For many years, eBay was the only real platform to buy and sell used merchandise. For used goods worth billions, there was only one marketplace for several years. In this day & age where there are dozens of apps for all, there are still only a few opponents for eBay in the USA — Craiglist, OfferUp & Letgo. The peer to peer marketing is at an all-time large. The second-hand market has boomed following the mobile online evolution. Users of Letgo assert the best feature about this app is its own geographical search. They focus on giving you choices in your own area or nearby instead of flooding your search results with irrelevant results. To add to the simplicity, the app allows you to sync your Google or Facebook account so that you may bypass the hassle of registering up & checking your accounts. So, how does letgo make money?
Based in New York, with more than 20 million active monthly users, the Letgo has made trades worth $23 billion in the first half of 2017, no wonder that it created a fascination how does Letgo earn money? They assert that items worth close to $381 billion have been placed useless in American houses. Having worked on a similar concept at OLX, Oxenford simply knew what was required to make the experience of buying and selling used goods exciting. Now, let’s see how can Letgo work.
How does Letgo Pro Work?
Letgo is a classified app that helps buyers and sellers connect. It’s limited to products only while other apps list services as well. It’s quite straightforward to use. All you need to do is to put a picture of the item you want to sell then socialize with potential clients. For buyers, they can search an item they wish to buy and Letgo will show an effect based on your location. Have a look at a Few of the key features of this Letgo:
- Chat: Buyers and sellers may interact with the chat feature. This chat could be about anything from price negotiations to measuring contact information of each other.
- Image recognition: Letgo has incorporated artificial intelligence to maximize your purchasing and selling experience. It uses image recognition technology to suggest you categories where your item can be put once you upload and click its own image.
- Geographic Location: Letgo uses your place to get you the greatest possible results. This filters a lot of insignificant spam that you don’t wish to see. The results displayed are within 50 miles of your location to promote better deals.
- Review: Once you purchase something from someone, you can leave a comment or you could accelerate your overall experience. This will show on the seller’s profile. This makes it quite simple for buyers to recognize genuinely good sellers by their evaluations and feedback remarks.
How does Letgo Make Money?
Letgo is free for the users. It makes cash from advertising revenue. Inspired by the idea of Oxenford’s former venture OLX, the manner Letgo is dependent upon the adaptation of the very same theories as OLX. Letgo gives a platform to buyers and sellers to buy their used products in 35 countries. A general wondering is how does Letgo make money if they don’t take any commissions from your buyers or sellers for their listed products? Letgo doesn’t even force users to make transactions through their app or website. Users can contact one another and meet in person to decode the deal. If none of the transaction quantities of the product goes to Letgo, then how does it run, and how does it be worth a thousand bucks?
A traditional classifieds field would charge any user to post an advert, but not the modern-day app based on a solid system like the Letgo business model. While Craigslist charges its users to post an ad, it is completely free to do the exact same on Letgo. The entire app is based on adverts by users so placing more ads would just simplify the interface. So the only way Letgo make cash is to generate revenue by offering premium memberships, as Letgo would like to phone, the bump feature.
Letgo business model: The Bump Feature
For a price of $1.99 per day, your item will be listed right at the top over the other items in the search results. But, Letgo business model makes it quite clear they want only relevant search results. So even if you enable the bump feature, do not expect your item to be over every search result. This is probably the reason why the price for promoted results is kept low and that too on daily basis.
While most apps favor sponsored ads as their chief source of revenue, it is a no-brainer that how does Letgo makes money goes down that road. But how can you put ads to a platform that’s built on screens filled with ads? The answer is really a bump. The bump feature distinguishes any ordinary and from the sponsored ad. It’s readily recognizable so you know that what you are seeing most frequently at the top of your search result isn’t spam and it’s a sponsored ad. The fantastic thing about bump is the fact that it doesn’t intentionally put the sponsored advertisement anyplace. On the contrary, it still retains the relevance strongly. The advertisement will only show up if it is within the classified radius of the buyer and only if it’s precisely the exact same product as the buyer has searched. This enforces a whole lot of trust among buyers and while users on other apps are a bit skeptical to approach the content that is sponsored, users on Letgo trust their sponsored ads and that trust.
Letgo business model: Simplifying the User Experience
Oxenford claims that while the company is looking to explore other ideas such as value-added services, its sole goal remains to make Letgo the best place to buy and sell products. Letgo business model which is highly inspired by the simplicity of startups like Airbnb & Uber, Oxenford thinks that the trick is to empower users. Everything else will fall in its place if that’s your drive.
To serve this purpose, Letgo attempts to make listing a very easy & fast process. Putting an ad shouldn’t be complex and that’s why image recognition assists the cause a large time. All users need to do is to put up a picture and the artificial intelligence recognizes what the product is & places it under the most applicable category to attract maximum real buyers. Right now, Letgo remains one of the hardly any apps which use AI to help service users.
The chat feature is also a very welcome gesture in Letgo. This makes the app quite transparent and comfortable for users. Afterward, the app has found over 3 billion messages sent so far with an average of 9 million messages a day. This really goes to show how convenient and popular the conversation feature has been around for users.
Letgo Business Model
Letgo is based on a peer-to-peer marketplace business model that allows users to buy and sell used stuff everywhere from each other.
Letgo has managed to raise $375 million to date from different investors over a string of investments. They initially increased $100 million round precisely the exact same time as they merged with Spanish competitions, Wallop. They raised $175 million in ancient 2017. Main investors in the Letgo comprise 14W, Accel, Eight Roads Ventures, FJ Labs, Insight Venture Partners, Mangrove, Naspers, NEA, NextView, and Northzone.
With investments and mergers like this, they definitely raised some queries on Craiglist & eBay.
Challenges for Letgo to make money
The biggest barrier for the Letgo business model right now will be Facebook’s debut to Marketplace, a concept similar to OLX, eBay & Letgo. There is little doubt that Facebook gets the most active users when compared with other apps. The social networking giant is excited about introducing a new thing where people can buy and sell products via socializing.
It’s safe to say that Letgo has defeated Craiglist with regard to getting again in the number of users. The conventional classifieds platform has not evolved with time and technology. The user interface of this Craiglist website is as old as 1995 and they still haven’t established an app nonetheless. Even though you can sell and purchase stuff on the go from your mobile with apps like OfferUp & Letgo, Craiglist sounds somewhat old school.
The simple fact that Facebook has groups and communities makes the future road ever so hard for how does Letgo work. & it’s needless to say that they also don’t need to worry about their finances. It was simplicity & innovation that won the battle for Letgo against contemporaries & with challenges like these, the exact same can help them struggle against the mighty.
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