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Online Classifieds
Date - 1st March
Source - expresscomputeronline.com


Looking to sell your used merchandise or property? Log on to the numerous classified Web sites and sell anything, from mobiles to furniture and even cattle! Recently, a seller had listed a ‘milk giving black young buffalo, with a yield of 20 liters milk per day.’ Describing the animal, the seller said that it was used but in a healthy condition.

Similarly, there are umpteen posts on sites such as OLX.in where users buy and sell used merchandise and, at the same time, hunt for property or jobs. Gone are the days when the only means to locate a house, find a job or sell used cars was the classifieds section in a newspaper. Today the online industry is a viable option.

“The online classifieds industry in India is catching up and growing exponentially. Most traditional newspapers now also have online versions and most of the classifieds booked in some way, shape or form also show up in the online space. It is very important to consider that almost 80% of the ads placed in big newspapers in Tier-1 and Tier-2 cities will have an online element to them. In this light, the online market is quite significant. As regards traditional media, they too realize that the power of classifieds in the digital space is significantly higher since the matchmaking ability is many times more,” said Siddharth, CEO, GetIt Infoservices.

"Almost 80% of the ads placed in big newspapers in Tier-1 and Tier-2 cities will have an online element to them."
Siddharth
CEO, GetIt Infoservices
It is probably due to this fact that the market has witnessed some major acquisitions and mergers. Last year, Naspers Ltd. infused $40 million into the Nexus-backed OLX and in July, Mid-Day Infomedia Ltd. acquired SnatchKing Online Pvt. Ltd. Naaptol Online that has been famous for offering cheap look-alikes of aspirational gadgets including Blackberry phones, received $7 million in venture capital funding from Canaan Advisors Pvt. Ltd. while Nexus India Capital Advisors Pvt. Ltd. invested $1.5 million in Magic Rooms Solutions, which offers an online hotel inventory distribution software.

The market has been abuzz with various shopping and classified Web sites. The sector, which had started mushrooming a couple of years back, is now going ahead full steam. However, consolidation is the need of the hour wherein only the serious and long term players would survive while the small fishes would either be acquired or absorbed by the market.

Defining the scope

Classifieds consist of general Web sites offering everything from apparel to groceries and those that are specific in nature such as naukri.com or shaadi.com offering limited services. Usually the majority of business for these online companies comes from Tier 1 and metro cities given the Internet penetration and awareness. According to experts, classifieds portals like jobs, matrimonial and real estate, bring in almost 96% of the total online classified revenues. Given its popularity, the industry has been receiving large scale PE funding in accordance with its estimated growth.

Based on the spurt of these sites and also the consumer behavior, one can easily derive a few factors that have been responsible for the industry's growth including increasing Internet penetration, cost effective advertisements, growth in online advertising, favorable demographics, growth in the services sector, growth in print media, vernacular presence and growing circulation and customer base.

Sizing the market

The online classifieds industry in India is huge and has great potential. The market figures for this industry vary between Rs 800 to Rs 1,500 crores.

“The online classified industry in India is now worth over Rs 800 crores. The sector has seen exponential growth in the fields of jobs, matrimonial and real estate. As the Internet continues to penetrate into various sectors and remains a cheaper medium for advertising, the online classified industry looks promising compared to the conventional classifieds industry as far as revenue generation is concerned,” said Aditya Verma, Senior Vice President and COO, Makaan.com, a popular real estate site.

Amarjit Batra, Country Manager OLX.in estimated the market to be somewhere about Rs 1,500 crores and believed that online classifieds were the second largest revenue churner after the online travel industry. “People are evolving and they are replicating their behavior online. With everything available at a click of a button, operational costs are saved and it is also much more convenient,” he said.

"We get about 35 - 40 million page views every month. Ours is a utilitarian site & it has gained instant popularity."
Parikshat Dar
Founder & Director,
Bigtree Entertainment
Currently, it is the multipurpose sites that are getting the maximum mileage out of this opportunity. This includes Web sites like OLX.in where people can sell their used merchandise or bookmyshow.com, where one can not only book movie tickets but can also find out various other means of entertainment in their city.

Parikshat Dar, Founder & Director, Bigtree Entertainment, said, “We get about 35-40 million page views every month. Ours is a utilitarian Web site and it has gained instant popularity.”

"Ad sales banners are a good source of additional revenue as are partnerships and alliances with used car houses."
Satya Prabhakar
CEO, Sulekha.com
Talking about hits and sales, Satya Prabhakar, CEO Sulekha.com, a leading yellow pages Web site explained, “We get close to six million page views and one million visits/month in classifieds and 80+ million page views and 20+ million visits/month in Sulekha.com that includes all segments—cars, property, etc. Sulekha’s user base has evolved over a number of years and we have always had good organic traffic.”

Almost all the classifieds Web sites average to about 20 million plus visits every month and this number has been growing.

Evolution of user behavior

User behavior has certainly changed and evolved over the years with advances in technology, search techniques, faster and easier access etc. As far as the use of online classifieds is concerned, it has become simpler and better for both buyers and sellers.

