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Old 03-12-2012, 01:42 PM
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Default 4 Issues Bearing Down on Yelp

Following Groupon, LinkedIn and Zynga, Yelp is the latest high profile tech IPO. Here are 4 salient challenges facing the local reviews site:

- Yelp has yet to make a profit, despite launching 8 years ago. For the full year in 2011, Yelp had a net loss of $16.7 million on sales of $83.3 million.

- Google, a potential competitor who recently acquired restaurant guide Zagat, is a key source of traffic to Yelp's website.

- The authenticity and fairness of it's reviews is another problem. In its initial filing back in November, Yelp said it had 22 million reviews on its site. But in an amended filing the figure dropped to 18 million after filtering out questionable contributions.

- The business model is easy to replicate. The barriers to entry to start a review site are low. Furthermore, established giants like Facebook and Google could easily step into the space.
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