Will the Facebook Marketplace disrupt classified ad’s websites?


At the commencement of Facebook Marketplace, there have always been buying and selling groups or people that want to sell something on their Facebook wall but that doesn’t stop the existence of classified websites. The sole merit of classified pages are the anonymity of people who really don’t want to show their real name nor profile picture when they are selling or transacting business.

Selling on Facebook may have a higher chance of increasing market share, but I don’t think that classifieds ads on other websites will become extinct or even if it can be, then it would take a very long time. Even newspapers still do classified ads despite the fact that only a few people are still using them.

Will the Facebook Marketplace disrupt classified ad’s website? The short answer to this is “No probably not”. Read on as we answer your question explicitly.

Will Facebook Marketplace disrupt classified ads websites?

Facebook introduced Marketplace feature on its platform of recent. This feature supports buying and selling several items to users. The introduction of this feature did not facilitate any payment. This has made many wonder if this new feature will eat up the existing big classifieds players.

However, to be sincere with ourselves, there is no comparison between Facebook and other players since they are not in the same zones. Facebook Marketplace has only being introduced to only four countries- USA, Australia, New Zealand and UK while classified ad websites such as OLX, Quikr are majorly based in India, even Quikr is actually moving toward becoming a vertical conglomerate from being a Consumer to Consumer, C2C horizontal marketplace.

So what happens when Facebook Marketplace opens up for India? 

For classified ad starters, it may have an adverse effect on them, it may have the potential to disrupt the current set of horizontal C2C classifieds players. Listed below are the challenges that Facebook might  encounter to become successful in India and eliminate all competition:

1. Network effect and culture: A lot of people mistakenly believe that the value of the feature increases with the addition of users. However, that is not really the case but an increase in its usage is what really creates the network effect.

If for instance, Facebook has 140-150 million active users in India, everyone will automatically become a signed-in user by default when it opens up its marketplace. But, this will not automatically translate into high usage.

2. Hyperlocal or neighborhood discovery: Lots of cities in India, such as Delhi or Mumbai, are much bigger than some European countries. These cities have various zones and each zone is further subdivided into various sub-zones.

Facebook has to show the availability of items in the neighborhoods (not just zones or sub-zones), which is in a 5-7km periphery.

Similarly, a potential seller should be able to choose a neighborhood and not just one single zone to increase his reach and the chances of selling.

Facebook needs to design this intuitively to be able to lend a great UX

3. Hyperlocal volumes: This is a chink in the armor for the current set of horizontal classifieds players in India. For instance, searching the category for Home and Garden is actually one of Delhi’s largest zoning. Searching for dining tables in the same zone shows only a few results. Facebook will have to build not only city volumes, but more importantly neighborhood/zones volume to inspire lots of people to check from its feature, discover and then buy, else it will not be able to create any interest.

4. Serendipity: Horizontal marketplaces will succeed in very high usage and very high frequency of visits. Buyer and Sellers must be willing to come back very frequently to discover new and unique items in their neighborhood, which they may not have searched for before. The current set of players score low in terms of product innovation around ‘discovery that leads to delight’ or uncovering hidden gems from neighborhoods.

This is extremely important for Facebook as it will attract more users (which will eventually increase conversion chances) and also sellers (who will benefit from better sales).

5. Content quality: This is a hygiene requirement for the feature. Non-compliance to these hygiene may lead to breaking of the network effect. Facebook should have contents based on each country’s policy and monitoring (automated, crowd sourced and owned staff) system to be able to succeed in India. It should also remove listings of products that are sold. We will have to wait and watch how that will be done.

I hope you enjoyed reading this guide.

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