To elaborate, it has become easier for buyers to find what they are looking for as it's easier and faster to search and browse online. It's more effective to qualify interest when listings contain more descriptive information (more space for characters and text, upload photos, virtual tours etc.). It's quicker to make contact.

For sellers on the other hand, ads can be purchased more cheaply and in many cases for free. Moreover, it is easier to accept inbound requests via e-mail and SMS. Listings attract better prospects when they contain more descriptive information and advertisers can edit or delete a listing at any time as per their convenience.

Explained Batra of OLX.in that though jobs and real estate are big, OLX is the local classified Web site for its customers. “We offer jobs at a local level, PG accommodations to those who are new in the city, and also second hand vehicles for convenient travel. Basically we offer the same services that others are offering but with a slight twist,” he said.

Minting money

Making money online comes easy as it is a low cost business model and there is not much pressure on the entrepreneurs. “Ours is a free classified model and most of our users don't pay us anything. Hence, we thrive on advertisements. We deal with companies individually and also use Google ads,” said Batra of OLX.

"Free membership gives access to global buyers or suppliers, up to 50 product displays, advanced trade tools etc."
Nayan Thakkar
Sales & Services Operations Manager, Alibaba.com India
On the other hand, Alibaba.com which provides its users a platform for direct trade between businesses over the Internet thrives on membership fees. “Our B2B e-commerce platform has been providing small businesses with a cost- effective way to establish their presence on the Internet. An online marketplace like Alibaba.com offers different types of membership based on the needs of its customers. Our free membership gives access to global buyers or suppliers, up to 50 product displays, advanced trade tools along with access to value-added features. Gold supplier is our highest level of membership for our supplier members and allows them to maximize their exposure to overseas buyers,” said Nayan Thakkar, Sales and Services Operations Manager, Alibaba.com India.

Verma of makaan.com stuck to the fact that it was advertisements that kept the business going since paid memberships were not very popular with customers.

Sulekha.com however, has more than one means to earn. Besides the usual ads, the company welcomes ad sales banners, which it said were a good source of revenue. “Partnerships and alliances with used car houses are another means to earn money,” said Prabhakar.

Tech trends

For customers to have a seamless experience most of these sites opt for product suites from the likes of Microsoft or Google. There are others who believe in open source technologies and also developing them in-house.

“At Sulekha, we focus equally on both heuristic measures as well as technology to enhance the user experience. The company has a ‘user experience lab’ where we constantly get real users to review new designs before launching them to the market. We also visit the user’s environment where the product is used to get real time feedback on user experience. For this, we have our own portal framework to support all of these functions. Analysis of real time user behavior using technology is done so as to understand the nerve of the market better. Apart from these, we also provide many value-added services like ‘click to call’, ‘map direction’ and ‘compare products’ to make the user’s experience more rewarding,” said Prabhakar of Sulekha.

Most of these classified portals have also launched mobile applications for seamless, hassle free experience. There are apps of almost all these sites available for Android, iPhone, Blackberry and Windows phone. Some of them also have Java versions available.

Challenges

The key challenges of the market include language barriers, online payment mechanisms, low scope for advertisements and low visibility and coverage. Key trends in the market have also been analyzed, which includes the emergence of mobile classifieds, value-added services, new ventures in the online space and the emergence of local classifieds.

Other challenges that the classifieds industry have been facing are the number of ‘real’ buyer responses. “However, Sulekha has managed to effectively solve this challenge and has been successful in providing a robust marketplace for real buyers and sellers to meet and interact. Each buyer response is verified by us before it is sent to the prospective seller, which not only helps the seller to close the deal faster, it also helps to reduce or eliminate the clutter of non-serious buyers,” said Prabhakar.

Outlook ahead

The outlook is positive for the digital classifieds industry. It thrives on a simple model namely free of cost and virtual tours. Hundreds of people buy and sell everyday or get a job through these sites and if they had to pay then these sites wouldn't have been as successful as they are.

Take the case of matrimonial Web sites. They are doing spectacular business given the ease of getting in touch with the same community bride or groom. Gone are the days when families had to travel miles to see their prospective brides, now at a click of a button the bride and the groom can not only can see each other but also court virtually.

Media convergence is another factor that has contributed to the growth of online classifieds. The Internet is one medium that can be accessed not just over a laptop but also over other cheaper devices like phones. It incorporates all other media as well.

Matrimonial sites’ growth is mainly driven by the massive young Indian population and the existence of a strong culture of arranged marriages. Compared to the west, where dating sites are popular, matrimonial sites have established a huge market in India.

Studies show that in between 2010-2030, India will add 241 million people in working-age population. This indicates a further growth of online classifieds.

Although online classifieds have started playing a major role, it would be foolhardy to believe that they would replace print classifieds in the near future. However, for the companies in the business, the prospects look good. With the government gearing up to increase broadband penetration, customers for this sector will continue to rise.
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