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Why eBay’s Classifieds Is Being Exposed to More and More Users

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Classifieds versus Craigslist

Prior to the online era, one of the best mediums for selling a valuable product was to post an ad in the classified section of the local newspaper. In the digital era, the advent of e-commerce sites has broadened this exposure, but the purpose remains the same.

eBay’s (EBAY) Classifieds platform drives the same objective by bringing sellers and buyers together to a common platform for executing such transactions.

Classifieds follows the consumer-to-consumer model to serve the advertisers, which is similar to Craigslist’s model. Until 2015, eBay held a 25% share of Craigslist, which has been recognized as one of the most popular portals for advertising local services and products in the United States.

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According to Salehoo, as of 2014, “eBay Classifieds has a global rank of 5,302 and 1,887 in the US,” and “Craigslist has a global ranking of 50 and 10 in the US.” The graph above represents eBay’s Classifieds revenue of $183 million in 4Q15, a relatively strong performance compared to prior quarters.

Close5 and Gumtree

eBay’s Classifieds has improved the user experience with its standalone app Close5, whose total downloads reached 6 million in the recent quarter, more than double compared to 3Q15. Close5 provides a faster way to list items than Craigslist does, and it also facilitates user-dealer interaction through use of the app. Craigslist does not provide an interface for communication. Generally, users end up doing transactions through email and on the phone.

In 2005, eBay penetrated the United Kingdom (EWU) market with its acquisition of Gumtree, which provides a portal for seeking jobs, accommodations, and contacts. According to VentureBeat, in 2015, around 38 million people made transactions and posted ads on Gumtree in the United Kingdom. Also, there were “250,000 jobs posted, and six million cars listed for sale” on the site.

Amazon (AMZN) and Google (GOOG) constitute 5.1% and 4.5% of the PowerShares QQQ ETF (QQQ), respectively.

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