restaurant in the world.

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One Response to “Yelp will fail in Japan”

  1. May 1st, 2014 at 5:59 am

    vera says:

    thank you for sharing this! i came across your one entry for sushi in Japan (Kyoto) specifically. not sure if I can survive Daigen but will definitely try to go as I will be visiting Japan for 3 days on my way to Singapore. This is a really nice blog btw. Keep writing! Cheers!

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