how-does-gumtree-make-money

How does Gumtree make money?

  • Gumtree is a British-based online classified advertisement and community website founded by Michael Pennington and Simon Crookall in 2000. The site was created to allow Australian, New Zealand, and South African ex-pats to connect in London.
  • Gumtree charges listing fees to sellers for products in certain categories. To increase product visibility, the company also sells three paid ad packages with extra perks such as larger search result images and highlighted listings.
  • Gumtree also sells advertising to interested brands according to the number of ad views they desire. Ads appear on the home page, search results page, and “view items” page.

Where does the name come from?

The term “gum tree” is used to describe eucalyptus trees, which are native to Australia but can also be found in New Zealand and South Africa.

Pennington and Crookall decided on this term because they thought it best reflected the roots and branches of a real community.

Origin story

Gumtree is a British-based online classified advertisement and community website founded by Michael Pennington and Simon Crookall in 2000.

The platform was initially created to connect the more than 1 million Australian, New Zealand, and South African ex-pats who were living in London.

Gumtree enabled these individuals to receive much-needed assistance with accommodation and employment, with many others using the platform as a place to make new friends.

Gumtree.com went live in March 2000 at a time when most people accessed the internet from work and not from home.

To drive traffic to the website, the co-founders placed adverts in several newspapers and distributed flyers around London.

Three years later, Gumtree was more popular with Londoners than it was with the ex-pats for whom it was created.

Pennington and Crookall started charging employers to place job ads on the site but kept it free for individual users.

Gumtree had spread to 31 different cities around the world by 2005, including Adelaide, Durbin, Paris, and Edinburgh.

The business was now profitable and employed a skeleton crew of just 12 people in a London headquarters.

Sensing an opportunity, eBay acquired Gumtree that same year for an undisclosed sum, though the deal was part of a larger purchase of three online classified sites worth $81 million.

The co-founders then departed from the business and later founded the Russian and Ukrainian classifieds site Slendo.

Gumtree continues to operate today, with eBay recently selling the platform and eleven other classified services to Norwegian global marketplace specialist Adevinta.

One of the biggest national platforms is Gumtree Australia, with 7 million monthly unique visitors browsing more than 2.6 million live listings.

Gumtree revenue generation

As an online classifieds platform, Gumtree makes money via listing fees, production promotion fees, and advertising fees.

Before we move on, it is important to note that exact pricing depends on the country, city, and the product that is listed.

Listing fees

Listing fees comprise the bulk of company revenue

While most products can be listed for free on Gumtree, the company does charge a listing fee to sellers in several categories. These include real estate, employment opportunities, services for hire, cars and other vehicles, boats, and jetskis. 

Product promotion fees

Sellers can also choose between three paid options to increase their buyer exposure: 

  1. Plus – with unlimited edits, up to 10 photos, a highlighted listing background, and a link to the seller’s website if applicable.
  2. Featured – with all Plus features in addition to a maximum of 20 photos, a bigger image in search results, and Top Ad functionality.
  3. Premium – with extra features including a homepage gallery and 3 large images in search results.

Gumtree also allows sellers to buy the features from these packages individually.

Below we have explained some of them in more detail:

  • Bump Up – where the ad is moved to the top of the category for extra visibility to help the seller get more visitors and replies to their listing. 
  • Highlight – where a darker yellow background is applied to the listing to make it stand out. With greater visibility, these ads receive more views and may be run for 7, 14, or 21 consecutive days. The 7-day option in Australia, for example, costs $3.99.
  • Price Drop – here, the old price is highlighted in red to alert buyers that the price has been lowered. When a price drop label has been purchased, it also alerts users who have the ad in their watchlist. 
  • Urgent – for sellers who want to sell an item quickly, a red urgent icon can be affixed to the upper-left corner of the listing.
  • Top Ad – the Top Ad section is a dedicated space above normal search results with room for only six listings. These ads tend to receive more interest from buyers because of their prominent position on the top of a category listing page.

Advertising fees

Advertising is also sold on Gumtree, enabling individuals and businesses to target specific product categories and locations. 

This can be achieved with a 728×90 pixel leaderboard or a 300×250 pixel banner, with both forms appearing on the home page, search results page, and “view Items’ page. 

Pricing is determined by the desired volume of ad views. For instance, advertisers can pay $250 for 25,000 views or $3,000 for 300,000 views on the Australian platform.

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