Will IENS succumbs to their own business model?
While talking to a few restaurant owners, something came up in consensus. Review and rating platforms do not necessarily help your business, even if you are graded and reviewed very well. In this particular case we take the website IENS. The company IENS is an online platform where people can explore where to eat. It has all the tools to simply answer your question on your journey: ‘Where do we eat?”. The locations, types of kitchen, reviews, ratings, it is all in there. They call themselves the essential link between restaurants and their (potential) guests.
IENS is built on User Generated Content. More and more restaurants submitted information on the platform with the incentive of future customers. With a new online way of obtaining information consumers did explore IENS to look where they wanted to eat. The overview and filters are great to navigate yourself to the eatery you want. And the supply of restaurants were just getting bigger and bigger.
There is another important factor on this website. It is the input of the content of the restaurant guests. Lots of reviews and ratings are on the platform, giving other potential guests more information about the restaurant. A 2013 global survey of Nielsen researched the trust of us in opinions of other people online. The research made clear that 68% (!) trusts other peoples vision on a certain subject. With this fact in mind, it seems like IENS got gold in hand. They have loads of information, an active consumer base to generate content and thousands of restaurants indexed. So, what is the problem?
Did you ever thought of the business model of companies like these? Actually, there is none. Only third parties can contribute to the platform, by paying for advertisements to reach out to the consumer on IENS. In general, this is the only way to receive money. The value proposition is pretty solid monetized for the different stakeholders on the platform, but not for the platform itself.
Reason enough to do something about the business model, since IENS is not making any profits anymore in the last four fiscal years. A way to go along with the incoming cashflow is to extend your services. IENS is trying to do this now in collaboration with SeatMe, an online reservation service coupled to the restaurant pages on IENS. If you look at the company from a theory perspective, it tends to a platform mediated network with two main sides. The restaurants on the one hand and the consumers on the other.
Because the willingness to pay of the consumers will be very low in this situation, you should subsidize that side. The restaurants on the other side provide the direct quality of the platform, so you could charge the side providing quality. IENS actually is doing this at the moment, giving restaurants an option to be premium partner and buy their position to the top. In my opinion IENS loses their independency with that move, leaving restaurants who do not want to pay for a high position with a choice to switch to another platform. Because of this spunky move my question would be: Will IENS succumbs to their own business model?