Classifieds sites let micro, small and medium-sized businesses sell online for free with minimal documentation. In India– for those who don’t have the capital, reach, or credentials to join the ranks of franchised stores or ecommerce sellers– classifieds are the easiest way to get online and get new customers.
Kunal Bahl, CEO of Snapdeal, India’s largest mobile commerce website, recently announced that the company will invest US$100 million in Shopo, an online marketplace that provides zero-commission listings. The investment will take place over the next two years and will focus on technology and brand building.
Alibaba allure
Bahl explains that Shopo is inspired by Alibaba’s similar marketplace model Taobao. Alibaba is an investor in Snapdeal.
Taobao, which
launched in 2003, is China’s top consumer-to-consumer marketplace, and features products from many small and medium-sized businesses. Business owners on Taobao are spread across the whole country. In 2014, more than 2 million Taobao stores were run from rural areas. This represented growth of more than 25 percent in a single year.
Snapdeal’s investment in classifieds is not the first of its kind in India. Shopo’s goals are reminiscent of Quikr, India’s largest classifieds site. Quikr has raised a total of US$350 million in seven rounds from investors like Tiger Global, Warburg Pincus, and more. It operates in more than 1,000 cities in India.
Other sites in India like Alibaba-funded online wallet PayTM have also developed classifieds portals.
Trust issues
Because classifieds are largely unregulated, web companies have done several things to ensure safety and trust.
Unlike the certified sellers on larger ecommerce stores, those on classifieds sites often lack credentials. Shopo and Quikr both have chat features to facilitate conversation between sellers and buyers – just like Taobao does. Bahl explains that the Shopo app also shows a user’s location to help make communication more transparent.
In India, Quikr offers other features specific to the demographic of small and medium business owners. The “missed call service” allows non-internet users to send a missed call to Quikr’s number and receive a free call back to help them sign up. It also offers a maximum selling price calculator to help customers estimate a reasonable price range for a product.
The epayments enigma
When it comes to online payments, India can gain valuable insights by observing the direction of trends in China in the past decade.
Because many Chinese citizens use online payment wallets, Taobao has the advantage when helping small business owners execute transactions. Buyers can either use Alibaba-affiliated Alipay or numerous bank or credit card options. Although the Taobao marketplace supports auctions, most products on the website are sold at a fixed price.
Weeding out the fakers
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