OLX Business Model: How it Works & Make Profit?

OLX Group is a C2C (Consumer-to-Consumer) online global marketplace allowing people to sell and buy stuff directly, without any intermediary party. The platform began its operations back in 2006 and today operates successfully in more than 45 countries. In 2014, OLX reported having above 11 billion-page views and more than 200 million monthly active users, nearly 8.5 million monthly transactions and approximately 25 million listings. To understand the business model and how OLX group has grown to be one of the biggest C2C online platforms, let’s dig into its history.

As far as OLX’s traffic is concerned, OLX gets sustainable page views and business through organic reach. According to SEMRUSH, OLX received 7M visits with an average session duration of 20:37 in September 2022.

To understand the OLX business model and how OLX has grown to be one of the biggest C2C online platforms, let’s dig into its history.

History

Fabrice Grinda and Alec Oxenford founded the company in 2006 as an alternative to Craiglist outside the boundaries of the U.S. Naspers; a South African media and technology group acquired 95% of the company in 2014, having its headquarters in Amsterdam. OLX has a very active and strong presence in Portugal, Ukraine, the Philippines, Kenya, Nigeria, India, Brazil, and Pakistan.

Before Naspers purchased the company, the C2C classified website received funds by many different firms namely General Catalyst Partners, Nexus Venture Partners and Bessemer Venture Partners. A few statistics worth considering are:

• OLX succeeded Google Trader as one of the biggest and leading classified websites forcing the search engine giant to shut down its own.
• It also competes equally (in terms of views and visits) with some of the major social media marketing platforms like Facebook, Instagram, and Snapchat by obtaining above 200 million monthly visits.
• OLX transactions reached almost 9 million.

OLX Business Model & How it Works

Curious to learn how OLX works and if OLX is profitable? OLX’s business model is simple yet quite profitable. There’s little to no risk involved as the platform only serves as a mediator between a buyer and seller. 

OLX business model is C2C (Consumer-to-Consumer) based on a simple classified website. The revenue model, however, is much different when compared with Craigslist as it has a parallel system for customers operating side by side. The platform allows sellers to directly upload pictures of the stuff alongside text details, just like an actual advertisement.

Buyers can also connect with the seller without any third-party intervention, bargain the price and buy. In fact, the buyer can even browse several alternatives of the primary product to find the most suitable seller in terms of product quality and cost to execute the purchase. On segmenting the typical business model, it functions as follows:

• OLX’s business structure is scale-dependent whereas the website acts as a classified portal, connecting buyers and sellers.
• OLX invests heavily to gather more user traffic, increase the number of listings and operate at a much greater frequency.
• OLX earns revenue by monetizing on the number of searches and clicks from the incoming web traffic.

Unlike being an intermediary to sellers’ products, the OLX approach is totally different. Its prime earning is driven through advertisements, sponsored links and listings, and Google Custom Search Engine.

How Does OLX Makes Money?

Google Ads

OLX revenue model entails little to no risk.  Most of OLX’s profit is generated from Google Ads Monetisation as the company is affiliated with different partners which are interlinked to Google and many other advertisements and digital marketing agencies in Dubai that act as major ad suppliers and mediators for the website. All the advertisements work in association with the OLX website whereas the content is displayed on the official site itself. Do note that the number of ad units varies per web page.

Brand advertisements on television also result in bringing a high level of web traffic to the website thereby generating more revenue. For the typical online ads, Google AdWords strategies result in profitable results such as Pay Per Click advertising and marketing Cost Per Click (CPC), Cost Per Thousand Impressions (CPM), and Cost Per View against the video ads that are displayed on the homepage as well as product listing page.

Featured Listings

If a seller updated a classified listing against a particular product, it ends up at the last of the list as more products are listed. This can be a loss to a seller whose product mightn’t even be displayed on the first page but, to avoid such a situation, the seller has to pay a certain amount to keep the product appearing on the top of the first page. This way, the option is a source of revenue for both seller and OLX.

OLX Traffic Share by Device

As it goes without saying, OLX gets more visits from mobile devices than PCs and laptops. According to SEMRUSH, in September 2022, 41% of OLX traffic came from desktops while 59% of visitors came from mobile devices.

Future Perceptions

The biggest, most active, and most profitable user base for OLX is in Pakistan, India, the United States, and the United Kingdom. The combined power of four makes up more than 75% of OLX marketing and success.

And the rate at which OLX is growing and expanding, we can expect it to be more active in regions where it’s yet to build any significant presence.

 All in all, OLX is a great example of a sustainable, risk-free business model allowing an entrepreneur to monetize traffic without selling a product or service.

Do you want to create a website similar to OLX in Dubai? Get in touch. We’d love to hear about your idea because we have the right team to assist you in this venture!