Online classified ads in a Web 2.0 world

The horizontal online classifieds industry may be becoming popular, but it is overshadowed by the many Web 2.0 ventures

E-commerce in India conjures up images of shopping portals and job sites. However, online classifieds represent another faction of e-commerce that is largely underutilised in the country. Classified ad websites like Kijiji (an eBay subsidiary), Baajaa, Sulekha and Indialist (of the Bharatmatrimony group) do exist in India, but none of them has the position Craiglist does in the West.

In an age where blogs and social networking are taking interactivity to a new level, one wonders what the fate of these classified and listing websites will be. Are they up to the challenge?

The interactivity factor

Sulekha.com, with 1.5 million unique visitors from India per month, recently added a phone-based free ‘click to call’ service in their Yellow Pages section, enabling users to click on a listing and make a call directly to the advertiser. Sulekha.com has diversified the classified and yellow pages business by adding features like movie reviews, travelogues and even blogs, says Satya Prabhakhar, CEO of Sulekha.com. “Sulekha is trying to replicate offline activities online. We want users to stay on our website even after their classified ad need is fulfilled, so we decided to add user-generated content,” he adds.

However, Jiby Thomas, head of Kijiji.in, a classified ad site with 65,000 live ads, believes in a plain vanilla classified model. “Kijiji already has an element of interactivity, as consumers can discuss and contact each other online as well as offline, so we don’t see the need for blogs and forums on the site,” he says. The website receives 400,000 unique visitors per month.

Means of monetisation

Monetisation is a big question mark for all web players in Indian web space, and it’s the same on the online classifieds front. Kijiji.in, which was launched in November 2005, is using Google AdSense for revenue generation and is planning to add display advertising in the next six to nine months. The website allows users to post up to 50 different ads per day free – the site doesn’t have paid ads.

At Sulekha.com, users who pay $40 per month can post any number of ads in the premium category, and others can post three ads per month free. Apart from this, Sulekha.com earns through display ads. Sulekha’s Prabhakar is optimistic. He claims that the horizontal classified sites industry is worth Rs 100 crore, and growing at 50-100 per cent every year. He adds that only 20 per cent of transactions happen online (among the big city audience), but there is potential to convert the remaining 80 per cent.

Language of business

Online classified ad sites are already moving towards localisation with city-specific content, but local languages are a long way off. Harish Bahl, founder and CEO, Smile Interactive Technologies, says, “Transaction sites can survive with English and do not need local languages, as they are not hardcore content sites.” He also points out that there are a lot of compatibility issues in local languages – the hardware and web browser not supporting local languages, for instance.

Thomas agrees: “English is the language of business and we will stick to it.” Sulekha.com has no plans to foray into local languages at the moment, but may do so two years down the line, according to Prabhakar.

However, Kijiji does have Hindi and Tamil content, as eBay is running a pilot project on it, called Rural Marketplace. The project has been created to help people living in the villages of Uttar Pradesh and Tamil Nadu to improve their economic livelihood through the Kijii platform. Thomas clarifies that the project is entirely an eBay undertaking. Interestingly, even in Rural Marketplace, most of the users communicate in English.

Where’s the future?

Currently, and as expected, it is the metros and big towns that are driving traffic to online classified ad sites.

According to Thomas, “Growth for sites like Kijiji will be driven by big metros as they have a large number of Internet users. The real estate category is doing well and it is simply a reflection of consumer needs – highly paid IT professional look for PGs and houses to stay in.” He adds that smaller cities like Mysore will drive the growth later on, although the consumer need already exists there as well.

There is a possibility that with the rising number of mobile users, the next level of transactions may happen through mobile. Sulekha has already tapped this opportunity with their mobile WAP site (wap.sulekha.com), integrated its classified and yellow pages business with mobile, and is ready to launch a short code in the near future.

While the future of classified sites is deemed to be bright (one recent study gave it top ranking in the Internet advertising pie four years down the line), it all depends on how the segment staves off the challenge from social networking sites.