For a short time, eBay experimented with a Local Trading unit, which specialized in autos, sofas and other things “too heavy to ship.” But in 2001, it closed down the unit, which didn’t fit into its plans for eBay Autos, greater transaction fees, etc. By doing so, eBay took the chance that it would be left vulnerable to competitors filling the void.
Sure enough, jump to 2005, and a flurry of companies are ready to take advantage of the increasingly clear relationship between local auctions, classifieds and transactions. One of them is Santa Clara-based LiveDeal.
Launched by a former eBay engineer in 2003, the 25-person company lists 200,000 items for sale, and gets about 500,000 unique viewers in a month. LiveDeal’s big news this month is that it has landed $4.8 million in financing, including $3 million from TorStar, the progressive publisher of The Toronto Star and dozens of smaller community and daily papers in Ontario. Other investors in this round include Draper Richards, a prominent VC firm, and individual Silicon Valley investors.
We had the opportunity to talk with Vice President of Corp. Development Steve Harmon about the company’s progress. Harmon, a former Jupiter analyst and money manager, says TorStar was attracted to LiveDeal because of its software, and its free ad model, which brings in enough local traffic to charge for lead generation and advertising.
Unlike eBay, however, transactions aren’t generally part of the mix. “You go test-drive a car, you are not going to go back to your PC and complete the transaction,” Harmon notes. The relatively rare item that does get shipped averages a 20 percent transaction fee.
As for the company’s user base, it appears to be in line with other ecommerce sites, with “a lot of women between the ages of 30-40” in its ranks, says Harmon. That usage is spread out among the various categories, with autos resulting in about a third of lookups – not much different than its share in classifieds, generally. The company has about 100,000 auto listings via AutoNation, the largest used car network.
Looking forward, LiveDeal is also pursing several key local verticals, including the under-exploited college market. “College students need to fill their dorm room” with cheap stuff, Harmon says. “And they’re highly transitory. They’ve got a high turnover.”
Students using LiveDeal either select their school name from a list of over 200 U.S. colleges and universities or simply type in their college town or zip code to browse thousands of new and used items for sale, all close to campus to avoid shipping. Affiliated colleges get $7-$14 per qualified lead for autos and real estate, 7 percent for “buy now” store accounts, and 70 percent of the gross for listing upgrades.
Harmon is currently engaged in a lot of business development, and hopes that TorStar will be just the first of many partner announcements with media (and possibly Yellow Pages) companies. In addition to TorStar, the site has already been working with a dozen or so community papers. Eventually, it hopes to announce additional deals in Australia, India, Ireland, New Zealand and the U.K.
More Media Partners Needed
LiveDeal is full of chutzpah and seems to have gotten off to a good start. To me, however, it isn’t totally clear where LiveDeal fits in the universe. Until it gets more media partners, it will rely on word-of-mouth traffic, and it may have trouble aggregating buyers and sellers in key markets.
The addition of more first-tier media partners like TorStar, will enable LiveDeal to significantly ramp up usage, and shoot past some of the other players in the auction/free classified space. These include Vancouver-based CityXPress, which works with over 250 newspapers, and smaller players such as San Diego-based Ad2Ad, which works with a couple of dozen community papers, an established college network (and yes, full disclosure, Krasilovsky Consulting).
The overarching question, of course, is whether LiveDeal can establish its own space. It might just be setting itself up as a placeholder for the likes of eBay, Google, Amazon or TKG (Tribune/Knight Ridder/Gannett).
I was interested to see the statistics you quote re: Live Deal.
I am involved with Newspaper Classified software, on line and in print.
Recently live deal barraged my customers (and potential customers) with marketing materials suggesting that Live Deal would add signficant revenue if newspapers only uploaded their entire classifieds sections to Live Deal.
They prepared a “potential profits” chart that showed how a newspaper could be making as much as ONE MILLION dollars A MONTH!!
The way a newspaper would make a million dollars a month, it turns out, is if they managed to get 500,000 of their customers to create car ads on LiveDeal, every month. And if each customer bought additional livedeal upsells, etc., etc.
It’s interesting to see that currenly ALL OF LIVE DEAL is getting (by their count) only 500,000 VISITORS each month. Not 500,000 ads, let alone 500,000 car ads. As for their current 200,000 ad, does this mean if 1 out of every 2 visitors was placing an ad. If so, that’s a lot of sellers — how many are buyers? In fact, Live Deal appears at this point to be cutting and pasting ads found on non-affiliated classified websites suchh as Craiglist to goose their ad counts.
To buttress their stories, the brochure points to a cars for sale website: “Silconvalleycars.com” or some such.
Live Deal points to this portal with pride, and says in the brochure that this portal alone “hopes to clear $2500/week”.
I think that hope is sincere and righteous, but as always, scratching the surface reveals more: his portal, it turns out, is owned and operated by (drum roll please): LiveDeal.
I’ve just returned from a newspaper convention in Kansas City. LiveDeal gimmee caps and T-shirts being handed out by booth bimbos. “They said we could make a million dollars a month”, glossy-eyed conventioneers could be heard muttering as they passed.
I can’t get over how dot.commish this is.
LiveDeal is serving Koolaid by the bucketload, IMO, and drinking their own urine. God knows what they served to the folks in Toronto.