eBay (NASDAQ:EBAY) purchased 25% of Craigslist in 2004, but it’s been a rocky joint venture from the start. Within a year of purchase, eBay launched a free classified site overseas in 2005, called Kijiji. In 2007, the American version of Kijiji was launched. In 2008, eBay filed a suit against Craigslist, alleging that the founders of Craigslist were attempting to push the American version of Kijiji out.
eBay claimed that Craig Newmark, Craigslist’s founder, and its chief executive Jim Buckmaster, began unspecified measures in January that put eBay at a disadvantage and reduced eBay’s economic interest by 10%. Craigslist did not sit back and allow the allegations however, and suggested in a blog that eBay had intended a hostile takeover of Craigslist from the start, or a sale to another company: “EBay has absolutely no reason to feel threatened – unless a hostile takeover of Craigslist, or the sale of eBay’s stake in Craigslist to an unfriendly party, is their ultimate goal.”
eBay has continued to push the growth of Kijiji, renaming the company to eBayClassifieds.com and adding a new mobile application which would allow users to view and add to the classifieds with their cellular phones. The idea of the mobile application is that users would be able to take pictures with their phones and create listings instantly – something that cannot currently happen with Craigslist.
Craigslist classified site gets between 50 and 60 million visitors per month in the US alone, while eBay’s kijiji receives less than 6 million visitors per month – according to compete.com. Craigslist is the most visible community site in existence – and also the most underdeveloped in terms of technology! As web features grow in popularity, Craigslist remains a mostly text site, with very little customer support or advanced applications. Most marketing experts will explain that a company’s brand and positioning is everything to it’s level of success. Craigslist’s founder operates the company very similar to a philanthropic venture – from an article on wired.com:
Newmark’s claim of almost total disinterest in wealth dovetails with the way craigslist does business. Besides offering nearly all of its features for free, it scorns advertising, refuses investment, ignores design, and does not innovate. Ordinarily, a company that showed such complete disdain for the normal rules of business would be vulnerable to competition, but craigslist has no serious rivals. The glory of the site is its size and its price. But seen from another angle, craigslist is one of the strangest monopolies in history, where customers are locked in by fees set at zero and where the ambiance of neglect is not a way to extract more profit but the expression of a worldview.
If eBay intends to compete with Craigslist in the classified word, it may need to focus more on positioning and branding and less on trying to sue Craigslist.
March 31, 2010
source: americanconsumernews.com