The advent of 3G and 4G spectrums has revolutionized online selling and buying in Pakistan. Bilal Bajwa, General Manager of OLX Pakistan talks to Profit about the achievements, future plans and business model of the horizontal portal in relation to Pakistan and its competitors, five years after it launched in the country.
Q1) When and why did OLX decide to commence business operations in Pakistan?
A. OLX was launched in Pakistan in 2011 and we started marketing on ATL (above the line) and digital channels from January 2012 onwards. Since its launch, OLX has grown tremendously and has become the largest online general classifieds portal in the country. We proudly claim to have over 90 per cent of the online general classifieds’ market share.
Pakistan had always presented a great opportunity for foreign companies looking to invest. As part of the Emerging Markets worldwide, and with the growth of the internet in the country, it made an especially attractive option for an online business such as OLX to come to Pakistan.
Q2)How do you weigh the pros and cons of vertical vs horizontal portals? There are other tech firms that are focusing on niche areas – Zameen does real estate, Pakwheels does auto, Rozee does jobs – but you seem to be getting into all of these. What’s the game plan and why do you think your model is better?
A. The biggest difference between horizontal and vertical classifieds is the nature of users. While vertical portals focus on particular niche categories like real estate or cars, the majority of their users tend to be B2C (Business to Consumer) who generate most of the listings. This leaves the average user with a less than optimal experience when it comes to selling or buying online.
OLX has been focused, since its inception, on creating a platform that can champion C2C (Consumer to Consumer) buying and selling by creating win-win exchanges within local communities. What matters the most in our business is that we have a critical mass of buyers and sellers and that can only happen when we focus on a variety of categories rather than just a small niche through a vertical.
By providing a wide selection of categories to our users for buying and selling, OLX has become the number one choice for every Pakistani looking to buy used products like furniture and phones etc.
Q3)Please explain your business model to us. How many sources of revenue do you have and which one is most significant?
A. All classifieds businesses rely on different revenue streams like online advertising, paid listings and premium services. These are some of the avenues we may explore at a later stage. Currently, our priority and focus is on building our user base by providing the best online classifieds experience.
At the moment, we are not earning any revenue from Pakistan. However, if you visit our website you will see Google ads. That is because we wanted to test how much monetization can be done but we’re not earning revenue as of now.
Q4) What’s your take on the conventional classifieds industry (Dawn, Jang). Do you believe online classifieds will take over the industry? If so, how long would it take for that to happen?
A. Conventional classifieds or print classifieds have always been a part of the print media industry and until the adoption of the internet, the only way to buy and sell. But there are a lot of problems with print classifieds such as limited description, payment to publish ad, no photo publishing option, and low reach and discoverability.
Online classifieds seem to be the first type of e-commerce website to become really big with the adoption of the internet in Emerging Markets, especially Pakistan. The fact that online classifieds are better, easier and a quicker way to buy and sell especially for an average consumer is the reason why they gained instant popularity.
Now, with the growth of internet, especially 3G and 4G connectivity in Pakistan, and smartphone penetration on the rise, the online classifieds are already surging ahead of the conventional classifieds. According to a study published by Google in 2014, the number of internet users in Pakistan will reach 100 million by 2020. Therefore it is safe to assume that with the increase in internet users in the country, print or conventional classifieds will lose more and more market share. Pakistani market has evolved so much that the big players in print classifieds like Jang and Dawn are looking at ways to innovate their classifieds offering in order to stay relevant in an increasingly digital future.
Q5) Have you faced a major backlash from these players – Dawn and Jang?
A. We believe all players try to provide users with the best experience and in the end whoever does it best wins. They play in the print space while we are online so in some ways we don’t get impacted by them too heavily. They are moving online but their online presence as of now is negligible.
Q6) How do you adapt to the changing market conditions and aspirations of the users
A. We believe in focusing all our efforts on providing our users with a superior buying and selling experience. This means that we have to continuously evolve our product and innovate in order to stay at the top of our game. As more and more users are experiencing the internet for the first time through their mobile devices and smartphones, we are working on providing a mobile-focused classifieds experience. This is just a small indication of how we adapt to the needs of our users and respond to their aspirations.
As the Pakistani market evolves we believe we are well poised to take a leading role in creating the best experience in online classifieds, making sure each OLX user is a happy ‘OLXer’.
Our new app, which was launched in June 2016 already has 1.5 million downloads.
Q7) How do you ensure the credibility of the ads posted on your website?
A. We realised at an early stage the importance of content quality. When we launched, the ads were reviewed after they went live, but now every single ad is reviewed before it goes live. We do this through a very powerful moderation tool. We have also launched Customer Services operations in Pakistan so that we can ensure all ads posted on OLX are moderated properly.
We have strict rules on spam postings and we closely monitor if multiple ads are posted by the same user, the description, title and price of the product. We also take into account complaints by other users about spam ads.
We introduced phone verification through OTP (one-time password) to ensure all ads placed on OLX are from genuine sellers, verified through their mobile number. This has improved our content quality even further.
