Craigslist Vs. Letgo.com – Disrupting the Online Classifieds Market

Have you recently entered craigslist.org, the biggest US online classifieds site?

It screams for disruption!

By entering the site, it feels like we went back to the ’90s. The irony is that this outdated design is still being used by the biggest classifieds site in the world, serving millions of customers daily (30B page views and 60M visits a month).

This outdated simple web design was noticed by many startups who tried their best to take a market share from Craiglist, most of them failed and very few succeeded.

The big question is – why?

 

The Ones Who Succeeded – Only in the B2B Sector

The companies that succeeded to take a major market share from Craiglist are companies like: AirBnB, Etsy, StubHub, and more. Companies that took a niche and gave a superior value to the customers.

The common ground for all these companies is that they all operate in the B2B segment (Business to Business ). Meaning their customers are mainly businesses that sell the same service or products repeatedly. Of course they allow individuals to give one time offers, but these individuals are marginal in their business.

 

The Ones Who Failed – C2C Sector is still being Govern by Craiglist

Private people still prefer to post free ads for their personal stuff they want to sell on old sites like Craiglist and eBay, rather than on new emerging sites that offer much better design and functionality. It means that the huge C2C segment (Consumer to Consumer) is still untouched for the past 2 decades and was not really penetrated by new major players.

Here are some reasons for why C2C segment is still untouched:

1. Local market behavior – C2C market is usually a local one. Private buyers in many times would like check out the items before purchase 2nd hand items, therefore new entrants will have to localize their site, which is costly and for global sites (like Amazon and eBay), developing a non generic solution is much harder.
2. Private sellers hate to do manage logistics – Shipping and handling of sold items. So they prefer a face to face meeting with the buyer, meaning that the buyer will take care of all shipping arrangement after the item is sold – which is possible only in a local market with offers being relevant to local buyers only.
3. Entry barrier – Craiglist and eBay customer base is a huge entry barrier for new players. When posting on Craiglist, sellers get a free exposure to millions of visitors. But on new sites, it is not an option. If the site has no visitors, it won’t convert and therefore customers will not return.
4. Simplicity – The simplicity of Craiglist is something that has a big value, people are used to it and therefore in many times converts better than sophisticated site with many functionalities.
5. Free advertising – Private sellers are used to advertise their stuff for free (Classifieds allow free advertising). Therefore just the thought of paying a fee to a marketplace will deter sellers from posting their items.

I haven’t seen the company and startup that could breach these major barriers.

It may look like Craiglist and eBay are too big to fall in the C2C segment, however I believe that anything that hasn’t really been innovated for a long time, sooner or later will be disrupted massively. In particular in a massive profitable market like Classifieds.

 

Who will Disrupt the Online Classifieds Market?

Very similar to my advise to eBay in my article “How Can eBay Dominate The C2C Market For Years? “, the one who will take Craiglist and other classifieds sites out of business, will be the one who will solve the logistic question in the domestic C2C market.

Meaning, we all hate logistics that involved in selling our stuff, like talking to customers, packing, shipping and dealing with returns. Most of us prefer to through away good valuable 2nd hand items, than try to sell them and make some money. A business model that will remove this barrier and will provide full turnkey logistic solution to private people to sell their items (new and used) without thinking too much, will take the jackpot and will leave all current classifieds sites out of business.

These days we can see solutions, like letgo.com that aim to simplify the selling process, so that private people can post their items within 1 minute locally. On Letgo, we just need to take a photo of the item and add to it a short description, and it is posted locally together with nice features that allow local buyers to find great deals. However, Letgo still requires buyers and seller to meet face to face in order to complete the transaction and many us just prefer to avoid such meetings. If Letgo, or another similar company, will do the next step and offer a logistics solution, they can be the ones who will reshape the entire C2C industry.

Good luck to Letgo and other startups! As private unprofessional sellers we will surely be happy to get such a solution. If you liked my observation and would like some more insights, you can also check out my article “How Can eBay Dominate The C2C Market For Years?” and tell me your thoughts either by sharing a Like or a Comment.

Thanks. Ori.

Ori Feldstein is a senior manager, experienced in eCommerce and in management of multi-million dollars programs in various industries – Big data, e-commerce and Defense. He is a co-founder of two family owned websites in the B2B eCommerce of chemicals (cheta.biz ; chemcenters.com). Follow him on Linkedin, @ori-feldstein.