Tag Archives: craigslist

eBay Sells Off Craigslist Stake

eBay’s one-time dream of anchoring its large classifieds/marketplace business with Craigslist as now officially ended. Last week, eBay accepted a cash buyout from Craigslist for its 28.4 percent stake, allowing eBay to focus on splitting off its multi-billion dollar PayPal division as a separate company.

eBay isn’t disclosing what it received for its stake, but it is likely to be at least 10x what it sunk to buy into Craigslist, or $320 million. Aim Group analyst Peter Zollman notes that Craigslist has plenty of cash in the bank to pay for those shares, with estimated profits of $304 million in 2015, or nearly 2.5x more than its $130-140 million profit in 2013. The surge in profits occurred as Craigslist started charging auto dealers for used auto ads, in addition to its fees for apartment, recruitment and escort listings in certain markets. Other parts of the site remain free.

eBay had purchased its stake in 2004 for $16 million from one of the Craigslist’s early employees. It initially sought a friendly relationship with the Craigslist leadership, paying founder Craig Newmark and CEO Jim Buckmaster $16 million for goodwill. In exchange, it was awarded a board seat.

In theory, the relationship could have worked. eBay was one of the only dotcoms to successfully build community into its business model . Publicly, it remained a company that was dedicated to “community first.” In reality, however, that may have been an earlier version of eBay. At the time of the deal, eBay had already begun focusing on hyper-efficient services – unlike Craigslist’s avowedly lowtech, small revenue approach. It had also started charging higher fees on most items, and focusing more on profits than on building a viral, Craigslist-like community. It also was focused on a number of big dollar paid classifieds and vertical areas, especially eBay Motors.

By 2008, relations between the two companies dissippated into a number of lawsuits and counter-lawsuits, as eBay set in motion a plan to launch its Kijiiji classifieds as a Craigslist clone – apparently as a hedge in case it wasn’t able to assume control over Craigslist. Later, in court documents, it was revealed that eBay had passed along confidential board information to the Kijiiji team.

Ultimately, Kijiiji – now eBay Classifieds in the U.S. — never broke out as a person to person classifieds success, although it is the leading classifieds site in Canada and has a good presence in many countries. Even if does not serve as an effective P2P anchor for classifieds, eBay has become one of the leading online classifieds sites in the world, with major international properties such as eBay Kleinenzeigen, Marketplaats, Gumtree and LaQUo.

While eBay may ultimately be more focused on its enterprise businesses, former CEO Meg Whitman’s 2006 description of classifieds as eBay’s “lead generation, advertising based model” still holds true. As for the future of Craigslist, we’ve noted press reports in The Wall Street Journal and others suggesting that Craigslist has been made obsolete by the emergence of smart phones and lost its chance to become a major ecommerce player. The latter part may be true – Craigslist is hardly poised to compete in the goods value chain against Amazon, Google, eBay and others. But it remains the global leader in person-to-person online classifieds, and there is no reason to suggest that it won’t remain the leader.

Facebook Goes Up Against Craigslist and eBay (Sort of)

Craigslist has outlasted its challengers, and remains the platform to beat for classifieds, or “things to sell” marketplaces. eBay, similarly, remains a leader for the sale of goods – although most are not geographically oriented. Amazon is also active in that space.

Can Facebook, with its huge volume and trust networks, cut into their business? It is going to try via a new “For Sale” offering that allow users of its groups to post items for sale. Items are listed with prices, photos, descriptions, pick-up location and prices. They can also be listed as “available” or “sold” to let buyers know what’s still on the market.

The listings are currently free – and probably won’t go into the paid areas that provide the bulk of Craigslist’s revenue: apartments, cars, jobs and “personal services.” But if Facebook decides to provide a greater emphasis on classifieds, it could conceivably move into transactions (and commissions). It could also open the service up beyond its groups to have more of a geo-orientation.

It isn’t the first time that Facebook has been used for classifieds. Oodle, a large classifieds platform that launched in 2005, took over a nascent Facebook classifieds service in 2008 and focused on Facebook’s huge scale to offer items for sale to friends and groups within the service. Oodle was sold to QVC several years ago.

