CH 9 Online Retail and Services
1. What characteristics of the restaurant market made it difficult for a reservation system to work?
In the beginning, the restaurant industry lacked with use of internet and computers. The internet would give people access to restaurants’ reviews, menus and more information about them. Developers of OpenTable knew that there was no method of making reservations online and reservation over the phone were time consuming ad subject to errors. Also, the restaurant industry was highly fragmented and local. OpenTable was spending $1 million a month with only $100,000 in revenue.
2. How did OpenTable change its marketing strategy to succeed?
At first, OpenTable paid online restaurant reviewers for link to its website to expand faster and target national chains. Then, OpenTable created a user-friendly ERB system and deployed a door-to-door sales force to ger high-end restaurants to subscribe. Also, they created a mobile app for more efficiency and more than 58% of reservations were made via phone app in 2018. As more people started using the service, it attracted more restaurants to purchase OpenTable’s hardware and software.
3. Why would restaurants find the SaaS model very attractive?
There are many benefits to SaaS business model. The major benefit of implementing SaaS is will allow to cut down on costs. Also, with SaaS there is no need to have extra hardware to install it is simply a subscription plan. Since OpenTable have been in the business for a long time, there is no point of creating your own software for reservations because it will be more expensive and stressful.
4. What challenges does Open Table face?
Some restaurants complained that even though they attracted and retained loyal customers, they had to pay 1$ every time a booking has been made. But the main challenge that OpenTable faces is the increase of competitors. The competitors found some flaws in OpenTable’s system and upgraded. For example, Resy, a startup, allowed restaurants ask for a credit card to reduce a number of no-shows, and their subscription fee is $99 which is cheaper than OpenTable’s. Some other competitors have found a way to different value propositions like special deals when booking a restaurant.
Projects p. 659-660
Question 2: Find an example not mentioned in the text of each of the four types of online retailing business models. Prepare a short report describing each firm and why it is an example of the particular business model.