I’ve personally been on the craigslist market for nearly a decade today, constantly wondering: How do they make money? Well, craigslist executives actually charge money for apartment and job ads. These are not huge revenue streams because most of the buyers and sellers operating on the site deal with trading goods rather than services and property. So the real question here is: Why is Craigslist so successful in the market for used goods? I’ll attempt to answer this question through my experiences and observations of the site’s workings.
1) Craigslist has been making modest revenues on its site while keeping it ad-free. The site is simply not aesthetically appealing -but that’s okay because the only thing buyers and sellers are interested in are buying and selling. Thus, craigslist doesn’t need to spend huge sums on maintaining their site or designing it to be fashionable. Because of the ad-free feature, buying and selling negotiations and considerations take place efficiently without distraction – another strength of the website.
2) No online payment fees. What I mean by this is Craigslist simply serves as a port of connection between potential buyers and sellers. Much like a retailer, Craigslist pools together many individual sellers of an identical good and links them with the market of interested buyers who then have many options of who to buy the good from. The site is essentially a retailer EXCEPT that it bypasses the actual payment and defers that responsibility back to individual buyers and sellers. This way, it doesn’t have to pay VISA or any other company fees for online purchases. It simply serves as a platform for negotiations to take place and deals are sealed locally through buyers and sellers who reach a mutual agreement on the price.