Finding gold in other people’s rubbish

Image credit: Ian Burt

All this interest in the classified space lately might surprise some people as to why founders and investors think there’s value in used goods. This includes recent funding announcements for Carousell and the iProperty sale. For the sake of argument, let’s leave aside categories like jobs, which are creating marketplaces and which continue to disrupt other businesses.

Craigslist is a firmly entrenched global leader which basically allows anyone to list almost anything for almost free, so it would seem that this space is closed off for any new entrants.

On the contrary, Craigslist’s firm refusal to monetize their market’s dominant position creates the draw for others to compete with them. The competition and potential profits, however, is not focused on capturing any minuscule revenue from listing fees.

The focus is instead on building an engaged audience. With an engaged audience, any classifieds startup has the potential of selling offerings which are complementary to the listings.

Disrupting the classified’s listing space

At its nexus, online classifieds were just a land grab for listings, so audience wasn’t always the focus. Twenty years ago, Craigslist was the first disruptor in the classified’s listing space, by allowing people to describe their listings with as many characters as they needed.

In addition, people could also post images which added color and clarity to their advertisement. In comparison to the existing method of paying per character for a black and white ad at the back of a newspaper, this was a massive paradigm shift.

At its launch, Craigslist was entirely free and the combination of better listings with no cost dealt a body blow that the newsprint industry has still not recovered from. Yet, times have changed. Free and long text listings is no longer the recipe for continued dominance and we can look at the state of classifieds sites in Singapore as proof.

Audience is everything

At the time of this writing, there are 141,000 listings on Gumtree compared to only 2,500 on Craigslist. To any non-tech insider this might be quite shocking. Craigslist arrived in Singapore first and yet it is being thoroughly trounced by eBay owned Gumtree which sports a look that some might say is even uglier than Craigslist.

Digging deeper, if we look at the types of listings available of Craigslist compared to Gumtree, it is obvious that Gumtree sports has more C2C (consumer to consumer) listings while Craigslist has more B2C (business to consumer) listings.

Clearly, audience is everything and Craigslist does not have the right one. What we see here is an illustration of the classic chicken and egg working in real life. Gumtree has more quality listings which attracts even more listings, while Craigslist cannot attract quality listings because it does not have quality listings.

User experience

The key to building and maintaining an audience, as any marketer or web designer knows, is user experience. Carousell and BuyLah are focused on listing enhancements that specifically improve user experience, and this is where they hold a distinctive advantage over Craigslist and Gumtree.

Carousell’s competitive advantage is that it is incredibly easy to list an ad, but their involvement in the transaction stops there. They don’t do anything to help sellers find buyers, and don’t necessarily help buyers to find products. Their focus is on the experience of the sellers. They do however roll up the product in a slick way that is reminiscent of the infinite scroll users are familiar with from Facebook and Twitter.

On the flipside of the buying experience, BuyLah focuses on the buying experience by using social ads to help buyers actually find the products they are seeking and expires old listings.

Monetizing through complementary offerings

Where the gold lies