For the past two decades, the online second hand market in the United States has been dominated by two major players: Ebay and Craigslist. Both services were started in 1995 and went through the ups and downs of the dotcom bubble and subsequent burst.
Whether you are looking for a used car, a typewriter, or an aloha shirt, you can choose either to buy locally via Craigslist or bid globally via Ebay. Ebay, on the one hand, has made a lot of efforts to expand its services over the years — which included adding “Buy it Now” functionality as well as integrated money transfers via Paypal. Although there haven’t been dramatic overhauls to the UI over the years (probably thanks to the “if it ain’t broke, then don’t fix it” mindset), the company does appear to be making active efforts to focus on design. Craigslist, on the other hand, is recognized for its incredible ability to remain unchanging — taking minimalism to the extreme with its iconic text interface that stands still like an artifact from an earlier age of the internet.
Throughout the years many startups have challenged Craigslist and Ebay for a slice of the secondhand pie but recently a couple services have really started to gain traction thanks to their app first approaches.
But first let’s take a look at Craigslist and Ebay in their current incarnations.
Craigslist is web only (although there are some third-party client apps) and has a simple grid layout with a sidebar for search filtering. You’ll notice that there’s even an option to find only listings that allow cryptocurrency as a form of payment. Although the UI looks dated and barebones, it has everything that’s necessary: each item’s price, title, and location are clearly displayed and the structure is very intuitive.
Personally, I found my first car, my first apartment, and my first job on all Craigslist. But Craigslist is also notorious for its scams and sometimes much, much worse. Craigslist does very little to address the issue of safety because their service is built on anonymity. However, they have shut down certain gray area sections (personals, adult services) in the recent years to avoid risk to their core business.
Apart from a lack of security, Craigslist has fallen short in addressing other user needs and in response, other services have cropped up to fill these needs. For example, services like Padmapper used Craigslist listing data to create visual maps of where available houses and apartments are located to make apartment hunting easier. Craigslist eventually put a stop to these piggybackers and integrated the map feature themselves across their entire platform.
See exactly where you can buy this used boat thanks to the map feature.
Craigslist makes no money from item listings. The company depends on its job postings for the main share of its cash but it also charges some fees on a variety of listings types depending on area.
The basic structure of Ebay hasn’t changed much over time with all items organized into detailed categories which the user can reach through filtering or direct search. One of Ebay’s strength is the sheer amount of filters. You can adjust the displayed results based on the pattern, brand, color, material, and more. For example, in my search for the perfect Aloha Shirt, I can narrow down the results to a floral-patterned grey shirt made from 100% silk from the Tommy Bahama brand.
Ebay has taken active steps to make users feel secure with ratings, a money back guarantee, PayPal integration for secure payment, and other features. They have also tried to build a closer connection to their users through curated categories and recommendations based on shopping histories.
Unfortunately their native apps leave a lot to be desired. The entire experience attempts to replicate the web experience too closely and fails to take advantage of the benefits of mobile. Filtering is limited for some reason. And it’s clunky for sellers to post new listings (although it could be argued that the listing experience is difficult for new users even via web).
Ebay charges an array of fees in addition to its store memberships, including insertion fees (a fee you pay just for listing but the first 50 listings are free for most users) and a final value fee (on average 10%).
Readers in Japan will be familiar with Mercari as the country’s top peer-to-peer marketplace, as well as being the first unicorn company. The Japanese flea market service broke into the American market with a completely new incarnation of their flea market app in 2014 and has slowly built up momentum. Although its easy-to-use UI attributed to its success in the Japanese market, Mercari made the decision to rebrand and redesign themselves in the US with a “cleaner [and] simpler” look released in March 2018. Most noticeably, they dropped their previous array of primary colors to go purple and orange.
In a way, Mercari finds a sweet spot between Ebay and Craigslist — the app has the casual peer-to-peer feeling that is lost on Ebay which is greatly dominated by professional Ebayers. But Mercari offers a clean, secure feeling that just can’t be find on Craigslist thanks to user profiles and reviews, as well as a modern app design. While the company has found some traction overseas, they have suffered heavy losses in the US market that take a heavy bite into the profits from the Japanese market. Mercari has stated that they are willing to shoulder the short term losses because they see the long term opportunity in the US market.
Mercari takes a 10% cut for every successful sale but offers prepaid shipping labels to protect sellers and help them save with discounted postal rates.
