Written by Alex Iskold and edited by Richard MacManus.
A few weeks ago we were briefed by the co-founder of vFlyer, Oliver Muoto, about the changes and new features
in their upcoming release. Oliver gave us a great overview of the service (which we will
talk about a bit later) but he also shared with us an interesting map of the entire
classifieds landscape. The map shows a lot of activity in the space and lots of players
in different niches. And this is not surprising, since classifieds is a volume business.
If you can attract and retain customers, then you will make money because the margins are
there. So in this post we look at what is happening in the different corners of the
classifieds landscape – and try to figure out who is doing well and where this market
segment is heading overall.
Source: vFlyer
General Marketplaces
We begin with an overview of the general marketplace – i.e. those companies that provide end-to-end service to sellers and buyers. All of these web sites allow
you to both list and search for items in various categories. However the mechanisms and
approaches of each are quite different.
Craigslist (Alexa 33) is
the grand daddy of simplicity in Web 2.0. Craigslist allows its users to list
geographical classifieds in categories such as personal, housing and jobs. Remarkably the
site only charges for listings in San Francisco, Los Angeles and New York areas – which,
according to the traffic stats on Alexa, amount to approximately 33% of listings.
Known for its extreme simplicity, code-of-honor, self-governance and great customer
service, Craigslist has attracted the power users – at least in the metropolitan areas.
However, the company has not made a major push to grab all it can. According to a recent article in
the SF Chronicle, craigslist is not focused on maximizing revenues (25M in 2005), despite
the fact that it attracts almost 10M visitors from the US monthly. Bottom line,
Craigslist is leaving some money on the table. This is not, however, easy money to take –
but others are certainly trying.
Next we look at Google Base – the web giant’s foray into the world of
classifieds. When it first came out a year ago, there was speculation it would force eBay
and Craigslist out of business! But even this six
month old article by Hitwise proves that rumor to be bogus. Google Base has
not taken off, at least not yet. Why not? There are perhaps several factors. First
it simply may not be obvious how general users get to the site. And once on the site, it
may not be obvious what to do.
There are definitely unique and positive things about Google Base. The bulk upload
feature is great for power users. Perhaps Google’s smartest play with the base to date
was the recent
release of an API. Any application now has an easy way to publish classifieds to the
base. Since the listings are instantly available via RSS and are searchable on Google,
this is a very compelling proposition.
And what about the economics? Since Google makes money via context sensitive ads, it
does not need to charge listing or transaction fees. Can this ultimately sway people away
from Craigslist? Perhaps, but it seems that for this to happen Google needs to do more
marketing and more UI work.
edgeio (Alexa 17,500) calls
itself a distributed marketplace for classifieds. Publishing is always free of charge and
can be done in a number of ways. Here are a few very handy ones: a blogger can create an
instant listing in a post by using a special tag, people can submit listings by pointing
edgeio to existing web sites or RSS feeds, and large enterprises can request a data pull
via an API. But edgeio is not only creative when it comes to the consuming of data, they
do a great job on distribution as well. The edgeio content is syndicated on blogs and
websites in a variety of ways, from straight RSS to embedded widgets.
How does edgeio make money? There are many revenue streams. For example, if you do a
search on their web site you will get context sensitive ads. Also, there is an option for advertisers to bid on the placement of the ad – based on the number of clicks. There
is also an option to do the same but based on a fixed, one time fee.
Overall, edgeio is an interesting, evolving service. The key question is whether it
can attract enough users. The traffic chart from Alexa shows there is no definitive
growth, so we will have to wait and see on this one.
Vertical Marketplaces
From an infrastructure point of view, there is no reason to have a vertical
marketplace. If you can list houses, you can just as easily list jobs and cars. But there
is value from the user interface, semantical and specialization points of view.
Vertical marketplace sites can also offer domain expertise and value add. For example,
Rent.com (Alexa 2,800) allows
its users to find roommates – but also offers value add services like estimating and
booking the moving. And Auto Trader (Alexa 800)
offers an array of services, ranging from assessing the value of the car, to listing it,
to getting a car loan.
In a sense these sites are more portals, than just marketplaces or search engines –
since they strive to deliver an end-to-end experience. Despite that, Alexa traffic
patterns show an overall decline in traffic for these sites over the past half year.
Vertical Search Engines
We have written before here about the rise of vertical search
engines. The classifieds market is no exception, perhaps even a vivid illustration.
The chart at the top of this article lists a range of vertical search engines ranging
from generic classifieds to a narrow specific vertical.
In the jobs market, Indeed.com (Alexa 1,900) and Simply Hired (Alexa 6,300) offer a very similar feature set. Both have two initial search boxes for position and location, then allow the user to refine the search results based on various criteria.
The contenders that we looked at in the housing market were PropSmart, (Alexa 48,000)
and Trulia (Alexa 4,500).
Despite a big difference in traffic, both of these sites offer a similar interface. The
initial search is done by geographic location, then the search results are displayed via
a list and a map. Both sites offer nice ways of customizing the search results to help
the user find what he/she is looking for. There is a feature on Trulia, which is nothing
short of amazing, called “city guides”. By typing in a city and the state, you get a
report card which ranks the real estate activity and gives a ton of useful
information.
Finally, we looked at two generic classifieds search engines – Oodle.com (Alexa 5,200) and Vast.com (Alexa 38,000). Again
both are very similar, however we were not overly impressed with the results. Vast did
straight text search, which defeats the purpose of a vertical search engine (hint: it
needs to understand the semantics). Oodle did better, but was not as clean an interface
as Indeed.com. Overall, both sites seemed a bit overwhelming because of the number of
different tabs. Breaking it down to a refined vertical, adding more semantics and making
results more relevant – would make these engines more appealing.
vFlyer – make it once, post everywhere
To come full circle, now we review vFlyer (Alexa 41,000).
vFlyer claims to do the heavy lifting in classifieds. Publishing a classified to the
vFlyer service instantly makes it available on many major classified sites and search
engines. It is not an easy job, but in our tests we found vFlyer to be
comprehensive and easy to use.
Conclusion
The Classifieds market is complex and rich. There is plenty of money to be made and,
as the above players show, plenty of room for innovation.
So what really stands out? Craigslist has certainly been doing a great job. In a way,
you can argue that their approach is perfect – just let the users fill in the ad. But
things start to get interesting with the rise of the vertical search engines, which are
able to “parse” and “understand” the semantics of the ads fairly well.
But should users input classifieds using structured forms? We believe so, since people get impatient when search engines don’t deliver what they are looking for. So we think the semantics work being put in by classifieds services is well worth it – since it leads to more precise results and therefore faster transactions.
