What does OLX do? OLX is a “horizontal classified” company that allows folks to post free online ads to sell services and goods of all kinds—from electronics and furniture to bikes and cars. Unlike traditional classifieds where companies advertise their wares, OLX is primarily focused on the C2C (Consumer to Consumer) space where individuals sell pre-owned household items and vehicles. OLX India also serves as an online marketplace for jobs and real estate. Originally founded in Argentina in 2006, the company has operations in more than 45 countries today and has a footprint that serves more than 200 million users every month. Naspers, the South African media conglomerate, owns 95% of OLX.
Olx
Investors
Naspers
Competitors
Quikr
What has OLX been up to?
OLX now claims to have more than 80% of the market share in the C2C classifieds space in India and is engaged in an attritional battle with its direct competitor, Quikr. OLX’s sweet spots are the pre-owned cars and pre-owned bikes categories where it claims to have a 70% share of the market. And make no mistake about it, the market is huge—the company itself believes that the value of unused goods stored away in Indian homes is Rs. 79,000 crore. As is inevitable, such a large potential market attracts multiple companies angling for a piece of the pie. Quikr, the Tiger Global-funded Indian Unicorn, has been spending millions of dollars every month attempting to capture the market and stave off OLX. Amazon’s recent entry in the space brings forth new competitive challenges to the incumbents. OLX has a second string to its bow in the form of services such as jobs and real estate.
Results:
Rs 8 crore: This was OLX’s profit after tax for the year ending March 2017. One of the few e-commerce companies in India that actually pays income tax.
Rs 92.6 crore: The revenue OLX made from its operations in the year ending March 2017. The figure is a 58% increase over the previous year.
Rs 76 crore: The revenue OLX India made by providing Business Support Services (marketing, customer support & other services) to its holding company, OLX India BV. Even though the company counts this under operating revenue, the fact of the matter is that this is a related party transaction that has little to do with the core market-facing endeavours of the company.
Rs 16.6 crore: How much OLX made from subscription and advertising services. This figure represents the “true” operational revenue of the company. While this sum is admittedly a lot smaller than the nearly Rs 100 crore topline mentioned above, the company’s progress can be measured by the fact that the corresponding figure for the previous year was just Rs 68 lakhs, representing an increase of nearly 25X.
Rs 56 crore: The amount OLX spent on employee benefits including salaries, a 53% increase over the previous year’s figure.
Rs 19.7 crore: This is how much OLX spent on other expenses, including a surprisingly low figure of Rs 69 lakh on advertising and business promotion. This sum is probably lower than the daily marketing budget of many other e-commerce firms in India.
Rs 8.5 lakh: OLX’s prescribed CSR expenditure (2% of average net profit for last three financial years)
Zero: OLX’s actual CSR expenditure – the company apparently “could not identify a suitable organisation for this purpose” and intends to spend the prescribed amount in the next financial year.
Where is the company headed?
In the past year, OLX has improved its business traction and metrics steadily but not spectacularly. Despite the headlines touting OLX’s profitability, the company still has a long way to achieve operational profitability in its core subscription and advertising business lines. The recent announcement that OLX India’s long-time CEO, Amarjit Singh Batra will be moving out of OLX and India to Naspers means that in addition to external market and competitive challenges, the company has to deal with internal organisational and leadership issues too