Q8) What’s your USP? Is it free ads? Do you also offer feature ads or paid-for ads to allow the seller a greater coverage?
A. Our USP is our promise “Yaha Sab Bikta Hai” AND “Yaha Sab Milta Hai”, meaning whatever it is you want to sell or buy, your best chance is OLX.
Millions of happy ‘OLXers’ in Pakistan can testify to the fact that OLX is the best platform for their buying and selling needs. After conducting many independent 3rd party mystery shopping tests, we can categorically state that OLX is the easiest and the quickest way to buy and sell.
As far as featured listings are concerned, we do not offer featured ads or paid listings at this moment, but we may decide to launch this service at a later stage.
Q9) How much money have you invested so far in marketing and advertising and social media promotion?
A. We cannot disclose our investment numbers as this is part of our confidential business data, but suffice it to say that OLX is the biggest advertiser on T.V. in the internet category. We are backed and owned by Naspers, which is a broad-based multinational internet and media group and one of the largest technology investors in the world. Being owned by such a company which operates in more than a hundred countries allows us financial clout which our competitors cannot match.
Take PakWheels, for example; according to a press release issued in 2014, Frontier Digital Ventures, a Malaysian venture capital fund, gave $3.5 million to the vertical portal in order to allow for exponential growth. Consequently, Pakwheels started its advertising campaign around September 2015.
Zameen also followed suit and commenced its advertising at the end of 2015, with $50 million allocated for the region of North Africa, Middle East, and South Asia.
A. The success of so many online businesses in Pakistan is a testament to the fact that the digital revolution in Pakistan is taking root. Especially with the launch of 3G/4G there is a sudden boom in internet usage and smartphone adoption, which means more users demanding more services thus contributing to the growth. The start-up culture setting in Pakistan is another indication that the growth trend will stay for some time and the market will continue to expand each year.
According to market sources, and this is not my market intel, OLX is growing at a staggering rate of 40 per cent on a year-on-year basis.
Since OLX has entered the Pakistani market, we have grown from strength to strength. We quadrupled in size within the first 2 years of launch in Pakistan and still growing at a tremendous pace. We measure our success in terms of bringing in new users to OLX and making sure the existing users keep coming back.
Q11) What’s your strategy for getting a higher market share and is it in line with the overall international strategy of OLX
A. As discussed earlier, we focus on our users’ needs and solving them. And we believe that the best way to do that is through a solid product experience on the platform that our users engage with on a daily basis. Pakistan, in terms of global importance for OLX with regards to users and performance, comes in the top 5 countries.
The top management believes that the growth is dependent on the rising smartphone penetration in the country. In 2011, the ratio of desktop users and mobile users was 80:20. In 2016, this ratio is almost the complete opposite: 70 per cent users on mobile phones and 30 per cent on a desktop.
OLX is not currently listed with the Securities and Exchange Commission of Pakistan but we are working on that. Currently, we only have 5 employees in Pakistan and our tech team is based out of Dubai.
Even though such figures are confidential, I will give you a rough estimate of monthly listings. On a monthly basis, we have 600,000 new listings.
According to market experts, PakWheels has 500 daily listings while Zameen has 1000-1500 daily listings.
It is safe to say that OLX is almost 5 times bigger in terms of ad listings of automobiles when compared to Pakwheels and 4 times bigger than Zameen in real estate listings.
According to similarweb.com, OLX is ranked 10 and Pakwheels is ranked 35 in Pakistan, while alexa.com ranks them 22 and 52, respectively, in Pakistan. Each of them has 5.7 million and 2.8 million total visits, respectively.
Q12) Who’s your main competition in the country?
A. As of now, we don’t face any serious competition since there is no other horizontal (general classifieds) portal operating in the country. Conventional classifieds, as discussed earlier, don’t pose a serious threat to us, including the vertical portals. Back in 2014, in collaboration with Telenor, a Norwegian media group named Schibsted, owner of Ebay, launched asani.com in Pakistan.
Naspers struck a deal with Schibsted, whereby the latter (asani.com) would not launch its operations in Pakistan in return for Naspers (OLX) to pack up from Brazil. The deal was successful and Naspers averted facing major competition in Pakistan.
However, right across the border in India, OLX faces stiff competition from big shots like Amazon and Quickr.
Q13) What new features are you planning to add to the portal?
A. We believe a strong feature set and a superior classifieds experience is the key to success for our business. With this guiding principle in mind, we keep adding new features to the OLX platform.
Just recently, in June 2016, we launched a Pakistan specific app to provide an even better app first experience to our users. With other features like ‘Phone Verification”, “In-app Chat” and “Phone No. hiding feature” we are making buying and selling a more personalized, easy and secure process for all our users .Other recently launched features include “Push Notifications”, “Creating a wish list of favourite ads”, and “Saved Searches in the app” which provide a personalized buying and selling experience.
Also, we are constantly developing and testing new features that can add value to the OLX experience.