Startups Seek to Challenge Craigslist

Rolfe Winkler reported today at The Wall Street Journal Online that, “An arms race is heating up to replace Craigslist, the dominant force in online classifieds the past two decades.

Startup companies OfferUp and Letgo are surging in popularity among people looking to buy and sell everything from used clothes to used cars through their smartphones. And deep-pocketed investors are paying up for stakes in them even though they don’t charge for their services today.

“OfferUp is set to raise $120 million in funding led by private-equity firm Warburg Pincus, say people familiar with the matter. The Bellevue, Wash., company’s valuation would stretch to roughly $1.2 billion from about $70 million just two years ago.”

The Journal article noted that, “Facebook Inc., meanwhile, is testing its own local classifieds service supported by ample cash and a social network with 226 million users in the U.S. and Canada.

“The companies are gunning for Craigslist, which upended newspaper classifieds during the dot-com boom and now has 70 million U.S. visitors a month, according to comScore. But Craigslist appears vulnerable in the smartphone era: It has a modest website that has changed little since 1995, and relies on third-party mobile apps that can make placing ads clunky.”

Today’s article added that, “OfferUp, Letgo and a few other challengers are tailored for mobile. Sellers post ads after snapping photos with their camera phone. Buyers reach sellers quickly via text instead of Craigslist’s slower email system.”

The startups are keeping an eye on Facebook. Many of its users post items for sale, so last year it created a marketplace to collect the ads in one place. A Facebook spokesman said the company is testing the feature. If it catches on, the social network could prove a formidable player in classifieds,” the Journal article said.

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