Back in 1995 Craig Newmark had a revolutionary idea. Why not use this new thing called the internet to launch an email distribution list? Inspired by friendly social sites like WELL, MindVox and Usene, Newman used his email list to inform people in the San Francisco Bay area about upcoming local events. Word of mouth quickly spread and the number of subscribers grew unexpectedly. Eventually, people began using the list for non-event postings. By 1996, craigslist.org went live.
Within its first 5 years, Craigslist expanded to 14 cities in North America. As more categories and cities were added, Newmark left his job as a software engineer to work at the site full-time. Today, Craigslist is in over 700 “cities” in 70 countries with over 50 billion page views per month, putting it in 37th place overall among web sites worldwide and 10th overall among web sites in the United States.
Throughout the years, people have found ridiculous bargains, employment, and a great way to get rid of items taking up space in their homes.
But, for all of its potential and good, is the site actually killing your business? Here’s how that may be the case.
Scams
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The internet is no stranger to scams. It happens on a daily basis. For most of us, internet scams have become so frequent that we’re usually cautious when something sounds to good to be true. Unfortunately, when you visit a well-known site, you expect it to be scam-free. That’s not the case with Craigslist.
If you’ve ever posted on the site, you most likely received some sort of spam as a response. That’s a common occurrence that you simply discard. However, for some businesses, Craigslist scams can be harmful.
For example, in March 2011, a car dealership in Texas had to restore its reputation thanks to a scam on Craigslist. By manipulating an ad template used by the dealership, the scammer placed fake ads on Craigslist offering unbelievable deals on cars because of a “family emergency”. The dealership had to deal with the blow back and work to win back the trust of customers who believed they were the ones perpetuating the scheme.
This type of scam can really damage your brand’s reputation. Instead of focusing on actual sales and improving you business, you could be forced to do damage control for months to repair your brand.
Lawsuits
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Despite its appearance of being a “do-gooder” Craigslist has a nasty history of suing or issuing cease-and-desist letters to a number of startups. As noted on the New York Times technology blog in 2012, Craigslist “has dug an effective moat by cultivating an exaggerated image of ‘doing good’ that keeps its customers loyal, while behind the scenes, it bullies any rivals that come near and it stifles innovation”.
This means that any company wanting to improve on the Craigslist concept probably won’t have the opportunity. It seems that Newmark and company don’t want any competition. This doesn’t just harm innovating start-ups, it could also prevent future sales for your business.
Instead of placing ads, products, or services in a number of different sites, you’re only limited to just one. Wouldn’t it be better to reach as many people as possible? Casting a wider net through several sites could catch more ad-revenue or sales.
Advertising
Image Credit: Samantha Marx
It’s no big secret that Craigslist has harmed local newspapers.This is because local newspapers have lost about $5 billion dollars in potential revenue from classifieds, according to a study in August 2013. Since newspapers can’t compete with the free postings on Craigslist, there was a 20 percent drop in ad rates. There are two reasons why this could be detrimental to your business.
The most obvious reason is increased rates to place an ad in a newspaper. Less ad sales means the price per ad goes up. This additional expense may not be in your budget and you may be forced to stop advertising in newspapers, creating a vicious cycle.
In many cities, Craigslist doesn’t allow you to customize an ad that uses third-party HTML tags in listings. This means your ad will no longer stand out because it won’t have have brand recognition (no logos, for example), instead showing only low resolution images.
In addition, you also have to take the time to experiment with your ads on Craigslist. This means finding out the right phrases and keywords to attract visits to your post. And, you need to consider the sales a Craigslist ad pulls in. It may not be worth your time to place an ad on Craigslist.
Why Buy Something New?
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Yes, there has always been a way for people to save money by purchasing a used product. However, the popularity of Craigslist has made it much easier. Users have been able to find all sorts of items and services via Craigslist for years. They don’t have to go anywhere else to find an apartment, new kitchen table, working grill, or whatever else they may want or need. With an almost endless supply of listings, why purchase something new?
Obviously, Craigslist hasn’t closed the doors on every shop on ‘Main Street’, but it’s helped create a new type of economy: one where trades, barters, and selling used items to bargain hunters are the norm. This must have had an impact on local businesses who were profiting from good American throw-away mentality. It’s a brave new world of reselling, and that could weaken your sales.
Are there any other reasons that you can think of on how Craigslist is killing you business? If so, tell us how! Or, have you found Craigslist has helped your business?
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