Thursday, February 16, 2017

Why Craigslist is Unbeatable

Reham Fagiri’s eureka moment was the result of a deal gone wrong.

It was spring 2012, and the recent Wharton graduate was trying to sell her television on Craigslist. A prospective buyer—an older, gray-haired gentleman—came to her Philadelphia apartment to take a look. When he realized Fagiri had accidentally listed the wrong television model, he was irate.

“He got really upset about that: ‘You made me drive all the way here, blah, blah, blah,’” she recalls. Fagiri asked $200 for the TV. He offered $50. When she balked at the deal, the man announced that he was simply going to take the television. He started carrying it away.

“I’m like ‘Well, I’d rather save my life than have to argue about $150,’” she tells me. “So I was like ‘I don’t even want your money. Just take the TV.’”

This is the basic flaw of Craigslist. The site facilitates peer-to-peer interactions, but does little to ensure that those transactions go off seamlessly. After her harrowing encounter, Fagiri began trading Craigslist stories with friends and classmates, many of whom were similarly frustrated with the site. “That was kind of the second step, like, ‘OK, well, clearly it’s beyond me, and it’s my classmates too,’” she remembers.

Months later, that Craigslist experience still on her mind, Fagiri started outlining a business idea: an online used-furniture marketplace dedicated to the proposition that sometimes consumers want a middleman around to shield them from irrational strangers. She called the site AptDeco, and, like Craigslist, it would allow users to list and view ads for used furniture. Unlike Craigslist, it would also process payments, coordinate pickup and delivery, and serve as a buffer between buyer and seller.

“I’m an engineer, so I started playing around with the idea in my free time,” says Fagiri. “And then I built a small site.” On launch day she sold a West Elm headboard. That’s when Fagiri knew she was on to something. “‘Oh, OK!’” she recalls thinking. “‘I guess this is a real business!’”

More than three years after it ushered that headboard to new ownership, AptDeco is thriving and pedigreed — it was part of Y Combinator’s Winter 2014 class. According to Fagiri, the site is also profitable. (“Obviously there’s fluctuations. Some months are better. But overall we’re at the break-even profitability mark.”) For its services, AptDeco takes a 23 percent cut of the sale price and charges a flat delivery fee of either $35, $95, or $145, depending on the size of the item purchased; the site also lets you hire people to remove unwanted furniture or assemble new purchases.

AptDeco’s functional business model earns it a place of honor amongst the many startups that are vying to disrupt the “moving used crap around” space. There is Chairish, founded in 2013, which focuses on designer furniture and has raised almost $9 million in venture funding, according to Crunchbase; Viyet, founded in 2012, which specializes in high-end consignment; Trove, also known as Trove Market, a mobile-focused used-furniture service that, according to Crunchbase, has raised almost $1 million in seed funding; others include Krrb, MarketSquare, and 1stDibs.

All of these startups are jostling to dethrone the unlikeliest market leader in the history of online retail: Craigslist. The site commands vast loyalty despite doing very little to actively court its users. At times, it seems to dominate through sheer inertia. And yet Craigslist abides, and thrives, as its would-be competitors struggle to establish themselves. Which raises the question: Why is it so hard to compete with a site that is only begrudgingly a business?

by Justin Peters, Backchannel |  Read more:
Image: Li-Anne Dias