Fabrice Grinda, the Co-CEO of OLX Inc talks about setting up OLX in Pakistan, and the future he foresees for the country.
Q. Why did you decide to set-up OLX in 2006?
A. I looked at the world and saw that the US and a few countries in Western Europe had made pretty big transitions from paid classifieds in newspapers to paid vertical real estate or job sites and free horizontal classifieds sites. On the other hand, in Latin American, Eastern Europe, South East Asia etcetera, the opportunities seemed to be there but Craigslist or eBay were not going to these markets. So I took the opportunity to copy the concept, improve it, make it appropriate for each local market and then deploy it globally.
Q. How has the site evolved since then?
A. When we looked at the people we took inspiration from, we realised that they were doing a lot of things wrong. They didn’t have social integration – in developing markets it is very important to havetrust in the people you are interacting with. Therefore, social integration with Facebook and Twitter and the ability to see pictures and videos is very important. Obviously mobile has become a much bigger component of the story over the last few years – we now have apps which allow you to access OLX from any Windows, iOS or Android device. This is bringing in a larger and larger component of the traffic. In terms of the business model, we realised it was necessary to be 100 per cent free especially in countries where credit card usage and GDP per capita is not very high. Last but not least, we realised how important it is to focus on content quality. When we launched, ads were reviewed after they went live, now every single ad is reviewed before it goes live.
Q. If you want to continue to be a free site, what is your business/revenue model?
A. Essentially we are a search business so when you come to our site you are looking for something, and if we put ads related to your search we’re going to get a very high click-through rate. On the internet, search business models can work if you have intent, and when you come to OLX you have intent in the right categories: cars, jobs, real estate etcetera. The combination of having intent plus being in value-laden categories leads to high CPM (cost per thousand).
Q. Are you focusing on emerging markets, and how many countries are you in right now?
A. We launched in 96 countries with 45 languages and while we’re live in all these countries, there are a few countries that we care a lot more about. Today we are focusing on Brazil, India, Portugal and Pakistan.
Q. How long has OLX been in Pakistan?
A. About four years, but we really started focusing on it a year ago. We’ve grown tremendously and quadrupled in size in a year. To give you a sense of scale; according to Alexa we are the 15th largest site in Pakistan (all sites combined) and by far the largest classifieds site.
Q. Who’s your competition in Pakistan?
A. What matters the most in our business is that you have a critical mass of buyers and sellers. We are not quite there yet in Pakistan, but we’re definitely on our way. One of our competitors in Pakistan is Dekho, but they are significantly smaller than we are. Every month, OLX.com.pk gets five million non-unique visitors.
Q. How would you define “there”?
A. It’s hard to tell at what point you have reached critical mass, where you’re so big that you’re by far the category leader. However, I suspect we will probably need to be 10 times bigger than we are today in page views, transaction value etcetera, and the reason I would say that we are not “there” yet is because when you look at the measurement metrics, most of the future users of internet in Pakistan are not online yet, but we’re going to continue investing in Pakistan for the foreseeable future.
Q. Can you give us a visitor profile of OLX users in Pakistan?
A. It is split evenly between males and females; they are usually in their 20s and 30s and start using us after school once they need to find a job, a place to stay, etcetera. The most fundamental difference between our users in Pakistan and developed markets is that in developed markets they are usually older, middle class women, whereas in Pakistan they are better off and younger than your average Pakistani.
Q. There have been reports that OLX may set up an office in Pakistan. When is this likely to happen?
A. We have been working with local agencies on media buys and adapting our advertising for Pakistan and the reason we’re considering opening a local office is to make sure we really localise the product and understand the local nuances. What we are looking for is a country manager responsible for the region, someone to do local PR, partnerships etcetera. There is no set timeline, but probably sometime this year.
Q. What are the challenges to growth in Pakistan?
A. There are lots of challenges but the biggest is that not enough people are online so that’s not an OLX or classified-specific problem; it’s a country problem. Approximately 15 per cent of the population of Pakistan has internet access and there has been no 3G deployment so that has created a barrier for us and the internet in general. While we are growing nicely, it is on a very small base of users.
Q. If usage become more widespread, will OLX.com.pk be presented in Urdu?
A. We’re in the local language in most markets we operate in. The reason we’re not in Urdu is a bit silly, our site doesn’t support right-to-left text right now. It’s part of the plan to do this but not in the near future.
Q. What are your predictions for classified sites?
A. Classified seems to be the first type of e-commerce website to become really big in the emerging markets. It is the simplest form of transaction and works even if you don’t have a good infrastructure because people are meeting in person; in Pakistan I believe this category will pave the way for other e-commerce categories to emerge.