For a related post read: Is Safaricom Being Greedy By Launching Services to Compete With Start-ups
Since the liberation of Internet access in Kenya a number of classified businesses have been established but none has gained prominence like the OLX. Before OLX, Kenya’s classified market was controlled by Mocality, a South African owned online directory that enabled Kenyans to buy and sell products for free through their website www.mocality.co.ke that has since been shut down. Mocality enjoyed a short time monopolistic advantage after Dealfish, another classified business that operated in Kenya, closed shop.
Since Dealfish and Mocality called it quit a number of online classified businesses including OLX have sprung up. These include Nation Media’s N-Soko that run on several sub-domains like propoerty.n-soko.com, jobs.n-soko.com etc, Bidorbuy.co.ke, maduqa.com, and 254deals.co.ke.
Currently OLX is the most visited classified website in the country where its website olx.co.ke is ranked number 16 overall by www.alexa.com. This ranking places OLX ahead of locally popular sites like Ghafla.co.ke, cnn.com, and even safaricom.com that is at number 27 overall. MyMARKET which has been launched as a sub-domain of safaricom.com already takes advantage of Safirom.com’s traffic to become the second most visited classified site at number 27 overall in Kenya.
OLX’s success can be attributed to their advertisement campaigns that they launched on TVs, radios, and online at a scale that the other classified sites have not been able to cope up with. The advertisements by OLX were to the extent that people started wondering how they make their money given that no one is charged for selling or buying via their website neither do they sell any ads. It was not until very recently that I understood their strategy for making money. The online classified sector must be very lucrative for Safaricom to move in, a move that has been read by some as Safaricom’s intention to kill OLX.
Ati BUY& SELL anything from your mobile phone with Safaricom MyMARKET…..This is monopoly! Damn u want to wipe out again OLX,@SafaricomLtd
— MG FELIX (@FELOHMG) October 8, 2013
There is a possibility of Safaricom driving OLX out of business. This possibility is real given Safaricom’s approach to MyMARKET and the current market share it has in the mobile telephony that gives it a huge customer base to start with. Yesterday Safaricom started sending text messages to its subscribers that they can “BUY and SELL anything from…mobile with Safaricom MyMARKET”. This message does not cost Safaricom anything to generate and send as the cost of sending a text message is close to zero. So Safaricom already has the advantage of about 23 million subscribers that are likely to take advantage of MyMARKET product via the USSD short code *665#.
Another advantage that Safaricom has over OLX is the M-PESA payment system. Most of the payment options even in OLX classified is via M-PESA so Safaricom is able to integrate M-PESA with MyMARKET such that transactions at MyMARKET can be done seamlessly via M-PESA.
The third and probably the most important advantage Safaricom has over OLX is credibility. Promotions by Safaricom will be seen as most credible and any product sold through Safaricom’s systems will receive very little, if any, doubts. Currently there are a number of people who are skeptical about OLX to the extent that some have termed OLX and OLX advertisers a hoax (just Google OLX Kenya Scam to confirm). The hoax tag should also worry Safaricom as giving the public free access to place ads as they deem fit will mean a number of fake ads will have feature at MyMARKET. For Safaricom to remain credible, it needs to thoroughly vet every ad that will come to MyMARKET, which will also mean it won’t acquire the necessary volumes fast enough to catch up with OLX.
These advantages are what a few people have considered and concluded that Safaricom wants to kill OLX. But Safaricom coming in into the classified business is a plus to the consumers. Always, consumers are at an advantage whenever the market has many suppliers. This way the consumer is assured of quality, affordability and all time availability of the products and services in question. If OLX is the only major online classifieds provider and they suddenly decide to close shop just as Mocality and Dealfish did, where will we who have somehow become dependent on OLX be? So major competition is key in this sector too.
What I wish for is that OLX should fight to remain relevant. Indeed Safaricom’s decision to start MyMARKET product places OLX at a disadvantage that might make it decide to close shop just as the others before it. I don’t know whether OLX has been able to recoup some of the investments it has made especially the massive advertisements or it is still looking forward to increased volumes before it starts rolling out money making products like banner ads, sponsored links, and premium membership for those intending to sell products and services via the platform. I think if the ranking by Alexa.com is anything to go by, then OLX has done pretty well in terms of generating traffic to its website and it now the time to strategically promote the money making products for it to remain relevant. OLX should also read the confidence Safaricom has in that Safaricom does not invite people to place free adds. At MyMarket, ads are charged at Kshs 10 per week and Kshs 30 per month. Also, MyMARKET’s buyers will not be allowed to obtain sellers’ contacts free of charge but will be required to pay Kshs. 5 per every contact obtained. It is up to OLX to apply the best strategy to capitalize on these but they must keep at the back of their mind that attacking Safaricom on pricing its pricing strategies has not worked for Airtel’s Jee unagongwa ad.
Other than relying on its website and the recently introduce mobile app, OLX should consider introducing a USSD short code that it can run across all the mobile phone service providers, including Safaricom. Since Safaricom’s *665# is toll free, OLX will have to provide its USSD at a profit free rate by charging the minimum possible rates. On top of the USSD short code that OLX may choose, it should also introduce an SMS short code similar to the Nation Media’s short code for sending classified ads for News Paper’s classifieds. This way, OLX will be in a position to also tap on the offline (Internet-wise) mobile phone subscribers where Safaricom has the over 5 million lead in terms of classifieds potential users.
Lastly OLX should also streamline its vetting criteria. Twice I have placed ads that were vetted within a few hours and posted online. During the vetting, no one from OLX called me to verify the validity of the ad I placed. There should be a vetting mechanism whereby OLX collects some basic personal information from those intending to sell anything such that if complains are received, then OLX can assist with investigations. This way OLX will be able to vouch for credibility just as Safaricom should.
If OLX can fight to remain relevant and Safaricom gains footing in the classified business, then we can be sure that Kenya’s online market will take shape and soon enough we may have our own Amazon and Ebay that will change the way we relate to online business.