Craigslist’s Growing List Of Competitors

There is no shortage of options for consumers looking for places to shop online. The number of sites that go in the other direction — allowing consumers to sell — is much more limited, and largely dominated by Craigslist. A few bold startups are getting in shape to cut into that site’s business. Do they have a real shot?

SHUTTERSTOCK

When it comes to buying products online, the list of shopping apps is seemingly endless. Nearly every major retailer has developed a mobile-friendly online shopping experience and made it easy — if not fun — to buy stuff from your phone. But what about consumers who want to start selling some of their own stuff? Who do they turn to?

There are an increasing number of apps that are seeking the business of nascent sellers and their digital classified listings. Craigslist has long dominated the desktop, with some 50 billion monthly page views, according to a recent article by Xconomy. That’s a big audience and a lot of potential revenue — and both figures are only increasing. Mobile commerce currently accounts for 39 percent of eCommerce transactions, according to research firm Forrester, which predicts that number will increase to account for 54 percent of all eCommerce transactions by 2018, when eCommerce sales will reach an estimated $414 billion.

But Craigslist is, by and large, a free service; so, how exactly does it make money?

According to an article on Elite Envy, the company — which operates more than 700 websites in cities around the globe and employs a mere 30 people to keep them all running — makes money through a handful of channels. According to the outlet, Craiglist charges a flat $10 fee for apartment listings in New York City, $75 for job listings in San Francisco and $25 for job postings in six of its biggest U.S. markets. The site also charges a flat $10 for any ad that falls under the category “therapeutic services.” On top of that, Craigslist charges $5 for reposting any ad that is live and running. These are the only revenue streams for the company, and they keep it extremely competitive. By keeping most ads free to post, Craigslist assures that it continues to keep traffic flowing through its (many) digital doors.

That kind of traffic is certainly enviable. In light of that, some might find it perplexing that Craigslist has been notoriously slow to innovate, having yet to create a mobile application to put its service into the pockets of its users — creating an opportunity that is almost too good for startups (and their investors) to pass up. That may account for the slew of mobile apps popping up that are eager to grab the mobile attention of users who want to get rid of stuff on the go.

5miles is just one app that hopes to be a “Craigslist killer.” Originally developed in China, the app has since established U.S. headquarters in Dallas, Texas. According to Xconomy, 5miles has a similar feel to Craigslist, with users allowed to sell anything, within reason, from a chest of drawers to a classic car. The service is a mobile-first company, with a website serving as its secondary digital home. The company differentiates itself from Craigslist and larger, better-funded digital marketplaces, like eBay, by focusing on the user experience, says Rick Cantu, general manager at 5miles. Among other features, 5miles allows direct messaging between buyers and sellers through the app; buyers can also make offers on any product for less than the asking price. Responsive customer service is also a differentiator for the company.

5miles plans to eventually make money through paid premium listings and in-app advertising. According to Cantu, the company recently closed a Series B round of funding, although it declined to disclose the exact amount. The company plans to use the capital to expand into more markets, including Los Angeles and Miami, in addition to Houston, San Antonio and Austin, where it is currently operating.

5miles isn’t the only one trying to grab a hold of market share, but Cantu isn’t concerned about competitors. “When there’s an opportunity in the marketplace, you’re going to have multiple entrants going after that opportunity,” he says. “At this point, we believe the market is large enough for multiple competitors in the marketplace.”

Spain-based Wallapop is one of those young and growing competitors. The company has kept a somewhat low profile as it’s grown internationally. In fact, when asked how many people had heard of, or even used, Wallapop at TechCrunch Disrupt London 2015, there was hardly a hand raised in the crowd. CEO Agustin Gomez, who spoke at the Disrupt conference, refused to comment on a recent round of funding that was rumored to be substantial.

“A long time ago, we thought there was no upside to talking about fundraising. We never comment. We keep a very low profile,” Gomez said. “This is a personal point of view; the only ones interested in how much money we have in the bank are our competitors.”

When asked about where the money was going, Gomez was more candid, replying “marketing.” The company is heavily betting on a slew of TV ad campaigns, he told TechCrunch. TV is a medium he encouraged companies to continue looking at for mainstream audiences. “We’ve learned a lot about how to combine traditional TV marketing channels with a huge digital strategy,” Gomez went on to remark. “Wallapop is really TV-driven. TV still works.”

According to TechCrunch, Wallapop is a secondhand marketplace application where anyone can post goods they want to sell. The service connects buyers and sellers in the real world, where they can complete the transaction. Wallapop was partially built to encourage those in-person meetings, Gomez said.

5miles and Wallapop are just two of many mobile competitors looking to take Craigslist down. OfferUp, Sell It (recently acquired by Wallapop), Listia, Bonanza and Poshmark are some of the names that you’re likely to hear more about in coming months. But, as Gomez pointed out to TechCrunch, the goal of classifieds domination is a long road, and it will likely take years before Craigslist is dethroned.