It also isn’t the first time that online groups have been used for classifieds. In their heydays, Yahoo Groups and Big Tent – each with hundreds of thousands of users — had active lists of classifieds. Many associations and groups currently host classifieds on their websites and pages.

The classifieds project is the latest transaction-oriented effort from Facebook, which may want to diversify its revenue beyond advertising. Facebook has been experimenting with various transaction models for several years, including tests with virtual gift cards, deals and virtual currencies. Facebook has also developed an Amazon-like capability to enable transactions on other sites by collecting credit card information on its profiles.

Craigslist’s Revenue Up 101%; Measuring Its Impact

There have been several game changers in local. One is Google search. Another is Yelp reviews. Another has got to be Craigslist.

Craigslist started out as a totally free community site focused on recruitment. In recent years, it has incrementally added paid sections – partly to make them more manageable – and it is beginning to make real money from these. According to “conservative” estimates compiled by our friends at AIM Group for its annual Craigslist report, the site’s revenues grew 101 percent in 2013 from $166.5 Million to $335.7 Million.

While Craigslist now serves 700 markets around the world, AIM Group says the vast majority of the revenue comes from 54 markets. The dollars largely come from Craigslist’s affordable fees for recruitment in 28 markets, and its auto ads, which were just introduced in 4Q 2013. AIM estimates that 79 percent of Craigslist’s revenue comes from recruitment; 16 percent comes from autos; and the remaining five percent coming from things like “therapeutic” listers in New York City. The site’s fees range from $5 to $75.

Yet, the site stays true to its roots as an altruistic community resource by not charging for “private party” person to person ads – recruitment ads are just charged to agencies and companies; and auto ads are just charged to dealers.

The question we’ve asked in the past is whether Craigslist is vulnerable. It still seems easy enough to produce a better classifieds site. eBay Classifieds – started after eBay was unable to take over Craigslist — is a much better site in terms of user experience, with links to social media, easy photo uploads, etc.

To be sure, Craigslist is — as AIM notes — “the same drab user experience” as it has always been. Under the hood, however, AIM notes that Craigslist has finally started improving the site. Suddenly, listings are mapped; there are new ways of searching for goods and services; there is a picture gallery view; and even a way to save thumbnail photos. Moreover, by imposing fees on dealer auto ads, it has become easier to find autos for sale — spam entries have been significantly cut back.

Does all this suggest that Craigslist is now poised to become a state-of-the-art site that truly serves the needs of its users as we move into the mobile age? Not necessarily. But Craigslist has probably done enough to keep its critical mass of listers, and users.

Craig Newmark at Inman: Craigslist in 70 Cities

Craig’s List Founder Craig Newmark made another of his regular visits to Brad Inman’s stage at Real Estate Connect today, which is taking place in San Francisco. Newmark, who humbly refers to himself as working in customer service, noted that Craig’s List is now in 70 cities and receives over 50 million unique visitors a month. Those visitors look at over 20 billion page views a month.

Craig’s List has been taking a beating from law enforcement officials over its adult ads and other subjects, but Newmark says that the complaints are not really making much of an impact. “People like to manufacture controversy,” he says. But Craig’s List remains both “a business and a community service.”

In fact, the service has generally made strides in most areas, thanks in part to the addition of more customer service employees. The service now has 35 employees.

“The most complaints are in New York,due to abuses of apartment listings. But “there has been a big improvement. It is better than it was five years ago,” says Newmark, who also answered personal questions and discussed government issues. In answer to an audience question, he noted that he did not find his girl friend on Craig’s List. He also says that a pre-nup between them is the “subject of negotiation.”

AIM Group Projects Craigslist Revenues at $122 Million

Craigslist has always been murky about revenues, and remains a free site for most categories. It only charges a commercial rate for recruitment, with listings costing just $25 in 17 markets and $75 in San Francisco. Fees for apartment listings (in New York) and “adult and therapeutic services” ads fit into the nominal fee category, assessed mainly to track who is advertising and to limit ad spam.

