Who will own the classifieds space in East Africa was the title of a piece penned back in 2011 when there was a flurry of activity with everyone claiming to be the number one destination. The way things change, the way they remain the same and with blatant replication of business models with no drive for service differentiation, a number of players have hit the dead pool but this has not stopped others – whether from a skin change or as entirely new entities, from attempting to draw
blood cash from what is proving to be a most difficult segment to crack. The late Carey Eaton, Co-Founder One Africa Media #RIP, saw the opportunity that online classifieds present and in his own words gave some insights into what his team was onto, with a business model primarily around advertising and value added services:
- “We are the largest online classifieds business in Africa, operating in the verticals of travel, jobs, cars and real estate in about 8 attractive countries on the continent.”
- “We have 1 billion page impressions a year and will reach 30-40 million unique users this year (2014) ”
In June 2013, One Africa Media closed on a Series A round of US$20 million from Australia based Seek valuing the company at US$80 million, some sweet numbers by any measure. I feel however that the real problem with this space is that it is flush with cash from diverse VC outfits throwing money at a model that has not proved itself to work…at least not yet. Olx Kenya has made short work of early movers like PigiaMe (who is still see lurking on Facebook) and NSoko from the Nation Group stable and MyMarket from Safaricom. While I do not have hard numbers on NSoko and MyMarket, traction and market share is currently measured by visibility which the two are lacking and surprisingly so as they both own key assets that would have them top of mind at a virtual cost of zero! Olx Kenya and One Africa Media portfolio companies buy inventory on Nation Media Group. Dealfish executed on a similar strategy that saw them rank high on traffic.
Every interaction must lead to a transaction that has a direct positive correlation to the bottom line beyond brand building in the medium to long term. To put it plainly, in markets such as ours where capital remains flighty, one should not focus on building numbers for numbers sake. For most of the current players, the house is kept warm and cozy with wads of cash thrown into the fire, without which the embers would fade and the business die out. Platform thinking requires that the opportunity be seeded and often times that will see an initial go to market strategy as exhibited by local players. Two things that need to be looked at differently is the nature of the interactions thereafter:
- are they natural (in that they mimic an offline interactions but with increased efficiencies ) and
- do they arouse demand (as would happen if a customer was window shopping for a bargain and stumbled upon something totally different) or predict it to give value to producers?
Examined and tweaked, these two may provide the next innovation spark that will see the classified business model morph, to scale and break even without breaking bank.