BECH DE OLX PE

ABSTRACT

There has been a rapid expansion of E-commerce since 1998 due to the growth in

availability and falling costs of technology. E tailing is a concept which rising in market

but there is a new market segment have been raised which deal in second hand product

selling. OLX is a website which start its operation in India. It operate as a medium for the

buyers and seller of the second hand products. Study reveals that most of the products

have disposed or given away after they become old. But after the implementation of OLX

in market it allow the users of old product to find a suitable person for that product at a

good price. OLX have find a successful Market in India for the last six years. TV

advertisement campaign have helped in maintaining a brand positioning to OLX. Most of

their add was humor and culture based, which totally understand the mentality of Indian

consumers. OLX have maintained effective strategies in implementing the market

position and other alliances have been made with other organization for survival.

Alliance with flipkart is one of the most significant one. OLX also face competition in

market from Quikr .

KEYWORDS: online classifieds, OLX

INTRODUCTION

The trade begins from when human being started producing more than what he

need. At first all the trade were on exchange basis. Commodities were exchanged for one

another. Commodities or services exchanged for other commodities or services, it was

known as the barter system. The common rate of exchange was not available on that

time. The common way of exchange was invented as currency, then the trade started on a

kick start. The trade have seen a vast years of development. Internet invention change the

face of trade. Consumer can book a service or purchase almost anything through internet

in the modern world. E retailing is the new face of trade where all the items are available

just in our finger tips.

E-tailing began to work for some major corporations and smaller entrepreneurs as

early as 1997 when Dell Computer reported multimillion dollar orders taken at its Web

site. The success of Amazon.com hastened the arrival of Barnes and Noble's e-tail site.

Concerns about secure order-taking receded. 1997 was also the year in which Auto-by-

Tel reported that they had sold their millionth car over the Web, and Commerce

Net/Nielsen Media reported that 10 million people had made purchases on the Web. E-

retailing uses internet as a medium for customers to shop for the goods or services. It can

be either pure-plays or bricks-and-clicks. Pure-play uses internet as primary means of

retailing while bricks-and-clicks uses the internet as an addition to the physical store.

Now a day retailers have started offering almost everything under the sun on internet.

From products like groceries to services like online gaming and jobs, e-retailing covers

all frontiers.

The world’s second largest country by population isn’t really known for its

internet penetration. That number stands at a lowly 12.6 percent where people who surf

the internet only once a month are also counted.

Online classifieds, an offshoot of traditional classifieds still found in abundance in

newspapers began emerging in the USA in the 1990s as internet usage started becoming

mainstream. Traditional offline classifieds were known to be cash cows for print

publications around the world, so it only made logical sense to extend the concept online.

Technology pioneers who foresaw the impact of the information superhighway in the

future saw a clear opportunity to enlarge and grab a share of the $100 billion classifieds

marketplace; their solution, create the online classifieds industry. Online classified ads

offered benefits beyond traditional classifieds. The Internet provided a medium for

buyers and sellers to independently manage, post, and search ads while allowing for easy

interaction with one another. It also provided a vehicle for quick transactions. As Internet

usage grew worldwide, so did the attractiveness of the online classifieds industry.

Today, the industry is composed of a handful of dominant players and numerous

smaller sites, all of which can be categorized into four strategic groups: General Local,

General Global, Vertical Local and Vertical Global. General sites such as OLX include

postings from buyers and sellers in a wide range of categories (jobs, rentals, goods for

sale, personals, etc.). Vertical sites on the other hand focus on specific categories (cars,

homes, jobs…etc). Their geographic scope defines them as Local or Global.

Monetization and revenue generation for the players in the marketplace normally comes

from online advertising, featured listings, and value added services.

The birth of the online classifieds industry actually happened in 1995 when Craig

Newmark started Craigslist as an email distribution list for friends and co-workers

publicizing events in the San Francisco Bay Area. The subscriber list grew rapidly

through word of mouth and an online community began to form. In 1996, Craigslist

became a web based service and for many years it was the only known name in the online

classified arena. The immense success of Craigslist enticed a number of competitors to

enter the industry which boasts of an easily reproducible model that can be customized

for different cities and countries. Even today, Craigslist is the most popular online

classifieds site in the United States but it operates as a not for profit, making it one of the

rare exceptions in an industry where growth is directly proportional to the level of

internet penetration in the world.

