Location-Based Businesses Enter The Next Phase: Layering Of Services

The past two years have witnessed location based services grow out of their awkward adolescence and come of age as arguably the fastest growing industry in the history of business.

With companies like Groupon and Foursquare paving the way, the capacity of the internet as a revolutionary tool for the backbone of economies, small and medium sized businesses, is quickly being realised.

As history so often repeats itself, web trends are starting to re-emerge.

Some of the best evidential support for the maturing of an industry is the layering of its eco-system.

And that’s exactly what we’re seeing today with location based services.

A quick survey of the space shows companies addressing specific layers of the vertical: discovery, delivery, data, and execution.


Photo: Clarke Nobiletti

We’ve seen this before. Look at online travel over the last decade. From Tripadvisor to Kayak, the GDS platforms, and Expedia/Orbitz/Travelocity, huge businesses have been built on the specialisation of layers within online travel.

And if travel, albeit a huge industry, can sustain multiple players in the same layer then imagine the capacity of local businesses.

There’s a more important element here, and it’s happening right now. The Bow Tie model, a great depiction of the buying process for online travel, shows the importance of ‘owning the sale.’


Photo: Clarke Nobiletti

In short, whoever makes the first sale in the travel planning process is in the best position to capture additional sales… a testament to customer retention.

Look at the hot topic in online travel today. American Airlines pulled out of a big name GDS and Delta is cutting off countless distributors. Ironically, the same thing is happening in the location space, LivingSocial just dissolved its affiliate program. Now you could say that LivingSocial is displaying the same foresight that Southwest did years ago, all in the name of a controlled user experience. It’s a valid argument but don’t discount the benefit of owning your customers.

Whether it’s mobile, web, travel, or location… the rules of e-commerce rarely change. Owning the sale, or more appropriately the customer, yields the greatest power and the war never ends.

Bow Tie Image: Martin Collins – Tnooz

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