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Online classifieds: Disrupt or die

May 22 2018 07:26
Andrew MacFarlane

We've all paged through old classified publications or their digital counterparts. There's something hynotic about idly thumbing through adverts. Yet at the end of the day, the purpose of these publications is to connect the seller with the potential buyer. And in the current age, where you can book accommodation or summon a taxi from your smartphone, is this basic service enough to keep online classifieds relevant – and the market engaged?

According to SimilarWeb, South Africa's top three classified websites are Gumtree, OLX, and Junkmail. These players’ positions in the local marketplace have remained close to static in recent years, although OLX has gained some traction in domestic rankings. Internationally, however, there's a downward trend among the old guard of classified websites. Craigslist (the top player in the sector) has dropped a few spots in recent months. This may be due to Facebook seizing market share in the United States with their Marketplace app, but only time will tell.

On the local scene, tech startups know they need a business model that will disrupt and innovate, or they're bound to fail. "Identifying and creating a service that helps streamline a process is key when establishing a new tech startup in South Africa," says Michael Zahariev, the founder and CEO of the third-party car auction site, HiCarByeCar.com. "I think you’d struggle to launch a platform delivering only one distinctive service that’s not disruptive in its nature. I knew any idea I had had to address a real-world problem and deliver a service that couldn’t be offered in the past."

Recently, HiCarByeCar.com received an eight-figure valuation from a Swiss venture capitalist. Zahariev also believes if his young company weren't constantly evolving, no one would be interested in his platform.

"I’ve noticed that consumers, while interested in the best price, want little to do with the process. In the past, car owners were responsible for uploading the details and photos of their cars. Now I send a professional to inspect the car [and] manage the uploading. It’s this constant tweaking that’s helping us gain traction. After all, a digital platform lives and dies by how good its user experience is," says Zahariev.

Zahariev is not alone in the belief that success depends on constant evolution. The Australian Gumtree is now accepting PayPal payments, and our local Gumtree is allowing secure peer-to-peer messages. Ultimately, however, the classified publication hasn’t addressed one of its major flaws: face-to-face security, and the authentication of products being sold.

Gumtree, however, is confident. "The overwhelming majority of online transactions happen safely, but as platforms sharpen their security and new players enter the market, new scams are created. Fortunately, these are fairly easy to identify," says Claire Cobbledick, Head of Core Business for Gumtree SA.

And the danger of scams has opened doors for others. It was this small percentage of fraudulent deals that Luke Calitz identified as his gap into an untapped market when he foundedLuxity, SA's largest source of pre-owned, authenticated, luxury designer items.

"I knew there was a domestic market for pre-owned, luxury goods from producers like Gucci and Chanel. We often receive highly coveted Hermès items on a regular basis, and in 2017, a gorgeous Kelly bag sold for R150,000," says Calitz. "In the past, this sale may not have taken place, as there was no way to authenticate the pieces."

The business is thriving, it appears. "Since launching the company, we’ve opened a brick-and-mortar store in Sandton, and we even conduct sales via WhatsApp. It’s vital to reach your target demographic via a channel that suits them," says Calitz.

Starting any new business venture in today's environment means allowing room for growth and evolution. However, this is just as true for well-established platforms. In a recent press release issued by PriceCheck, CEO Kevin Tucker said, "PriceCheck has been around for 12 years. To keep pace with the rapid evolution of local e-commerce, we’ve regularly improved the PriceCheck user experience." 

It doesn’t matter if you’re well established or a young startup platform: the offering must evolve if it is to keep up with consumers who now expect services tailored to their needs. Whether old classified platforms will be able to retain their consumer base under these circumstances will be revealed over the next few months and years.

* Andrew Macfarlane is a full-time freelance writer. Obsessed with small dogs, he also loves hydroponics, urban-farming, cars, DIY, power tools, social media trends, and entrepreneurial matters.

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disruption  |  tech business  |  startups
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