Home Case Study How Does OLX Earn Money | OLX Business Model Explained

How Does OLX Earn Money | OLX Business Model Explained

by Tarun Pal
olx business model explained

In today’s fast-paced and ever-evolving digital world, businesses need to be adaptable and innovative to stay ahead of the game. OLX, the world’s leading online marketplace, has taken this mantra to heart and revolutionized the way people buy and sell goods and services. But how does OLX make money? 

In this article, we’ll delve into the business model that has made OLX a success story, exploring the revenue streams that sustain the platform, the value proposition that keeps users coming back, and the strategies that have propelled OLX to the top of the online marketplace game. So grab a cup of coffee and let’s dive into the exciting world of OLX’s business model.

About – OLX

The story of OLX reads like a thriller novel, filled with twists and turns that have led the online marketplace to become a giant in the industry. Founded in 2006 by Fabrice Grinda and Alec Oxenford, the company started in Argentina but quickly expanded to over 45 countries. With a focus on emerging markets, OLX has become a household name in countries like India, Pakistan, and Nigeria, where it has solidified its position as the largest online classifieds website.

But OLX’s success did not come easy. It faced stiff competition from established players in the industry and had to fight hard to capture market share. This was until a major part of the company was taken over by Naspers, a South African media group, which infused the company with fresh capital and resources. With its newfound strength, OLX was able to push forward and achieve even greater heights.

Today, OLX boasts an impressive array of statistics that demonstrate its dominance in the online marketplace space. With over 200 million monthly visits, OLX is on par with social media giants like Snapchat, Instagram, and Facebook. The platform has facilitated more than 9.5 million transactions and has procured more than 35 million listings. These numbers are a testament to the value proposition that OLX offers to its users, making it a trusted and reliable platform for buying and selling goods and services. But how does OLX make money? Let’s take a closer look.

Business Model of OLX

Just like Getezo, OLX operates on a simple classified listing model. However, OLX’s revenue model is quite different from Getezo. To understand the OLX business model, let’s break it down into parts:

  • The OLX business model is scale-dependent.
  • The website serves as a classifieds portal where customers can buy and sell goods.
  • OLX invests heavily in attracting more user traffic and increasing the number of listings.
  • The high traffic is monetized through the number of clicks and searches on the website, which generates revenue for OLX.

How does OLX work?

OLX functions just like any other classifieds portal, with a parallel system for customers to sell and buy goods. Sellers can upload their advertisements, including pictures, titles, descriptions, and expected sales prices. Buyers can browse through the listings, contact sellers directly, negotiate, and then purchase items.

The surprising thing about OLX is that it doesn’t act as a mediator between buyers and sellers. Instead, it merely connects the two parties online through the classifieds portal. The conversation, bargaining, advances, and transactions all take place between the buyer and seller directly.

How does OLX make money?

OLX has a unique revenue model compared to other online marketplaces, which typically act as affiliates to sellers’ products. OLX generates its revenue through advertisements, Google Custom Search Engine, Sponsored Links, and Sponsored Listings.

Google Adsense

A major part of OLX’s revenue comes from Google AdSense monetization. OLX works with partners who, in turn, work with Google and other ad partners to supply and mediate ads for the website.

These ads are displayed on the webpage and vary in number on different pages. OLX gains high user traffic through online and TV brand advertisements and monetizes this through Cost per Click (CPC), Cost per 1000 Impressions (CPM), and Cost per View for video ads on its home and product pages. This continues until the seller is contacted and the transaction is completed.

Google CSE

The OLX website features a search bar that allows customers to find products they are looking for. When a search is performed, the results are optimized with Google’s custom search engine and monetized with advertisements (similar to Adsense’s PPC ads). Typically, the first two to three results are from Google.

Feature Listing 

As explained earlier, when a seller posts a classified listing for a refrigerator they want to sell, the listing may eventually move down to lower pages as more recent listings are posted. To keep the listing at the top, the seller can pay OLX to “feature” the listing. This featured listing is a source of profit for both the seller and OLX, and it may also generate more impressions, which is another source of income for OLX.

In conclusion 

OLX has become a powerhouse in the online marketplace industry by providing a trusted and reliable platform for buying and selling goods and services. With a business model that focuses on attracting more user traffic and increasing the number of listings, OLX generates revenue through advertisements, Google Custom Search Engine, Sponsored Links, and Sponsored Listings. The company has also implemented innovative features, such as the ability for sellers to pay to feature their listings, which generates additional revenue for both the seller and OLX. OLX’s success story is a testament to the importance of adaptability and innovation in today’s fast-paced digital world, and its continued growth is something to watch in the years to come.

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