Craigslist and its Business Model

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Case Details:

Case Code : BSTR340
Case Length : 26 Pages
Period : 1995-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : Craigslist, Inc.
Industry : Online Classifieds
Countries : USA; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

Craigslist was founded by Newmark in 1995. Newmark, who worked as a systems security consultant for Charles Schwab Corporation (Schwab) in San Francisco, observed that his colleagues used online communities such as Usenet and the WELL to socialize as well as help each other...

The "No-Frills" Site

As of May 2009, Craigslist was the ninth most popular site in the US, according to Alexa. It was one of the leading online brands in the US online classifieds market and was considered as an online community where users could exchange information, buy or sell items, seek jobs, or find friends...

Low-Cost Business Model

Craigslist followed a low-cost business model, the main objective of which was to satisfy users and provide a service based on trust and simplicity. According to the company, its goal was not to maximize profits but to offer localized service which was free as well as convenient for users...

Non-Commercial Aspects

According to the promoters, Craigslist's business was non-commercial in nature and Newmark perceived it to be a community-based model rather than a for profit business. Newmark who had founded Craigslist as a hobby did not focus on profits as his aim was to serve the community by providing a free service...

Competitors

In the era of the Internet, many people turned to online classified ads instead of to newspapers to find the information they needed. With the online classifieds market booming, Craigslist had to face some tough competition from some major Internet giants as well as smaller, local, and regional players (Refer to Exhibit V for competitors of Craigslist)...

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