Why Some Battles Aren’t Worth Fighting (My Take On Craigslist)?
This blog post is my take on why building a marketplace for second-hand is nearly impossible today with Craigslist blocking the way for others.
Disclaimer: I tried to compete against Craigslist with Shook, an auction marketplace for second-hand (that later turned into listings marketplace) and failed, these are my thoughts.
Before reading this I highly suggest reading this blog post on building marketplaces in general. I’m about
to talk about building an online second-hand marketplace.
Craigslist’s Rules
Craigslist are today’s leaders in online listings and their service is free of charge. By doing so, they’re actually forcing everybody else to play by their rules. When we started Shook,
we wanted to charge an %8 fee of a transaction (a completed sale). We soon started getting feedback from potential users asking “why should I use Shook if Craigslist is free?”.
It soon became clear that a lot of people did not want to pay a fee for what they could get for free, even if our service was better.
By doing this, Craigslist are making it even harder for companies to innovate the second-hand space.
Building Supply
In the article mentioned above, they explain that usually marketplace builders start with fulfilling the supply (sellers & items) before bringing in demand (buyers).
However, in second-hand, it’s much harder. Here are a few reasons:
- Items are disposable. Once they are sold (on your marketplace or on Craigslist) they’re gone. Even if they don’t get sold, after a while there’s a chance the seller just threw it away.
- Limited inventory. Even Shook’s biggest fan can only sell items he owns and does not need anymore. In comparison to Etsy, where one seller can create hundreds of items, sellers on Shook are ‘worth’ less.
- Sellers are random. They can’t be defined demographically and they don’t surf any specific website. This makes it much harder to target.
People Are Fine
When we started, our assumption was that people were not happy with Craigslist because of all the fraud and scam going on there.
It may be true that people are not happy, but today I’d argue that they are fine with things as they are. They get what they wanted in the first place – selling their item.
Second-hand sellers are random people who seek to turn something they have into money and their best chances of doing so are on Craigslist.
They may not love it, but it works for them. To beat Craigslist, your value should be more than just a better experience.
That’s my take on the second-hand space. Leave me a comment and let me know what you think.
I for one am sick of Craigslist and I am not fine with it by any means. I do sell the crap I don’t want anymore on there because it is free however I would be willing to pay a reasonable transaction fee not to deal with the “folks” I deal with on Craigslist anytime I want to sell something. I wish I had heard of Shook before. Great post by the way and thanks for stopping by my blog,
Dear Khalid,
Thanks for your feedback!
I hope to see more of your blog soon, I like the name you chose for it
You should listen to the song, “Craig’s List” by Weird Al Yankovic. It’s great. It’s on his Alpocalypse album.
Don’t agree here. Your judgments are based on your personal experience. Personal experience is very often a misinterpretation of the factual situation. I would say all the time actually.
1. People will always complain. It does not matter if your services is better, they will complain and then in the end they will come back to you, but there is a time needed for that. Sometimes years.
2. There is no such a thing as “no target audience”. There is always target audience and you can always target it. No matter what. You say that Craiglist has poor quality and does not take fee. You say that your website takes fee, but can be trusted. I don’t understand where is the problem with targeting here?!
3. There are cheap or free services and there are paid services. For example, if you are not looking forward to sitting in the prison for a murder, you will try to find the best lawyer for the costs you can afford, instead of getting free one. Everybody knows free is risky, but it may work out. It may not though…
Paid services are of higher quality and client has more chances to succeed. It’s just that your target audience was not that one, which prefers to risk for free instead of getting security for fee.
I think that we all have to admit that, when something goes wrong with what we do, it is only our mistake and not Craigslist’s one.
Sorry for being too straight.
Dear Jelena,
Thanks for your honest response, I truly appreciate it.
I agree that all judgments are, by nature, subjective and that’s the reason why I wrote that this is only my take on things.
I still, however, believe that most people who use Craigslist (our main competition) are non-professionals, which makes it harder to convince them to pay. I’m saying this having seen the reaction of tens of thousands of users who visited our website.
Regarding the “no target audience” comment.. It might be a bad choice of words but what I meant to say is that they can’t be defined demographically (e.g women, 30-50, urban, likes wine) or by search queries in google (v. expensive to target ‘sell iphone’ on AdWords) like in other cases.
By the way, I don’t think it’s Craigslist’s mistake, but rather a brilliant strategy to remain market leaders.
I look forward to seeing more of your comments, thanks!
There are always 2 ways to market your audience. One is when you are specifing your target audience and adjust your approach towards your specific audience. The other one (which is specificaly used when it is difficult to research the target audience) is to develop company identity, which will attract the certain type of people. According to what you say, the identity of your website is not clear to its visitors. As a result you get wrong type of them (wrong ten thousands of people).
The problem that is clear here: the identity of your company as a “paid quality service” is not obvious for the audience. You need to work more on company identity to develop the certain impression.