Apart from Craigslist there are many other players in the industry who are either

global or local depending on their strategy. eBay classifieds group (eCG), an umbrella

organization comprising of eight online brands such as Kijiji (Canada, Taiwan,

USA),Gumtree (UK, Australia, South Africa), Loquo (Spain) is the biggest player in the

industry. Each of its brands are General Local and highly popular in different geographic

markets. eCG’s major competitor in Europe is Schibsted, a Norwegian media

conglomerate that operates in 27 countries and follows the Vertical Local model as its

operational strategy. Finally, the third major participant in the online classifieds industry

is OLX which differs from the rest of the competition by focusing on developing

economies which have tremendous scope for growth in the next five years.

OLX.IN

Co-founded in 2006 by Fabrice Grinda and Alec Oxenford, OLX titles itself as

the “next generation of free online classifieds”, a tagline that forms the basis of the reason

behind its inception. Grinda and Oxenford founded OLX Inc since they wanted to create

a secure, user-friendly, communal trading environment, with rich features at no cost to

the end consumer. Their platform which is used in 105 countries and 40 languages has

been doing exceptionally well over the last few years. In developing markets such as

India, Nigeria, Kenya and South Africa it even runs television advertisements that have

become very popular with the masses.

The growth story of OLX in India over the past two years has been absolutely

phenomenal. The site which was only known to those familiar with the online classifieds

industry in 2010 has now become a verb. Its easy to use interface, General Local strategy,

focus on mobile and effective advertising across television and digital has lead to a

CAGR of 653% since they established a presence in India. Their television ads in India

are unique since they are shown in the local language of Hindi even though the site

operates in English. This communication strategy has created brand appeal among the

masses stretching across all strata’s of society. Infact one of the reason’s the television

ads are so popular is because the site can actually work in the same manner as shown in

the ad at times. Their are several stories of items getting sold within a few hours of them

being posted on OLX.in.

The internet landscape in India in 2013 is still very much in its infancy with huge

waves of growth predicted in the coming years. McKinsey’s report on “The Internet’s

Impact on India” predicts that the online audience in India will treble to around 400

million by 2016 leading to a 100% increase in economic contribution to the GDP from

the internet.

Mckinsey’s prophecy coming true would make OLX India even stronger if it

continues to command the same market share that it does today. 60% of the market share

by 2016 would give the site a user base of almost 250 million users making it almost as

big as LinkedIn or Twitter.

Apart from India, OLX has also done well in other countries such as Kenya,

Nigeria and South Africa. A key reason behind its success is the way the organization has

been shaped by its founders Fabrice and Alec, who brought in their tremendous

experience in Internet entrepreneurship when they started the company in 2006. One on

of the hallmarks of the organization is its super-lean operational structure where

resources are committed only where there is tremendous growth. Its hard to imagine that

a company with the scale of OLX has less than 500 full time employees and yet it is

known for its excellent customer service.

Today, more and more internet enterprises are going public which highlights the

fact that the digital economy is working itself towards maturity. As the evolution

continues at a brisk pace it remains to be seen what will become of legacy marketplaces

such as the online classifieds industry. Many outcomes are possible, they can be usurped

by bigger players or search engines, they can go public or even morph into more social

platforms such as Airbnb.

OLX (Online - Marketing) operates as a national online classifieds marketplace

for used goods such as furniture, musical instruments, sporting goods, cars, youngster and

baby items, motorcycles, cameras, mobile phones, property and much more. It is

accessible through the internet and through native apps on smartphone originally founded

in March 2006 by Internet entrepreneurs Fabrice Grinda and A.C.F. Oxenford. OLX is

now owned by global media and digital company Naspers.

The website, which has now become one of the best places for selling and buying

things online, is quite useful for every customer, who would like to avoid the problems of

brokerage charges and related stuff in-between their deals, especially deals for selling and

buying used products. OLX.in is one of the best website, where we can post our free

classified advertisement in order to buy or sell desired products in no time. A huge

number of Indians, who also want to simplify the process, by means of using web-based

technologies, will explore all our advertisements.

Television-based advertisement campaigns of OLX are also equally popular

among customers not only because of its sole purpose but also because of the humorous

way of presenting the advertisement.

