Why OLX is yet to make money

an OLX ad in India
an OLX ad in India
An OLX advert in India

OLX, founded in March 2006, is an international classifieds service used in more than 90 countries and 40 languages and has more than 150 employees across offices in South Africa, Argentina, USA, Russia, China, Brazil and India.  OLX was launched in Kenya and Nigeria in 2012 and has since grown to become the leading online marketplace in Kenya that enabling many to sell their unwanted items at no cost and get good deals on items.

Did you know that 2 years down the line, OLX is yet to make any money despite spending millions of shillings in marketing and advertising? We had a chat with Priscilla Muhiu, the OLX Kenya Marketing Manager on this and other aspects of their business.

What informed the decision by OLX to set up in Kenya?
Kenya is the economic hub for East Africa and it also has a huge potential for e-commerce given that more than 40% of Kenyans (17mn+) can access the Internet through the mobile phone or PC. The growth remains robust and we anticipate that more than 50% of the population will have Internet access before the end of next year. Since our brand is internet based, it made sense for OLX to tap into this potential

How has the site evolved since its set up?
We have really grown since the we launched OLX in August 2012. We currently have hundreds of thousand of people visiting the site monthly. People have responded positively towards the brand.

What is your business/revenue model?
Currently, we don’t make money. We are focusing on getting Kenyans to adopt the culture of selling used goods online and educating them on how to use OLX. In future, we will charge for added value services such as featured/premium listings

Who is your competition in the online market in Kenya and what is your unique value proposition?
We have direct competitors such as pigia me and indirect competitors such as newspaper classifieds, notice boards in shopping malls etc. OLX stands out because we have a huge network of buyers and sellers so if you place your ad on OLX, you ad will be exposed to hundreds of thousands of people coming to the site daily.

There has been alot of emphasis on the selling through your marketing and not the buying, could you explain this approach?
Think of OLX as a shop, would you visit an empty shop? We have to ensure that the shop is fully stocked before we start asking buyers to come. Our stock comes from consumers hence we need to focus on asking the consumers to sell their stuff first. We have also seen that whenever we run a sell campaign, buyers come to the site as well.

OLX Kenya has over 600,000 fans on Facebook. Are you satisfied with the level of awareness? If not what are your plans to raise it?
Over 98% of our Target audience are aware about OLX. We need to convert the people who know OLX to loyal users of OLX.

What is the demographic of the visitors to the OLX Kenya site?
We target the mass market with internet access.

What are the challenges to growth and expansion that the company has faced?
The culture of selling used goods online is yet to be fully adopted by Kenyans. Our marketing campaign seek to instill this culture by showcasing the value proposition of selling what you don’t need/use.

 If OLX expands will olx.co.ke be presented in Kiswahili?
In Kenya no, In Tanzania yes.

What is the future of classified sites in Kenya?
The e-commerce industry is still nascent but growing steadily. There are many e-commerce platforms opening shop here in Kenya which is a good indication of a growing e-commerce industry. Online classifieds will soon be the most preferred channel for  Customer to Customer (C2C) trading.

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1 Comment

  1. KenTex Cargo Reply

    I think OLX being a global company as it is will eventually start making money in Kenya. I think OLX.co.ke is a country specific portfolio they are working on and they’ll push their local managers to generate profits, just like google does. Kenya is seen as one of the best countries in Africa for ecommerce

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