Business News/ Industry / Retail/  OLX plans logistics service to complement its classifieds operations

OLX India Pvt. Ltd, the online classifieds firm backed by South African media company Naspers Ltd, is testing a logistics service as it seeks to expand beyond its primary listing business and attract more customers to its paid advertisement product, according to three people aware of the development.

The firm, which launched its India operations in 2006, started the paid advertisement service earlier this year.

OLX is running the logistics services in partnership with start-ups in cities such as Bengaluru, New Delhi and Chennai for bulky items like furniture and heavy electronic goods, according to the people cited above who spoke on condition of anonymity.

The company, which started paid listings almost a decade after launching operations, may also facilitate payments on its platform in the days to come, said one of the three people cited above.

OLX, at present, acts as a listing platform connecting sellers of used goods with buyers, while the actual transaction—payment and movement of goods from the seller to the buyer—happens without any intervention from OLX.

“OLX has for the time being chosen not to go through a third-party logistics company. They are approaching start-ups directly. So, it will become a direct customer acquisition game for the logistics start-ups with OLX acting as a facilitator," said one of the persons cited above. “They are not looking at it purely from a monetization perspective. It will be a huge value add to their customers."

OLX did not respond to an email sent seeking comment.

The move comes at a time when rival Quikr India Pvt. Ltd has added services, such as payments and logistics, to evolve beyond a pure-play online classifieds portal into a marketplace for used goods.

While online classifieds firms have amassed huge user base—Quikr claims more than 30 million unique monthly visitors while OLX does not disclose the number of users or listings—monetization has been a concern as most users never paid for the listings. Besides, trust played an important factor in closing transactions on such portals, as consumers were wary of buying from strangers.

With the companies becoming party to the transaction, consumers may feel more confident about transactions on the platform, experts say.

“An end-to-end service like help in finding a buyer, enabling payment, then facilitating delivery and quality checks are crucial services because most of the products people try to sell online are really old or in bad shape. Logistics come in handy, as long as you’re buying from the neighbourhood. In India, pure listing does not have much value. We have seen this with Zomato which has explored additional revenue streams beyond listing," said Harminder Sahni, founder and managing director of consulting firm Wazir Advisors.

Quikr, for instance, has identified five key business segments —automobiles, real estate, jobs, services and customer-to-customer sales—to focus on, in an attempt to explore new sources of revenue and fend off competition from other venture capital-backed businesses which have emerged in each of these categories, Mint reported on 2 September.

The firm has since launched logistics and payments as value- added services, which, according to experts, will lend it more credibility and win more consumers with a bouquet of end-to-end services.

Quikr has also been on an acquisition spree since late last year, snapping up online realty firm Commonfloor (MaxHeap Technologies Pvt. Ltd); Indian Realty Exchange (123 Startup Ventures Pvt. Ltd), a real estate agent aggregator; and RealtyCompass, a real estate analytics start-up; and Salosa, an on-demand beauty service provider owned by Beawel Tech Pvt. Ltd. The company also made a strategic investment in A.N. Virtual World Tech Ltd, a firm which provides 360-degree street views.

Quikr has raised about $346 million from Investment AB Kinnevik, Tiger Global, Steadview Capital Management Llc., Matrix Partners India and others since its inception in 2008.

While classifieds businesses, such as Craigslist Inc., OfferUp Inc. and Kijiji Internation Ltd, among others, have thrived in the US, India’s OLX and Quikr have struggled to shore up revenue, mainly because of Indians’ apathy to buy used goods, given the probability of being duped due to lack of intervention by the listing platforms, say industry experts.

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Updated: 02 Jun 2016, 12:53 AM IST
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