Insights

Changing World: Online Classifieds

June 9, 2019

I remember as a kid, seeing my parents buy several newspapers on the weekend and going through the classified sections looking for a car or a house. Each ad had limited information and truncated words as advertisers were charged by line. My parents would circle the most promising ads and spend the afternoon on calls and visits. Not the best customer experience.

 

 

Over the few past years, online classifieds have substituted this with a much superior consumer offer:

  • Rich information on each house, car, including photos and videos
  • Ability to filter the search by region, price, amenities and other characteristics
  • Reviews on dealerships and real estate brokers help bridge the trust gap
  • No need to buy numerous newspapers to get access to all of the available inventory on the market

Online classified platforms have driven this change and also built extremely attractive businesses:

  • Market tends to concentrate around the winner where most of the inventory is displayed in a virtuous circle that makes it very hard to break a leadership position
  • Mostly fixed costs allow them to capture the growth at extremely high incremental margins
  • Strong pricing power
  • Strong cash generation ability with minimal working capital and ongoing capex requirements

– Pedro Ramos

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