Network Effect - Dazhong Dianping
The Network Effect refers to the phenomenon where the value or utility of a product, service, or platform increases as more users join. Put simply, consider Internet or social media like WeChat or WhatsApp: when only a few people use these apps, they are almost worthless to each user. However, when the majority of society adopts them, and people can easily connect with others through these platforms, they become extremely valuable to users. In the group discussion in class, we believed that dating apps show the power of Network Effect as well. As more people use dating apps, each user gains access to a larger pool of potential matches, increasing the likelihood of finding suitable partners, which adds more value to the platform for each user.
From my perspective, Dazhong Dianping is also a typical example of the network effect. It is a Chinese business review and recommendation platform akin to Yelp. In its founding year of 2003, Dazhong Dianping began as a restaurant review site aimed at providing users with genuine word-of-mouth information to help them make better consumption choices. With the widespread adoption of mobile internet in 2009, Dazhong Dianping kept pace with the times by launching applications for iPhone and Android devices. In 2010, it entered the group-buying market, introducing a series of group-buying activities. Dazhong Dianping announced a merger with Meituan in 2015 after experiencing intense competition with it. Following the merger, it continuously evolved into a comprehensive lifestyle service platform by including hotel bookings, travel, movie ticketing and various other areas. In the context of the rise of content platforms like Douyin and Xiaohongshu, Dazhong Dianping introduced more user-generated content, such as photo-text notes and videos, to enhance user engagement and the platform's appeal.
The initial success of Dazhong Dianping was rooted in its ability to attract early adopters who provided valuable feedback about their dining experiences. As more users share their dining and shopping experiences, the volume and quality of reviews increase, making the platform more valuable for users seeking trustworthy recommendations. The growing community encourages even more users to contribute their experiences, further amplifying its utility. This virtuous circle is a manifestation of the Network Effect.
Dazhong Dianping also has its limitations. Firstly, while it positions itself as a review platform, it does not place enough emphasis on the quality of user reviews. In terms of its business form, Dazhong Dianping resembles more of a group-buying website than a genuine review platform. Secondly, user reviews on Dazhong Dianping significantly influence contemporary choices for dining, accommodation and entertainment, which is well known by businesses. Many businesses incentivize consumers to leave positive reviews by offering discounts, free dishes, or gifts. This practice leads to a situation where the quality and reliability of user evaluations are compromised. These issues raise concerns about the authenticity of the content on the platform. As businesses prioritize favorable ratings instead of focusing on the quality of products and services, the overall value of user-generated content diminishes, making it challenging for consumers to trust the reviews they read. Consequently, while Dazhong Dianping thrives on user participation, it must address the quality and integrity of its reviews to maintain its reputation as a credible source for dining recommendations. I believe it’s time for Dazhong Dianping to address these issues in order to maximize network effects, enhance its core competitiveness, and outpace similar products in the market, such as other group-buying apps.
No comments:
Post a Comment