Indeed, site leaders Jim Buckmaster and Craig Newmark have made a big point of saying they have enough money and don’t need to pump up the revenue machine – much to the frustration of eBay, which owns about 20 percent of the site.

But even with its modest feel levels, and mostly free status, the reality is that Craigslist is actually beginning to make real money, according to a new report and forecast by the AIM Group. AIM Group (Peter Zollman, Jim Townsend et al) says that Craigslist is poised to earn $122 Million in 2010, with profits between $88 million and $99 million.

Recruitment accounts for more than half of the site’s revenue, and roughly 17 percent comes from the New York-only apartment fees, says AIM. The big surprise is the projection for sex ads, which will bring in 30 percent of the gross. AIM notes that represents three times its projections for Craigslist sex ads in 2009.

eBay Rebrands Kijiji as eBay Classifieds (in U.S.)

More than a year after it became apparent that it would do so, eBay has finally killed the Kijiji brand in the U.S., and rebranded its efforts as “eBay Classifieds.” The rebranding, which does not impact more established Kijiji-branded sites in several international markets, is accompanied by a cleaner interface and some new features, including a mobile app, better spam filters, improved customer support and easier cross-sells and buying with eBay’s main auction/buy-it-now site.

Unchanged is eBay’s value proposition of its classifieds as a “safer, easier, friendlier” classifieds provider than Craigslist and others. The mobile app might especially gain leverage against Craigslist, which doesn’t have one, claiming its unencumbered site loads so quickly that it isn’t necessary. Top categories for eBay Classifieds include motors, pets, goods, services, housing, jobs and personals.

eBay has chosen to refocus on classifieds instead of launching major new local hub sites that would fully integrate eBay Motors, auctions, classifieds and PayPal. This, in fact, was its tentative plan couple of years ago. In addition to the eBay Classifieds/Kijiji sites, eBay owns a number of leading vertical/classifieds sites in the U.S. and abroad. Most of its classifieds operations are based in Europe.

Insights into eBay’s Classifieds Strategy via eBay vs. Craigslist

eBay is expected to dramatically boost its efforts in classifieds in 2010, so we welcome clues into its historical and current thinking into classifieds via eBay vs. Craigslist. eBay has been seeking redress from Craigslist, which has diluted its 28 percent ownership share to 24 percent in a bid to squeeze out its influence. Craigslist, meanwhile, is seeking to force eBay to sell its shares, saying that eBay had an oral commitment to dispose of its shares if ever chose to directly compete against the company, a la Kijiji.

Highlights: eBay feared Google’s entrance into classifieds via Craigslist, and wanted to buy Craigslist as a pillar for a broad international vertical and classifieds play.

As noted in AimGroup’s excellent, comprehensive coverage of the trial, pretrial depositions showed that EBay’s initial vision was to merge all of its acquired classified titles into a single entity that included Craigslist. eBay also believed Craigslist wasn’t fully monetized and that it could add immediate value with its expertise in product search, trust and safety and international expansion. Another reason that eBay wanted in with Craigslist was to prevent Google from taking a similar position.

But it quickly became apparent that there was a major culture clash between “Top Down” managed eBay, which sought to maximize profits, and “Bottom Up” managed Craigslist, which was driven by its appeal to its community – a position that it took so seriously that it consciously took out an “.org” URL.

Craigslist also turns out to be very conscious of its public image. Desiring not to look greedy to its users, Craigslist did not publicly reveal that Craig Newmark and Jim Buckmaster received $16 million in “extortion money” from eBay to allow it to receive shareholder rights.

A major issue in the trial is whether there was an agreement that eBay would dispose of its shares if it started to compete against Craigslist, as it did in 2007 when it launched Kijiji , and stated buying search ads on Google to divert Craigslist users. While eBay acknowledged that there was some kind of understanding, it was never formally included in a contract. Indeed, Buckmaster testified that he felt that eBay was using sensitive, proprietary information to build its competing brand. He said eBay’s behavior directly lead to Craigslist taking its actions to dilute eBay’s shares.

A decision in the case is expected in early January. The judge in the case has said that both sides will be unhappy with the outcome, and he scolded them for not reaching a settlement.