Craigslist is one of the USA’s top online classified markets, allowing users to post classified advertisements. Unlike most of its competitors, Craigslist has a unique business model.
The platform does not focus on making profits or generating revenues but on providing value to its users.
However, that does not mean the company does not generate profits. For example, in 2018, the company generated over $1 billion and profits well above $600 million.
Craigslist isn’t like any other typical profit-focused company. Its competitors, such as eBay, OfferUp, or LetGo, focus on profit-making.
The business model of Craigslist is significantly different from other companies within the same industry and market. It is due to several unique features in the platform’s business model that others haven’t adopted yet or don’t want to adopt.
Below are some of the main points of the business model at Craigslist. While these do not comprise the platform’s entire business model, they should help users understand the concepts and ideas behind the company.
Free posting
One of the best features of Craigslist is that it allows users to post classifieds for free. It is one of its distinguishing features from its competitors and other similar platforms.
For example, its main competitor eBay charges users to list items on it and a percentage of the selling price of every product they sell.
There are some categories on Craigslist as well that require payment based on geographical location. However, these categories are limited in number.
Apart from these, there are no other charges or fees that users have to pay to use the platform. This feature is one of the reasons behind Craigslist’s success and popularity.
Minimalistic business structure
Craigslist is one of the largest platforms in the USA, used by millions of users daily. Despite its popularity, Craigslist’s business structure is very minimalistic.
A company of its size and stature needs hundreds of employees to manage its business. However, Craigslist only has over 50 employees. That is because the management believes in a minimalistic but integrated structure.
Finally, the company does not believe in introducing new quirky features to make it stand out. Instead, it believes in using a minimalistic design to drive maximum value to its users.
No promotions
Many companies rely on promotions to get new users. Even well-established companies such as Amazon, eBay, or Google must promote their products and services to attract new users. On the other hand, Craigslist does not believe in promotions or advertisements to get new users.
The platform relies on word of mouth to get new users. It is one of the unique parts of the business model of Craigslist.
It allows Craigslist to keep promotion costs down and not worry about how to promote its features. Although the platform is at a point where it doesn’t need any promotion, it has not used promotional tactics in the past, either.
Focus on the product, not the profits
The most important and unique part of its business model of Craigslist is its focus on the product offered to users. As mentioned above, the company does not focus on maximizing its revenues or profits.
Instead, it believes in giving users the best possible services without charging them. It is one of the main reasons why the platform does not display paid advertisements, such as banners and its website, unlike its competitors.
Similarly, some categories on Craigslist cost the users based on their location. However, experts believe that the prices charged by the platform are negligible compared to other forms of advertisements.
Worldwide expansion
Craigslist started expanding its platform to other countries back in 2008. Due to this policy, the platform is now available in over 80 countries, including major countries such as Canada, Australia, China, India, Germany, and Japan. The platform adopted more than ten languages to display the site to users.
The business model of Craigslist also contains a plan to expand into other geographical locations. However, the company has not used an aggressive approach toward expansion.
Therefore, it has not achieved the same popularity in some countries as in the USA. The company also faces tough competition in these countries from local competitors. However, the company does not believe in using aggressive tactics to take over these markets.
Conclusion
Craigslist, one of the biggest online classified advertisement websites, is well-known in the USA and several other countries. It is one of the biggest platforms of its kind.
However, the company has a unique business model significantly different from its competitors and similar companies. Given above is a summary of the main points of its business model.
