In recent weeks, there has been a series of not so great news within the technology space in Nigeria. From the unceremonious sale of Konga to the shutting down of OLX, one of Nigeria’s leading classified ads business. Let’s not forget that about a year ago, Efritin also shut down citing “the fact that we didn’t get desired returns on our investment, so we decided to scale back on our investments in Nigeria and that means we are forced to let many people leave the company,”

The CEO was also quoted saying – “I think the data cost in Nigeria is very high. In comparison to other parts of West Africa, Africa and the rest of the world, it is very expensive to use the Internet for the vast majority of the people. It is very difficult for e-commerce and classifieds because they are quite late in the evolution of the Internet industry”.

I am sure you guys know that I completely disagree with the CEO, but I believe it boils down to revenue. I have said it too many times, you cannot continue to operate any business on investors’ funds. That is not sustainable. Once funding dries up (Like it is now), can your business survive? For me, that is the major issue. Most online classified ads businesses do not generate revenues, or what they generate is too insignificant for their cost.

OLX on the other hand, transformed from DealFish in an attempt to rebrand. I have not seen an official statement from the CEO of OLX, but circumstances suggest that Naspers is looking to exit unprofitable markets and focus its attention on viable markets, hence shutting down its operations in Nigeria and Kenya.

Online Classified Ads – Business Model
There are 2 major models for an Online Classified Ads play. Horizontal and Vertical.

Horizontal – the horizontal model, offers ads across a wide range of categories, from automobiles to human hair. Jiji, OLX and Efritin are major players in the Horizontal space in Nigeria

Vertical – like you will suspect focuses on a single category, such as cars, real estate etc. Cheki, Tolet.com.ng are major players in the vertical space in Nigeria.

So, how do they typically make money?


READ MORE:https://nairametrics.com/death-of-an-industry-online-classified-businesses/


Cc:@lalasticlala

I love how Jiji. ng operates. They have always been the premier online marketplace in Nigeria and the results are starting to show. They have over one million sellers already making cool cash daily. Those people are not going away soon.