‘We have been able to create a market out of nothing’
Amarjit Singh Batra, CEO, Olx.in, tells Ananya Saha why and till when the online brand would be in customer acquisition - and hence marketing - mode.
Mar 04, 2014 09:41:00 PM | Article | Ananya Saha
How difficult was it to establish the concept of buying and selling used or unwanted goods online in India?
The site has been live since 2006 in India. Initially, there were people who were selling on our site but they were early adopters and were sensitised to selling stuff online. However, the general public was unaware of the concept. As a leader, it was our job to talk to people and tell them the benefits of selling their unwanted or second hand goods online. People were not selling because they did not even know if an option like Olx existed. Some of them didn’t sell because they were apprehensive that they would not get a good price.
We tried to understand the psyche of the consumer. Earlier, people used to finish off the product completely in terms of life cycle and then give it to junk dealer. Or they gave it to their friend or relatives, and sometimes for free. As incomes have increased, aspirations have increased. Olx tried to answer the need and took the lead in terms of communication. We tried to grow the market. We are delighted that people caught onto our communication. We are lucky to have been able to create a market out of nothing. In marketing, the most difficult job is to create a new market. It was a difficult task to start with. Now, we are building on what we have done in the last couple of years.
Another challenge we have overcome is that people in India were used to a sales-driven model where everyone in the classifieds space would meet them and post content on their behalf. Therefore, the challenge was to get users to use the site themselves. We took a great call by deciding that we won’t post ads for users. We are focussed on educating the users. There is a large population that doesn’t know English, so we do not know how to reach them. But then, there is a large English-speaking population which said we have to tap.
It is just a matter of time before everybody across the nation starts selling on Olx.
What is Olx’s share in the free online-classifieds market in India? What is Olx’s strategy to acquire users by volume?
Classified in India has typically grown from vertical classifieds - job sites, real estate sites, auto sites, matrimonial. There were no horizontal classifieds. If you look at classified market in India, the official numbers peg it at Rs 1500 to 1800 crore in terms of revenue, but it does not cover the business we are in. We should be between 60 to 65 per cent minimum in our space of used goods classified. If you look at content on our site, we are 2 to 2.5 times the content of anybody in our space. We are two times ahead in the categories that we focus on compared to the second player. If you look at page views, we are at least 2.5 times ahead of anybody else in this space. We wish to claim a share of 80 to 85 per cent in some time.
The strategy is simple. We have to continue to offer the best experience. We have to have the best products on site for sale. We have to make sure that more and more people sell on the site. We are a local site so we have to ensure that we are big enough in various key cities in India and in every city because that is where the users are. We also have to make sure that as India is evolving and adapting to mobile phones, we offer the right mobile experience.
Olx does not have a paid premium model currently. Why? How does the website monetise then?
We are in the business of free classifieds, which is horizontal. This model becomes paid classified as a free-mium model, meaning that a certain percentage of people would pay for listings but majority will not. We would look at this free-mium model, which is the model that works across international markets. The existing size of the online classified market is less than Rs 2,000 crores, but the business that we are working on aggressively for the last two to three years, is yet to claim a big chunk in revenues. It should start happening in one or two years. We are increasing the size of the pie actually. We do not want to monetise early because this needs more education, knowledge, and usage before we start the ‘free-mium’ model.
Most classifieds in the past were in a business-to-consumer model. Our model is focussed on consumer-to-consumer: anybody who is not in the business of selling. The paid model is very easy to launch. If you go and start collecting revenues today, it has businesses that are going to put across many listings but we are not focussing on businesses at all. We don’t have a sales team. That said, businesses do come to our site but we do not want them to be on the top of our page.
Another reason why we are not doing it is that for us growth is more critical. We want everybody to try our site. We are constantly improving our site, customer product experience, fine-tuning various things within the website and business. Once that is aligned, we can switch on the paid listing model.
We do have a monetisation model. There are actually three models - one of them is activated right now. It is basic contextual ads. Then there could be banner ads across sites. For instance, a person looking for second hand cars may be interested in buying a new car. However, we are not using it aggressively at this stage. We wish to activate the main business model of paid listing as soon as we feel comfortable with the market.
What is Olx’s USP in this space?
This business is a ‘winner takes all’ market. It is not a business like e-commerce where many people are doing the same things. Not many people are present in this unique business. For us, growth and more users are more important. It is like Facebook, which has started monetising only recently. Youtube also started monetising recently. We are a UGC (ser-generated content) site. We are only company in our space that is 100 per cent UGC. Others have call services, or employees posting ads on behalf of sellers, we don’t do that. We are like FB and Youtube, and the model works well only when you are the largest player in your space. We wish to be the only site in India in the classified space selling used goods. This is the reason we are focussed on marketing and not on anything else. We will continue to do it until the time we are comfortable. My revenues are a by-product.
Is it getting difficult to attract users, given the presence of various other websites?
Marketing is always difficult, especially for internet-based companies since the user base is much smaller. We are marketed very differently from other sites. From the beginning, we went after the larger pie - people who are on the periphery of using computers. We are not only focussed on the internet user but also on the non-Internet users in a given household. If that weren’t the case, we wouldn’t have advertised on television. Every household knows about Olx today, even if they do not use the site.
We have had the first-mover advantage in terms of creating the market. It is difficult for everybody else to follow this. When they advertise, because we are leaders in this space, we benefit from it. We do not have much trouble growing, except that India is such a big market that you always end up reaching only a small number of people. With 200 million internet users, expected to grow to 500 million in next three years, I think the only challenge is how we grow faster.
On an average, what is the traffic that OLX attracts? How much of this comes from mobile?
