Dining

GrubHub, Seamless, and the Importance of the Purchase


GrubHub, Seamless, and the Importance of the Purchase

Photograph by Essdras M Suarez/Boston Globe via Getty Images

The best review is a purchase.

That’s one truth underneath today’s announcement that GrubHub and Seamless, the Big Two of online food delivery, are merging. The two sites will have more than 32,000 restaurants in the U.S. and U.K. after the companies combine. If you want gyros sent over at 10:30 p.m., SeamlessHub (not, I should point out, the company’s new name—the parties have not announced what the new company will be called) may well be your only choice.

But besides strengthening their own position, the companies are betting they can serve as a place for people to rate and discover restaurants, not just order from them. Seamless and GrubHub don’t just feature menus and take credit-card numbers for orders—each restaurant has reviews from other people who have ordered from there.

While the convenience of online ordering is what gets you to come to GrubHub or Seamless, it’s those reviews that, in part, will keep you coming back. Once you’ve fallen for ordering lunch or dinner online, you’re only interested in restaurants with that capability. That means you’re going to start your search for, say, Mexican food on one of those sites.

And here’s the other part: What you’re not doing is starting that search on Yelp (YELP) or another rating-and-review site. Yelp and its brethren may have more restaurants listed and more reviews for each one, but since it lacks that final step—placing your order online—it’s less useful to you, since all you’re interested in are restaurants people like and are also taking online orders for delivery.

OpenTable (OPEN), which processes reservations for in-person dining, has a similar advantage. The problem with sites that provide only ratings and reviews is they can lose you after you’ve made a decision. Not that Yelp doesn’t realize that: The company entered into a partnership with OpenTable in June of 2010, allowing Yelp users to book a reservation on OpenTable without leaving Yelp’s site. The same is true of TripAdvisor (TRIP), which has a similar arrangement with OpenTable (as well as several online travel companies so that people can book their hotel or other travel reservations directly from the site).

But it’s the ordering sites that collect valuable data: what you ordered, how much you spent, how many times you’ve returned. Such companies as OpenTable and the newly merged Grubless (again, just offering up naming suggestions until they devise one of their own) know a lot more than just what you wrote in a review, as they have your actual spending and orders recorded. A site such as Yelp can get you to the point of making a decision about where to order lunch, but they lose you once you jump over to “SeamlessGrub” to actually place your order. “Here are these sites that aggregate ratings and reviews. That’s just one piece of the puzzle,” says Seamless Chief Executive Jonathan Zabusky. “I don’t want someone just to tell me that place was good, I want to know they went back.”

If you want to see the ultimate example of reviews combined with purchases, take a look at Amazon.com (AMZN). It is both the place to buy things and the place to research what to buy, based on its vast network of reviewers. With that data, combined with actual purchase history, Amazon is able to suggest all kinds of things to you when you log in. Which keeps you coming back. Which provides Amazon with more data. Repeat ad infinitum.

Another, more recent example would be today’s announcement by Pinterest that it will offer enhanced pins to advertisers that can include more data, such as pricing information. Pinterest said in a statement that the “community will now see more useful Pins at first glance, rather than having to dig around or click to other websites” (emphasis added).

And that’s the whole trick, isn’t it? It’s not enough to lead people to the promised land—you must also process their credit-card number.

Grobart is a senior writer for Bloomberg Businessweek and the managing editor of Bloomberg Digital Video. Follow him on Twitter @samgrobart.

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Companies Mentioned

  • YELP
    (Yelp Inc)
    • $68.7 USD
    • 0.13
    • 0.19%
  • OPEN
    (OpenTable Inc)
    • $102.95 USD
    • -0.02
    • -0.02%
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