Business

Jobs, Benefits, Business Model, Founding Story

OLX operates an online marketplace for consumer-to-consumer sales, particularly targeting users in emerging markets, with a view to providing a safe, reliable and efficient way for consumers to buy and sell goods.

OLX was founded in 2006 by Fabrice Grinda (“Grinda”), Alec Oxenford (“Oxenford”), and Jordi Castello (“Castello”). The founders sought to establish an online platform through which general consumers are able to sell unwanted items at no cost to themselves. Grinda noticed in particular that larger online marketplaces such as eBay and Craigslist had extensive operations across developed markets but had shown little interest in establishing a presence in emerging markets, particularly across Latin American, Eastern Europe, and South East Asia.

Grinda, Oxenford, and Castello subsequently developed the OLX platform to cater specifically to consumers in emerging markets. They pinpointed certain aspects that would be key to the platform, including: social integration with Facebook and Twitter and the ability to see pictures and videos; mobile access, with smartphones the principal link to the internet for consumers in emerging markets; a free service, especially in countries where credit card usage is not high. The team also focused on providing a high-quality and reliable service.

Since its launch, OLX has expanded significantly, and now has operations in around 40 countries worldwide, including in markets across Latin America, Asia Pacific, Africa, and Eastern Europe that are often not as well-served by large tech and online companies. The Company attracts more than 200 million active users per month, generating 1.7 billion monthly visits and 35 billion monthly page views.

OLX’s success across emerging markets – particularly Brazil, India and Poland – saw the company gain interest from a number of investors, with the Company raising more than $28 million in five rounds of funding. OLX was ultimately acquired in 2010 by internet and media group Naspers, and continues to function as a subsidiary of the company.

Business model of OLX

Customer Segments

OLX provides an accessible platform for general consumers to buy and sell items and services, and organise community activities. The Company’s online platform is reported to attract more than 200 million active users each month.

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A recent report suggested that the majority of the platform’s users are male, around 65%. As an online service it is utilised primarily by a younger, more tech-savvy audience, with the most significant portion of its traffic coming from 25 to 34 year-olds, followed by users falling between the ages of 18 and 24. The Platform, however, is reported also to generate traffic from users above the 50 to 55 age range, owing the platform’s simplicity of use.

Contrary to other tech companies, OLX does not seek to compete is large, established markets, instead seeking to exploit opportunities in emerging markets. The Company serves users locally in more than 40 countries worldwide, with its largest markets being India, Brazil, and Poland, which together account for around 50% of users. OLX also operates across other emerging markets in Africa, Latin America, Asia Pacific, and Europe.

Value Propositions

OLX provides value to its customers in the following ways:

  • The quality and reliability of its platform, with the Company operating an efficient and high-quality platform, providing a reliable and effective channel for consumers to interact with one another;
  • Its accessibility and ease of use, with the Company providing a user friendly and flexible experience that can be access either through mobile and desktop browsers or via the Company’s mobile applications;
  • Its broad range of product categories, with the Company enabling consumers to sell a range of products, including electronics, clothes, furniture, cars, and home appliances;
  • Its expertise and experience, with the Company employing specialist technical personnel across its business, as well as an experienced team of industry executives; and
  • Its international reach, with the Company serving consumers across 40 countries worldwide, in particular serving customers in emerging markets that are not typically served by growing online businesses.

Channels

OLX operates a website at www.olx.com, through which it provides information on its platform, its services, and its products. The Company operates numerous local online channels across its active markets that cater specifically to local consumers. This includes website such as www.olx.ph in the Philippines, www.olx.com.in in India, and www.olx.com.br in Brazil. These sites allow consumers to register a user account, browse classified ads by category, place advertisements, and make purchases.

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OLX also provides mobile applications for iOS and Android systems that provide similar functionality. The Company’s mobile channel comprises a significant portion of its business in emerging markets where smartphones are a consumer’s principal means of accessing the internet. For example, in India more than 60% of traffic is reported to come from mobile devices.

Customer Relationships

OLX operates on a self-service basis, with customers able to access the Company’s platform and its full suite of tools and functions through Company’s online and mobile channels. Customers are able to search for products, post advertisements, manage account details, and complete transactions through the Company’s digital channels, without interacting with members of the Company’s sales teams.

OLX’s local platforms are community-driven, driving consumer-to-consumer sales. As such all product listings and advertisements are placed by members of the OLX community. The OLX Community is self-moderated, whereby members are encouraged to moderate their own posts, allowing and helping others to moderate theirs. The Company, however, does provide ongoing support to its users in the form of user guides and help articles. It also provides personalised support to users via email.

Additionally, OLX keeps its customers up-to-date with company developments and activities through its blog, as well as through its social media accounts, including with Facebook, Google+, Pinterest, YouTube, Instagram, and Twitter.

Key Activities

OLX develops and operates an online classified advertisements platform. The Company’s consumer-to-consumer marketplace provides a range of self-service functions to its users, who are able design ads with pictures and videos, control their selling and buying activity via the My OLX portal, display ads on their social networking profiles, access the site from their mobile phone, and view their OLX account in their local language. The Company has local offerings across 40 countries worldwide, with a particular focus on emerging markets. OLX’s largest markets are Brazil, India, and Poland.

Key Partners

OLX works in conjunction with a number of companies and organisations across the world in order to provide the most reliable and efficient service possible to its users. These partners include:

  • Technology and Development Partners, comprising a range of technology service providers and software development companies that help to develop, maintain and support the Company online and mobile platforms;
  • Supplier and Vendor Partners, comprising suppliers of various tools and services that are utilised across the Company’s entire enterprise, including companies to which certain non-technical functions can be outsourced; and
  • Marketing Partners, comprising a range of companies and organisations, with which the Company operates joint marketing programs and projects.
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OLX has launched a number of partnerships in recent years, across local markets and internationally. This includes a joint marketing deal with Flipkart which encourages consumers to upgrade by selling used products on OLX before buying the new products on Flipkart; a partnership with Film Producer and Director Kunle Afolayan, under which OLX users could win tickets to a movie premiere; and a tie-up with local police in Kenya to combat online crime.

Key Resources

OLX’s key resources are its technologies, its online and mobile platforms, its IT and communications infrastructure, its marketing channels, its partnerships, and its personnel – in particular its technical support and development staff.

OLX operates an extensive data network, comprising data centres and other infrastructure, that is key to its ongoing operations. The Company also owns and or leases a number of offices across the Americas, Africa, Europe, and Asia Pacific.

Cost Structure

OLX incurs costs in relation to the development of its technologies and digital platforms, the maintenance of its IT and communications infrastructure, the implementation of marketing and advertising campaigns, the management of its partnerships, and the retention of its personnel. The Company’s most significant cost relates to the payment of salaries and benefits to its workforce of more than 1,200 employees worldwide.

Revenue Streams

OLX generate revenue through the development and operation of an online and mobile classified ads platform. The Company has three principal revenue streams:

  • Google Adsense, with the Company operating traditional display and banner advertisements based on searches made by each individual user; and
  • Sponsored and premium listings, whereby users are able to promote their product listings by paying a small fee, or businesses can pay to have their listings appear at the very top of the results for certain searches.

OLX is not a publicly-listed entity and as such is not obliged to publish its financial results on its website.

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