We started focussing on mobile five years back. Today with mobile apps all our products are available on mobile. Sixty-two per cent of our traffic comes from mobile, which has grown by 15 to 20 per cent in the last one and a half to two years.
What are the top growing categories for OLX?
The categories where we do exceedingly well are used mobile phones – we are biggest marketplace for used mobile phones in the country by far. Then, there are used cars and bikes. About 80 to 90 per cent of our content in both these categories are from individuals. We are very strong in electronics, and furniture and other household stuff. The other growing categories include arts and collectibles, sporting goods.
What is the visitor profile of OLX India users? Has OLX been able to gain traction in tier II and III markets?
Our TG is across –demography and geography. That is why we advertise on TV. For some, it has become the first shopping channel to either save money or shop when they have limited money. Within segments, typically, more sellers are in SEC A and B. SEC C is more of buyers probably because of aspirations. Across regions, we are seeing surprising amount of users from smaller towns, which was much lesser three or four years ago - probably because of mobile.
India is a difficult market because we have to focus on 1,000 cities, and reach out to everybody. And, it also gives us opportunity to make one brand so powerful for so many people across the country.
Currently, the country’s population is almost 30 per cent in tier I and 70 per cent in favour of tier II and below. This 30 per cent contributes to 50 per cent of our business but tier I is more aggressive on internet. We still have a long way to penetrate tier I. I foresee 40:60 in favour of tier II and below after few years.
What is the percentage share of repeated users?
Earlier, about 30 to 35 per cent users were repeat users. It stands at 60 per cent now. We are not worried too much about marketing because we have reached the inflection point. If we stop marketing, then it might go upto 70 to 80 per cent. We have to bring in new users constantly.
OLX also decided to venture in regional language markets. How has the response been?
Our websites in regional languages are live. In India, we were the first ones in this space to also launch in regional languages such as Hindi, Tamil, Marathi, Telugu and Kannada. Even e-retailers like Flipkart and Jabong do not have it. However, in India, internet is more English- based and people do not post content in local languages. It has started happening now because of mobile phones but the user base is still very less. We are waiting for the right time before we can promote our regional offering. I see a shift happening towards local languages in the future. We do regional language marketing. All our TV ads run in local languages. But that doesn’t convert in local language usage.
In establishing your brand, did advertising play an important role as well apart from the fact that you had first mover advantage?
In our case, it has helped a lot. We had to create the market - not take it from somebody. Converting someone to a seller is the most difficult task. Advertising has played a very critical role in changing consumers’ behaviour and mindset about how they perceive used goods. People now know that it gives them money, helps them de-clutter, and helps them to buy or move to a better thing. I think we have to continue to advertise because the market is big.
Our first ad was launched in 2011. We only changed one agency in between. We were with Saatchi and Saatchi and last year, we switched to Lowe Lintas. When we started out, we were an unknown brand, and today we are one of the largest brands. When we did a pitch, some of the top agencies of the country lined up. We are happy that we got Lowe on board. Both the commercials by them have been well appreciated.
From ‘Badi Badi Baatien’ to ‘Neighbour’s Envy’ to the recent ‘Wedding Gift’ campaign – how has the communication reflected the change in your strategy?
‘Bech De’ has become a catchphrase. That was the idea. It got shaped as we moved along but the idea was to get people in India to start thinking of Olx as an alternative to sell their unused or second hand goods. Now if people realise that something is lying idle, they think of selling it on Olx. It helped us to position at a time when people are looking to upgrade, change. The latest campaign ‘Ghar Baithe Kamao’ is to sensitise people that idle goods can also fetch you money and fulfil some other need for yourself.
Isn’t the marketing mix for OLX skewed towards TVCs?
We use all mediums. Users have become so diverse that you cannot claim that you have covered so much TG with one medium. It should be digital ideally, because we are a digital company but it doesn’t work. We use every medium but we are not using every medium all the time. We have to be present everywhere. That said, TV plays a major role. TV is one of the mediums where we build our brands. It is also a medium where we can tell our story. We will keep TV as an integral part of our communication strategy.
And what about your presence on social media?
There are two aspects of communicating on social media: what are you trying to market, which every brand is trying to do – fan pages, FB ads; the second is what users talk about you and you have no control on that.
Earned media is the core social media that brands should focus on. We have used it very effectively. When we launched our TV campaigns, we also launched our Facebook page. Today, we have about 4.5 million fans on FB. But the most important thing is seven to eight per cent of them are talking about the brand.
Social media also helps us to listen, and educate the audience. We have created content to educate them. We integrated with NDTV and ran a puppet show called ‘Bechshala’ to educate consumers about how to post an ad. We recently ran a campaign designed only for YouTube, where we promoted Olx in the pre-roll ads, over the first five seconds before someone has a chance to skip the ad. Both the concepts were developed by ITSA.
Is Olx also increasing its marketing budgets?
In May 2011 when we started out, we registered about 10 million page views per month. Now we are almost touching 850 to 900 million page views. It’s a 1000 per cent growth. More than the marketing budget, the RoI of the marketing has been phenomenal. More than 50 per cent of our marketing budget was spent offline earlier but now we are trying to balance it between online and offline. Today, if we stop all marketing, 50 to 60 per cent of our traffic will remain.
Is OLX still in investment phase?
Yes and we will be investing for another year or so. I can stop investing and start monetising but since the market is so big, we wish to invest till the time we reach a much larger base. Our next phase of growth will come from the users who have not used OLX, and that is still a significant population. People who haven’t used the site, still know about Olx, which has made our job easier.
Five years from now where do you see Olx India?
Five years from now, we will not be advertising too much. We would have reached a major part of the market. I see Olx five to 10 times as big as what we are today.
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