how-does-olx-make-money-olx-business-model

How Does OLX Make Money? The OLX Business Model

OLX, or OnLine eXchange, is a Dutch domiciled online marketplace for buying and selling goods and services. Unlike similar online marketplaces, OLX does not charge money for facilitating the transaction between the buyer and the seller. Instead, the company focuses on acquiring as much traffic as possible to earn money through advertising revenue and premium listings.

History of OLX

OLX, or OnLine eXchange, is a Dutch domiciled online marketplace for buying and selling goods and services.

The platform was founded by Fabrice Grinda and Alec Oxenford to provide a Craigslist-style platform to users outside of the USA. Indeed, Grinda noticed that larger online marketplaces such as eBay and Craigslist had shown very little interest in establishing a presence in developing markets.

As a result, the co-founders began work on the platform to cater specifically to consumers in these markets. Integration with Facebook and Twitter was key, as was a platform that would be mobile-friendly. Perhaps most importantly, the service had to be free since many did not have access to credit or debit cards. 

The OLX platform launched in Argentina in 2006 and quickly spread to other parts of Latin America, Asia Pacific, Africa, and Eastern Europe. In 2010, OLX was acquired by South African internet and media giant Naspers.

Today, OLX continues to operate as a standalone platform. More than 300 million people in 30 countries use OLX each month to buy and sell cars, bikes, houses, household goods, and fashion items. 

OLX revenue generation

Unlike similar online marketplaces, OLX does not charge money for facilitating the transaction between the buyer and the seller.

Instead, the company focuses on acquiring as much traffic as possible to earn money through advertising revenue and premium listings.

With that said, let’s take a look at both revenue sources in more detail.

Advertising revenue

Advertising revenue comes via serving Google Adsense ads on the OLX platform. Revenue is based on cost per one thousand impressions (CPM), cost per view (CPV), or cost per click (CPC). 

Some countries also incorporate a Google custom search bar, otherwise known as a programmable search engine. When an OLX customer searches for a product, they are shown a list of relevant ads and products. The company earns further Adsense revenue from this source.

OLX also sells banners and other advertisements that occupy high visibility areas on the platform. 

Featured Ads

Featured Ads is a premium OLX service allowing sellers to display listings in the first four places at the top of a product category page.

Aside from geographical location, pricing for this service is dependent on the product category and the number of days the seller wants an ad to run.

The Featured Ads service is particularly useful for sellers who wish to sell high-ticket items in popular categories. Without paying a small premium, listings for popular items are quickly pushed to the second or third page of search results.

Key takeaways

  • OLX is a Dutch-domiciled online marketplace for buyers and sellers of cars, houses, fashion items, and other household goods. It was created by Fabrice Grinda and Alec Oxenford to provide a free online marketplace for consumers in developing nations.
  • OLX prides itself on being a free platform for buyers and sellers. Instead, it generates revenue via Google Adsense in several ways.
  • OLX also earns revenue from sellers who want to pay to have their ads in high-visibility areas for longer.

Read Also: How Does eBay Make Money, How Does Amazon Make Money, How Does Lazada Make Money.

Main Free Guides:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"