EHarmony is one of the most successful online dating sites and service provider in the United States. Founded by Dr. Neil Clark Warren and Greg Forgatch in 1998, the company has helped singles find their long-term partners and venture into serious relationships that lead to marriage. It enjoys a registered user base of 20 million today and owns about 13% of the online dating market share. Before embarking into the case of eHarmony, it is essential to first assess the market as a whole.
Before, the first internet-based personals firm was met with a lukewarm attitude with the people who are tech savvy being the only ones to try out these services. There was a lot of social stigma that made the people who tried the online dating prefer meeting their partners in the AOL chat rooms. Today, the online dating industry is a huge and pumps in millions of dollars annually into the US GDP. It is estimated that about 33% of couples currently meet online, and the number is on a rise and expected to be 70% by 2040. Online dating lead to 120,000 out of 2.2 million marriages every year. The number is just a mere percentage of the entire group that meets online for other reasons apart from marriage. The base number is about 5.5 million subscribers who frequently use online dating sites each day. In the last fifteen years, many companies have launched online dating platforms that compete for these statistics and together they account for a whopping $2.2 billion worth of an industry.
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There is a stiff competition in the personals industry and innovations make a site have an edge or lose a grip in the market share. EHarmony is a paid do-it-yourself site and a number of others are in this category thus causing a lot of pressure. Yahoo! Personals and IAC’s Match are the rampant examples. The reason why these two sites have managed to compete with eHarmony is their few barriers to joining. While eHarmony screened users by making them provide information on their sexual orientation, the other two are more open and allows for all subscribers as long as they provided a short blurb about themselves. It was found that the individuals who were one Paid DIY site were also in others as either visiting or paying customers.
The other source of competition stems from the free DIY sites, which have been growing their membership base. The introduction and success of these types of sites defied the odds that required the payment for joining the online dating platforms. The paid ones prevented people from engaging in casual dating as the only serious ones could afford to pay for the membership. The free sites could attract members easily hence allowing for the interaction between vast group of people. The biggest competitor here for eHarmony was Plenty of Fish which was ranked the most visited site in the UK and Canada and was number 4 in the U.S. by 2007.
The other competition came from niche sites, which aimed at a specific demographic group to cater for their dating needs. One of the largest market that eHarmony seemed to lose to the niche sites is the lesbian and gay which attracted about a tenth of internet traffic of the heterosexual sites. Finally, of great importance and impact is the social media space. The online social networks pose a great threat to any paid DIY site and the online personal industry at large. Sites such as Facebook and MySpace are giants that do not need to advertise to attract customers as they depend on referrals and information sharing among peers. While chatting with each other on Facebook or MySpace, a person can scan for new partners.
With all the competition, eHarmony still has a competitive advantage. First, it is oriented on long-term relationships. This means that a person who needs a date that will lead to marriage is more likely to subscribe to this site. Thus, eHarmony is attractive to singles that are older and need to settle down with a partner. The other competitive edge that this site has is the scientific approach to paring. With their 250 question Relationship Questionnaire, eHarmony provides an algorithm that helps in matching pairs that are more compatible.
One of the options that exist for the site to manage the competition is through geographic expansion. Currently, the platform is concentrated in the US market. In the case, it is seen that the popularity of online dating is very high in the European Union countries. It is therefore essential for eHarmony to realize that there is a vast market that exists outside the United States and tap into it. Yahoo! Personals has demonstrated this fact. They can begin with the English speaking nations, particularly those where online dating is popular, first as they share most western values. By putting their weight to other countries, they will create competition to the already established global sites such as Match.com. It will create an avenue for more new users in areas where there are similar cultural values as those in the US.
The implication for this rapid expansion is the uncertainty it holds with several of eHarmony’s approach to matching couples. It is not known whether the algorithm used in the US will actually work in other countries. Therefore, there are risks that may arise with this option. In addition, there is a lack of clear notion of how the countries will react to online dating. While there is information that the countries in the EU are popular with the online dating, it is not certain that all of them actually embrace this. The site can therefore do a market research and model the reaction to online personals industry. The first expansion whatsoever should begin with Canada as it shares most values with the United States.
