The Craigslist Business Model – How does Craigslist make money? [2020]

3 mins read
Craigslist Business Model

Company Profile:

Craigslist is a free classified ads website that has sections related to jobs, housing, items for sale, services, gigs, etc.

  • Founded – 1995
  • Founder – Craig Newmark
  • CEO – Jim Buckmaster
  • Headquarters – San Francisco, California
  • Type – Private
  • Industry – Classified Advertising
  • Competitors – OfferUp| Letgo | eBay | Facebook Marketplace | 5miles | ThredUp | Poshmark

Craigslist Background

Craigslist was started in 1995 as a hobby by Craig Newmark, who spent 17 years at IBM as a programmer and later worked for Charles Schwab. He started Craigslist initially started as an email list to 10 to 12 people informing them about interesting events in arts and technology happening in San Francisco. Craigslist was formally launched as a company in 1999 and Newmark opted to focus on Craigslist full time in the customer service section and also hired the CEO Jim Buckmaster in 2000 to oversee operations.

What’s interesting is that Craigslist looks almost the same as it did it in the 90’s. It was designed to be simple and fast and with the goal of providing service to customers. It does not have any sales or marketing function and is built on the premise that providing good service is a good business strategy.

Craigslist Statistics

How many users does Craigslist have?

Craigslist has at least 60 million users in the US, and gets about 50 billion page views every month.

What is the revenue of Craigslist?

Craigslist posted revenues of over $1 billion in 2018. However, revenues of Craigslist in 2019 declined to $760 million, a 27% drop, mostly because of 37% decline in paid job ads.

Craigslist revenues

How many countries does Craigslist serve?

Craigslist serves 700 cities in 70 countries.

How many employees does Craigslist have?

Craigslist has 50 employees. Craigslist’s corporate structure is intentionally small and is based on a concept in psychology proposed by British anthropologist Robin Dunbar called the Dunbar’s number. Dunbar suggested that there’s a cognitive limit to the number of people that one can maintain stable social relationships. This number ranges from 100 to 150, with 150 being the often used value.

How many ads are posted on Craigslist in a month?

There are an average of 80 million ads posted on Craigslist per month.

Craigslist Business Model

For the most part, Craigslist is free to use for buyers and sellers. Then the question arises: How does Craigslist make money?

Paid listings

Craigslist monetizes a small section of its listings. The categories it charges for and the fees charged are given below.

  • Job postings in US and selected CA areas—$10-75 (fee varies by area)
  • Apartment rentals in Boston, Chicago, and NYC areas—$5
  • Commercial real estate in the US—$5
  • All for sale by-dealer categories in the US—$3-5
  • Cars/trucks by-dealer in the US, Vancouver BC—$5
  • Furniture by-dealer in Vancouver BC—$3
  • Cars/trucks, RVs, and motorcycles by-owner in the US—$5
  • Gigs in US and selected CA areas—$3-10
  • Services in US and CA—$5

Conclusion

Craigslist has a great operating model. It has kept its operating costs low and has built a successful business over the years. However, it has had its fair share of controversies. Around 128 murders have happened as a result of contacting someone on the site and several unsuspecting users have been the target of scams. There’s much to be done in the way of safety when it comes to Craigslist, but there’s no denying that it has made a mark for itself in the world of classified advertising.

References

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