Classified in India has typically grown from vertical classifieds - job sites, real

estate sites, auto sites, matrimonial. There were no horizontal classifieds. The classified

market in India, the official numbers peg it at Rs 1500 to 1800 crore in terms of revenue,

but it does not cover the business that it in. OLX is should be between 60 to 65 per cent

minimum in our space of used goods classified. OLX website is 2 to 2.5 times the content

of anybody in our space. The page views are at least 2.5 times ahead of anybody else in

this space. OLX claim a share of 80 to 85 per cent in some time.

The strategy is simple. OLX have to continue to offer the best experience. OLX

have to have the best products on site for sale. They have to make sure that more and

more people sell on the site. OLX is a local site so it have to ensure that it is big enough

in various key cities in India and in every city because that is where the users are. OLX

also have to make sure that as India is evolving and adapting to mobile phones, OLX

offer the right mobile experience.

This business is a ‘winner takes all’ market. It is not a business like e-commerce

where many people are doing the same things. Not many people are present in this unique

business. For OLX Growth and more users are more important. It is like Facebook, which

has started monetising only recently. Youtube also started monetising recently. OLX is a

UGC (ser-generated content) site. Only company in space that is 100 per cent UGC.

Others have call services, or employees posting ads on behalf of sellers, OLX don’t do

that. OLX is like FB and Youtube, and the model works well only when it is the largest

player in space.

HOW OLX WORKS

The working process of OLX.in is as much as simple as any other methods of

classified advertisement, as we have seen on newspapers. When a user publishes an

advertisement in the website, the site indexes the data, which includes some rich-media

content such as images along with the contacting and location details such as email ID or

the mobile number. And, when another user, who would like to buy a product, especially

a second-hand product for reducing the budget, searches in the mentioned category,

he/she could find out the advertisement and the user will contact the advertiser if the user

is interested in the product. If so, we can then follow the usual method of sending the

product to him/her and hence receiving money. Hence, what we have saved in the process

is many time as well as brokerage fees because OLX.in publishes all these advertisements

without asking you a single penny but they just want to register a completely free account

in the website.

PROBLEMS FACED BY OLX

Olx.com/olx.in is violating Indian cyber law incorporated in the Information

Technology Act, 2000. 99Acres.com also facing the same problem.

While 99Acres.com is still following the laws of India to some extent yet olx.in is

clearly violating the laws of India, especially the cyber law of India. Olx.in is simply

redirecting the users from India to a URL that incorporates the terms and conditions and

privacy policy of its parent website olx.com and the parent website is operating as per

United States laws and not Indian laws.

OLX has great presence in India and Indian citizens are actively using the same

for various commercial transactions. Olx.in is well aware of this position and this is the

reason why it has also appointed a grievance officer to deal with grievance arising out of

Indian transactions. Olx.in is in clear violations with various Indian laws including cyber

law and Indian criminal laws.

The TOI has reported that OLX has been under police scanner as some accused

have used the platform for selling stolen properties and goods. The report has even

suggested that this must have made some gullible buyers using OLX vulnerable to being

a part of the trade in stolen goods.

According to HT, the accused would upload pictures of the stolen things on OLX

and sell them at throwaway prices. The investigating officers are preparing a list of

gadgets sold on OLX.com for further investigation. The Police believe that there are no

security barriers and there should be some mechanism to screen users of the portal. The

police urged caution while purchasing durables and gadgets online. A buyer of stolen

items is equally liable to be booked for robbery.

A brief look at the terms and conditions of OLX reveals that it is using almost

same terms and conditions for both US and Indian versions of the websites. Further,

olx.com is redirected to olx.in for users of India automatically with the same terms and

conditions as are applicable to its US counterpart.

However, this has raised a serious question about the role of Indian government in

regulating the e-commerce websites in India. The e-commerce websites must be

regulated in India as they are operating with great disregard to Indian laws. Although

Indian government has assured that e-commerce in India would be regulated by

comprehensive guidelines yet till date no such sign has been shown by the government.

Another problem that Indian government is not willing to resolve pertains to

conflict of laws in Indian cyberspace. For long companies like Google, Facebook, etc are

violating laws of India. Indian government has not taken a tough stand against such

foreign companies that although operating in India for profit yet are not complying with

Indian laws.

OLX has followed the footsteps of Google, Microsoft, Facebook, Yahoo have

been flouting laws of India with no fear of legal actions. It is high time for Indian

government to resolve these techno legal issues for the larger benefit of India.