Letgo takes simplifying the buying and selling experience to the extreme. Upon sign up, the app encourages you to sell something — anything, you can delete it later! — with a simple snap from your camera. And it really is as simple as that. Although you can customize details if you wish, the listing experience is completely streamlined with even the listing title and category being automatically generated by the app’s AI. The only input required from the user, other than the initial photo, is a price.
Letgo is also minimizing the number of taps when it comes to the buying experience. After selecting a listing from the main screen (consisting of images and videos), the hurdle for reaching out to a seller is really low thanks to the prepopulated questions at the screen. Additional information can be found from the “More Info” drop down but in general the app replies on images and videos rather than text descriptions.
Like Craigslist, Letgo doesn’t charge users for any sales made via the platform. The app does provide in-app purchases for sellers who wish to promote their listing. The company is raising gobs of money too. At the beginning of August, they announced a $500M in investment. Pretty good for a 3 year old startup.
Poshmark proclaims itself as “the largest social commerce marketplace for fashion” and compared to other service’s which feature basic likes and messaging, Poshmark does indeed place a strong emphasis on social to promote your items and increase sales which departs from the more organic discovery process for Mercari. Buyers follow sellers that share their fashion sense and can even request personal stylist advice from sellers through the “Dressing Room” feature. Sellers also host parties revolving around a certain fashion theme in order to attract more buyers.
Poshmark shows an acute attention to detail in assisting the selling experience. Any haggling on Poshmark is done through the system itself rather than through public comments as per Mercari. This is more comparable to Ebay’s Make an Offer functionality for price negotiation. Poshmark also has built-in filters on it’s in-app camera to make it easier for users to upload and adjust their photos on the spot.
Poshmark takes a larger cut of the pie with a flat fee of USD$2.95 on anything under $15.00 and a 20% commission on anything above that. But even with their relatively higher fees, they have build a loyal community and are one of the most talked about marketplaces for female fashionistas.
Kidizen is a specialized marketplace for parents buy and sell children’s fashion with an integrated online community for sharing photos of your children’s style which can then be reposted to Instagram or Facebook.
Similar to Poshmark, Kidizen emphasizes the importance of the user and their shop. Sellers make an effort to build their community and connect with other users on a more personal level.
While other peer-to-peer marketplaces also feature listings with children’s clothing and toys, Kidizen targets fashionista parents who are invested in the individual styles of their child’s fashion — which really functions as an outlet for their own creativity. Upon sign up, parents are asked to choose their child’s “vibe” including such choices as “boutique”, “hipster”, and “designer”.
Love the detail on the listing page (far right) which gives hints to sellers about what kind of photos they should take.
Kidizen takes at 18% fee on any listing that successfully sells. All sellers can purchase discounted mailing label that ensure that Kidizen will cover any costs if the item sent is lost in the post.
Depop mimics Instagram UI to appeal to the IG-Generation and give them something they already know how to use. Depop marries social and shopping with listings full of hashtags, likes, and comments.
The company is actually a UK startup that crossed the pond to find success in the US. Of course, having megastars like Shaquille O’Neal as one of your users doesn’t hurt word-of-mouth.
Depop charges users 10% on the total sold listing, including shipping costs, and also makes users shoulder the 3.4% + $0.30 Paypal transaction fee.
OfferUp is quickly growing to be a major player in the local marketplace business. After finding that potential users were reluctant to use the service due to safety concerns, OfferUp added optional third-party identification verification in addition to other profile features to build up trust amongst buyers and sellers.
In addition, the company collaborates with local police forces across the United States to set up safe meetup spots for transactions to be carried out. These spots are located at police stations or in front of local businesses and are “brightly lit and have video cameras“.
OfferUp charges a nearly 8% on sold listings (not including shipping) and also make money from premium features that allow sellers to promote their listings more prominently.
For a long time, users have been looking for an alternative to Craigslist and Ebay that either offered more security or ease-of-use. This led to the creation of many BST (Buy/Sell/Trade) communities on Instagram and Facebook. People showed they were more than willing to approach secondhand from a social angle.
The apps listed above only offer a native experience that focuses on expediting peer-to-peer transactions with quick onboarding. But, more importantly, for many of the apps, there is a large social aspect that builds trust between buyers and sellers alike.
These services are also aware of their users — whether they be predominantly parents (Kidizen), millennials (Depop), Poshmark (women) — and work to build features that cater to their demands. They have built their initial user base via discount campaigns, social affiliates (vloggers and bloggers), and general word-of-mouth. It’s hard to say whether the US resale market will fragment between a number of services or whether another behemoth like Ebay will arrise from the ashes of the others as Mercari has already successfully done in Japan.