Olx Business Model – How does Olx make money

What do you do with the stuff you’re not using anymore? Give them to your family or someone in need, right? What if you can see them and make money? Sounds amazing, right. This is what people have been from the past few years. From makeup to clothes they are selling all their used stuff online. Yup, you heard it right. Many selling apps have seen the light over these past few years.

Not only that there are many online markets that have made selling online easy and simple. Over the years the demand for online marketplaces has increased. There is more than one online platform that is popular and still operating and offering people their services. One of such popular online s If you’re thinking OLX, then you’re right.

OLX is the online marketplace where people can sell anything to everything. Yup, you heard it right, this is the platform that has made second-handling selling easy and popular. It was founded back in 2006 by Alec Oxenford and Fabrice Grinda. The idea behind starting this company is that they want to give the world outside the United States something similar to Craigslist. 

Olx is a platform where people can buy or sell goods such as fashion items, cars, electronics, bikes, furniture, etc. This company is now successfully working in around 41+ countries currently. Yup, you heard it right. Olx has a strong base in countries like Brazil, India, Poland, Pakistan, Portugal, Nigeria, Kenya, Philippines and Ukraine.

As you know Olx is an online classified website. People who are planning to sell their items can put up an advertisement here and the buyers who are looking for things to buy will go through the listing to find the items they’re looking for. 

Are you curious to know about Olx and how it makes money? Yes, then lets jump right into the topic without any further ado. 

OLX business model 

As you already know that the model of Olx is a classified model. But its revenue sources are quite different compared to other classified models. But if you want to know in detail about their business model and how it makes money then you must know how it works.

Point right? To understand its revenue sources you must first understand how it works. 

Olx stands for Online Exchange. This is a platform where people buy or sell goods. So whenever a buyer has something they want to sell they will put a classified on this site and whenever a  buyer wants to buy something they will look through this listing and buy the things they are looking for. The sellers have to upload the pictures of the item they want to sell. They have to give a detailed description and title along with the expected price.

And the best part of Olx is that the buyers can check out more than one option, they can go through other listings, contact the other party, bargain for the price and then purchase it. This is what makes OLx different from other online marketplaces. But one thing that users must remember is that this platform is the communication point between both the seller and buyer. It only acts as a catalyst to connect both buyers and sellers. The bargaining, conversation, transaction and advances strictly between buyers and sellers only, Olx has no part in any of this. 

If you want to understand the business model better, here let’s make it more simple and easy to understand. Business model of this platform is dependent on the scale. The more traffic they get the more revenue they will earn. So to get more clicks, traffic and listings this platform spends a lot of money. 

Olx is undoubtedly one of the largest classifieds portals in countries such as Portugal, Brazil, India and Poland. Olx is one par with social media platforms such as Instagram, Facebook, etc. Because it has a total of 200 Million visits every month. Not a small thing right. This Portal site with roots in Argentina has procured more than 25 Million listings and has more than 8.5 billion web page views. Amazing, right? It has made more than 8.5 Million transactions. Definitely not a small thing. 

As you already know this company was founded by Fabrice Grinda and Alec Oxenford. Initially, it was funded by many firms such as General Catalyst Partners, Nexus Venture Partners, etc. But back in 2010, the majority of the company was acquired by the Naspers. Before the acquisition, Olx was standing at a whopping sum of $30 Million. It is actually owned by Proses, which is the division of the international assets of Naspers. The headquarters of Olx is situated in Amsterdam. As you already know that Naspers has acquired the majority of Olx in 2010. But in 2014 they acquired around 95% of it. 

Now that you have understood how this platform works. It is time to know how this platform makes money? So, what are you waiting for? Let’s jump straight into the topic.

How Olx does make money?

Compared to other classified portals, Olx has revenue sources that bring in good profit. This platform is quite different compared to similar marketplaces. It just acts as a communication between sellers and buyers rather than affiliating seller products. So now it is time to know about the sources of revenue closely.

One of the major sources of revenue for this platform comes through Google Ad monetization. Other sources of revenue include Google custom ad search, advertisements, Sponsored listing and sponsored links. Wondering how they make money through Google Ads. 

Google Ads & Google custom search engine

Olx works with partners, who work with other advertising partners or Google. They work as a mediator or supplier to the website. As you already know, this website just acts as a classified portal for customers to buy and sell things. So the high traffic is what brings them revenue. It makes money based on cost per impression, cost per view, cost per click.

So Olx monetizes the clicks of video ads on the home page or the product (individual page) until the transaction is made. Also, there is a search bar where buyers can search for the products they’re looking for.  The results of any of the searches they make are actually optimized by the GCSE (Google Search Engine) monetization of the Adsense. The first few i.e., two or three searches will be from Google.

Premium or Future listings 

Since this platform is a classifieds portal. People will keep on making submitting listings. So as time passes the old listing will bury under new listings. Let’s talk it with an example if you have added a listing to sell a bike. Even after some time you haven’t received any call from the buyers. Why do you think? The reason behind this is that your listing will be buried under other latest listings.

So the buyers would miss your listing as it would have gone to the later pages. If the seller wants their listing to appear in the first page or top of Olx they can pay. Simply put, the sellers can pay Olx if they plan to feature their listings on top of this platform website. 

This way sellers can constantly stay on top of the buyer’s mind and Olx also makes good money.  Premium listings are also another important source of income for this platform. 

Banners / Sponsored ads

Another source of revenue for Olx comes from Banner and sponsored ads. As this platform is highly popular and has high traffic coming through. There are many other businesses that want to display their ads or banners. These ads are similar to Ad-sense ads. And the best part is that these are completely controlled by Olx itself. So all the income made through these ads will belong to this platform itself. 

Wrapping up

Olx has been in the market for a long time. It has made its place in the market and has gradually increased its user base. Although it is a classified portal. It has made itself different and special. Most people are curious about the way it makes money. From sponsored listings to Google ads it makes revenue through different sources. This business has a strong footing in countries such as Brazil, Poland and India. They are concentrating on developing countries or less-developed countries as they have a lot of opportunities there.

As the core idea behind creating this platform was to provide countries outside the US with something similar to Craigslist and it is true that they have succeeded. Also, Olx has to suffer from fake listings and counterfeits. With time they have also come up with a better way to handle the situation well. As you have made it to the end, hope you have gained enough knowledge about this business model and how they make money. If you want to know more about other business models then check out other articles in Zeen. 

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