OLX.in faces problems of frauds due to lack of proper surveillance methods.

They don’t try to do much mediate between the buyer and seller instead they are just

connecting with the buyer and seller. It actually work as an data base for the buyers for

the second hand used products, where buyer can search for the products for which he is

looking for and get the contact details of the seller and understand what are the features

that the product could include. Seller is not controlled by any of the authorities so he can

add any kind of features which is not hold by the product and even the buyer can’t

identify these features in time of purchase, this will lead to trap of buyers in to fraud

sellers. The value for money concept is not implemented in these case, due to there is no

standard price for a used product. The value is always fixed by the quality and quantity.

Some of the quality cannot be identified by the buyer some time.

COMPARISON WITH COMPETITOR

Quikr   is the closest competitor OLX has. But OLX is much ahead of it in almost all

aspects. Quikr does have interesting content on its Facebook but it’s a disappointment on

Twitter. The updates are few and far between.

OLX on the other hand has monotonous content but is getting some really good traction

THE ALLIANCE BETWEEN FLIP KART AND OLX

This alliance between India’s number one marketplace for used goods, and country’s top

destination for online shopping, can be considered a stepping stone towards consolidation

of Indian ecommerce space. Both the companies have Naspers as their common

investor. The first phase of the tie-up will be kicked off with a joint marketing campaign

urging consumers to upgrade by selling their used products on OLX.in before buying the

new products on Flipkart.

OLX INDIA TV AD CAMPAIGN

OLX India TV Ad Campaign has received much appreciation from the Indian

viewers and has helped OLX India to widen its base among Indian online buyers and

sellers. OLX India TV Ad Campaign is being aired since 2011 and has recently been

extended on the Radio network too.

The institutional TV ad campaign of OLX India focuses on the concept of “Where

Buyers Meet Sellers” and presents various ads which showcase funny and humorous TV

ads to highlight the advantage of advertising online with the free classified ad website.

With the tagline as “Sab Kutch Bitka Hai” or Everything Sells, the TV ads by OLX have

been successful in communicating the idea what the website helps them to accomplish so

much so that almost every person watching TV is well aware about OLX India.

OLX India TV Ad Campaign has drawn much attention of people from every

walk of life and has realized the importance of classified ads website. The OLX TV ads

show real life situation which the people can easily identify with. The OLX TV ads

depict common problems faced by people in selling olds goods, articles or unused

products and also present them with an effective solution in the form of using online

classified ads with OLX India.

Another advantage of using OLX India is the fact that its user interface is

extremely easy to use and navigation through the various categories and subcategories is

easy too. OLX India also provides other useful options to the online users too. It lets you

design rich and colorful ads with pictures and you can use videos in it too. It gives you

the facility to have a control on various activities like selling, buying and community

activity as well.

And this is not the end to what OLX India lets you do. You can even display the

ads on social networking sites such as Facebook, Twitter, etc. OLX India can also be

surfed through other mobile digital devices like mobiles, smartphones, tablets and can

even view the site in your own local language as it supports 40 different languages

worldwide.

On the whole, OLX India website is one of the best online places to host free

classified ads which have become much popular with the Indian masses thanks to the

successful OLX India TV Ad Campaign.

REFERENCE

Source: Bajaj, K.K., “Country Report on E-Commerce”(2006) (India, Ministry of Communications and Information Technology, Department of Information Technology, Office of the Controller of Certifying Authorities)

Source: Farooq Ahmed (2001); Electronic Commerce: An Indian perspective;

International Journal of Law and Information Technology

Source: http://creativeoverflow.net/olx-india-makes-waves-with-tv-ad-campaigns/

Source: https://en.wikipedia.org/wiki/OLX

Source: http://www.bestindiansites.com/top-companies/e-commerce/

QUESTIONS TO BE DISCUSSED

1. What is OLX’s share in the free online-classifieds market in India? What is OLX’s strategy to acquire users by volume?

2. How difficult was it to establish the concept of buying and selling used or unwanted goods online in India?

3. OLX does not have a paid premium model currently. Why? How does the website monetise then?

4. On an average, what is the traffic that OLX attracts? How much of this comes from mobile?

5. What is the visitor profile of OLX India users? Has OLX been able to gain traction in tier II and III markets?

6. Five years from now where do you see OLX India?