Chinese classified site, 58.com, has filed for IPO in Nasdaq, according to local news.
The company was founded in late 2005, by Yao Jinbo, who previously founded the largest domain name exchange company in China and sold it. 58.com is modeled after Craigslist in the U.S.. It provides classified ads for flat rental, recruitment, second hand goods, selling car, restaurant, etc. Its services cover over 300 cities in China. Most of the ad are free. But it charges if the advertisers want their posts to appear in front of the listings.
Imitators Poping Up In China
Craigslist imitators started to mushroom in China in 2005, when the original classified site got famous in the U.S. Within a year, there were about 500 such websites in the country. “Many of them are portals for a particular region, such as Beijing, Shanghai, etc. They cover local news and events in their own cities or provinces,” said an industry insider, “As Craigslist proved popular, they started their own classified sections too.”
Apart from the regional portals, major Chinese Internet powerhouses also spotted the opportunity. Sina, Sohu and Netease, the country’s top three online portals, all started their classified sections in 2005. Tencent, which operates the country’s largest online chat platform, QQ, also started its own that year.
Consolidation After Overcompetition
Consolidation came in 2007. Lacking economies of scale to sell ads, many smaller sites had to close or tried to sell themselves to larger competitors. Even Tencent’s classified session did not survive.
“During 2007-2008, many competitors came to us saying that they could not go on anymore. If we wanted to, they could sell their sites to us at a bargain price,” said Baixing.com on its blog. X9898.com, a classified site that was quite famous at the time, switched business to do e-payments with fingerprint verification.
Baixing, started in Shanghai in March 2005, remains one of China’s leading classified sites. Other survivors include Ganji, 58.com, Koubei and eDeng. Of those, Ganji and 58.com are the largest. Ganji had 285 million page views in March 2010, followed by 58.com, with 272 million page views, according to comScore, a global marketing research firm. Baixing ranks third with 137 million page views.
A major difference from the original Craigslist model and its Chinese imitators is in sales. Out of the 500 staff Ganji has hired, about 200-300 work in its call center to cold-call companies to place ads with the site.
“Here it is China. No one will go online and place an ad on his or her own. This is the most effective way of getting sales,” said Mark Yang, CEO of Ganji and a Yale graduate, “Baidu (the country’s biggest Internet search company) is doing the same.”
Compared to Ganji, 58.com is probably even more aggressive. “Although Ganji is more popular, 58.com probably has higher revenue,” said the insider. “It has set up sales offices in 20 cities, while Ganji only has four.”
Besides of its headquarter in Beijing, 58.com has offices in over 20 cities in China.
“The Three Lows”
Most of 58.com and Ganji’s visitors are of the low income group. “We called them, the Three Lows. Low in age, in income and in education level,” said Mark, “They can found everything they want on Ganji. Job, place to live, second hand furnitures, etc.”
There are plenty of ads for house cleaning ladies, security guards, baby sitters, and so on. Ganji has secured a a major deal with US-based Wal-Mart, under which the supermarket chain will hire about 3,000 people per year through the classified site. Wal-Mart as of June 2010 operates in 99 cities in China, and “created over 50,000 job opportunities” across the country, according to the company’s website.
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