E- 90% visitors from US on its website

 

E-
Business Management

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Daljit
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Manjeet
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Amanpreet
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Shiwani

 

 

 

 

 

 

INTRODUCTION:

OpenTable is an
Electronic Reservation book (ERB) for the restaurants. This ERB software
provides a real-time map of the restaurant floor and helps restaurants in table
management and guest management. People can make reservation by just a click on
the website. When you reserve table on OpenTable it requires your email address
and some other particulars which serve as a Customer Relationship Management
(CRM) tool for the Restaurants. Open Table is the leading player in the online restaurant
reservation business having a mobile website, mobile app and website. Open
Table is an online reservation solution for making reservations on calls which
is termed as time consuming.  It is a
cost-effective technique used by the restaurant owners to maximize their
seating ability. It has introduced an updated version of the reservation system
which is known as OpenTable Connect, having more features. It is continuing its
operations over more than 40,000 restaurant and helping 21 Million dinners in
online reservations per month. OpenTable’s website is ranked at 2,514 all over
the globe and 531 in United States. There are 90% visitors from US on its
website followed by Canada 4.1%, UK 1.7%. US market is the largest source of
revenue to the OpenTable. Total 18,973 sites link to OpenTable.com which depicts
it has a dominance in the North American Market.  It is not only a user friendly e-commerce
website but also the best application of new technologies such as Cloud, ERB
etc. OpenTable not only excels in Reservations Management but also in Table
Management, Guest Management and Marketing Management. It has indirectly helped
the restaurants in growing their customer base.

                                                                  

BACKGROUND:

OpenTable was established
in 1998 by an American Internet Entrepreneur, Chuck Templeton. Open Table was
originally incorporated in the name of Easyeats.com, in California. Open Table
is an online reservation solution for making reservations on calls which is
termed as time consuming. Open Table is the leading player in the online
restaurant reservation business. Initial strategy of the company was to expand
its reach and target national food and beverage chains.  After operating as a Private Company for 10
years, in 2009 it opened its Initial Public Offering (IPO). Gradually, after
flourishing American market it headed towards the European market.  In 2010, it acquired UK-based Top Table for
$55 Million. Open Table is continuously growing in the United States, Canada
and Mexico. International expansions are planned beyond Germany, Japan,
Austria, Belgium, Sweden, Switzerland and UK. In 2014, Open Table was taken
over by The Priceline Group for $2.6 Billion operating as a separate entity.

HOW OPENTABLE WORKS?

Hardware requirements:
Touchscreen computer system. Software requirements: ERB software. OpenTable
allows restaurants to build diner databases for improved guest recognition and
targeted e-mail marketing. The Open Table joins to the thousands of online
reservation systems at OpenTable restaurants website and app. Reservations are
recorded in restaurants electronic reservation book. ERB software is installed
on a touch screen computer system serves as customer relationship management
system as well as helps in managing the guests and meal patterns. This ERB
software is updated periodically to provide better service. Open Table offers a
reward card to its loyal customers giving them 1 to 1000 points, which can be
redeemed to get discounts.

REVENUE MODEL OF
OPENTABLE:

OpenTable is working on
the two types of revenue model. Which are as follows:

RESTAURANTS

– OpenTable makes its
revenue from restaurants in 3 ways which are:

A) One-time installation
fee – when a new restaurant avails the OpenTable services, OpenTable charges
one-time subscription fee.

B) Monthly subscription
fee- another way in which OpenTable makes its revenue is by charging the
monthly subscription fee from all of its clients who avails the services of
OpenTable.

C) Transaction fee –
OpenTable also makes its revenue by charging the transaction fee for every
transaction made through OpenTable. As the number of transactions through
OpenTable increase it also increase the revenue of OpenTable.

GUESTS

Booking through OpenTable
for clients was usually free but this business model was made in such a way
that guests should assist in viral marketing. So, through viral marketing
OpenTable saved money by reducing advertisements as well as attracting new customers
through viral, marketing.

 

 

 

 

E COMMERCE MODEL OF
OPENTABLE:

 OpenTable used two types of e commerce business
models which were as follows:

BUSINESS TO BUINESS
MODEL: in this business model OpenTable provided services to the all the
restaurants who availed services of OpenTable. So, in this business model
OpenTable and restaurants were two main participants. OpenTable provided
services like table management, guest management and customer relationship
management to the restaurants.

BUSINESS TO CUSTOMER
MODEL: This was another business model which was used by OpenTable in which
OpenTable provided services to the clients or customers of the restaurants. The
services like the booking of restaurants and checking available spots at
restaurant were provided to the customers.

 

MARKET STARTEGY USED BY
OPENTABLE:

OpenTable made periodic
changes to its market strategy after making the plans and their implementation.
Initially, during the start company planned to expand online reach of their
website in 50 cities. But it was not that much success full. The expenses company
on advertising were ten times then the revenue company got with the help of
that advertising. Then soon, Company retooled its hardware and software to
create user friendly ERB system. Door to door sales force was deployed to get
subscriptions from high end restaurants. 
This strategy became successful and played vital role in the expansion
of the company and increasing the revenue of company. This strategy helped in
creation of successful local network of OpenTable. After the successful
creation of local network same strategy was used in the whole country.

 

MARKET GROWTH OF
OPENTABLE

?         Initially company was getting only 1/10th of revenue as
compared to spending’s.

?         In 2009, IPO was made and on its first day of trading,
OpenTable’s shares climbed 59%. The share price in July 2013 was over $100,
more than five times the $20 IPO price.

?         In 2013, the company’s total revenues were $190 million, up
18% from the $161 million recorded in 2012.

?         In 15 years, the company has seated approximately 575
million dollars, and it is currently averaging 14 million diners per month.

?         OpenTable now having approximately 40,000 restaurant
customers.

 

 

 

 

 

 

 

 

WHY WILL OPEN TABLE
COMPETITORS HAVE A DIFFICULT TIME COMPETING AGAINST OPEN TABLE?

It is the largest and
most successful business in online reservations market with the best
technology. The company uses user friendly ERB service and sells it through
door to door marketing strategy. The competitors don’t give online reservation
service feature on their websites.  The
other competing companies don’t have access to many cities and countries over
the globe which reduces their competing capability with Open Table. No real
time reservation is provided by the other players in the market. Whereas, Open
table not only provides real time reservation but also the map of the seating
arrangement of the restaurant. The rivals have no option apply CRM systems and
track customer behaviour.

 

WHAT CHARACTERISTICS OF
THE RESTAURANT MARKET MAKE IT DIFFICULT FOR A RESERVATION SYSTEM TO WORK?

The restaurants are
highly fragmented and local which makes national reservation system difficult
to function. The restaurant industry is slow to leverage the power of internet.
For open Table to work it requires the restaurants to have wider reach and
scale. The restaurants operate as sole proprietor or group of chains or
franchises, where owners ignore the marketing aspect and focus on hospitality
and cooking. The participating restaurants should be large in numbers, which
will help open Table in attracting more crowd on its website and app in a
particular location.

 

 

HOW DID OPEN TABLE CHANGE
ITS MARKETING STRATEGY TO SUCCEED?

Open table created
Electronic reservation book (ERB) and provides door to door sale force to
attract high-end restaurants. It shifts its relationship from a “transactional”
relationship to “experiential” relationship. Open table help to advertise the
service through various kinds of social media and e-invites. This helps in
progress of online transactions which is stronger marketing strategy than
depending on online restaurant reviewers. Consumer can pay for a meal through
open table app. User can find the nearby restaurant by using GPS through any of
its mobile support like- mobile website and mobile application.

 

WHY WOULD RESTAURANT FIND
THE SAAS MODEL VERY ATTRACTIVE?

SaaS is Software as a
service which is software distribution model. In this model, applications are
hosted by third party and customer can get them through internet. Cloud
computing, IaaS (infrastructure as a service) and PaaS (platform as a service)
are three kinds of SaaS model.

SaaS allow all
restaurants to participate in the service. This software allows customers to
pay for what they need, not for the hardware. It provides restaurants with
professional, reliable formula to secure clients. Restaurants like SaaS because
they go online and get the software through subscriptions without buying it.
SaaS model helps to save time and cost of customers. The customers do not have
problems of software maintenance and even new hardware is not required.

 

 

 

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