Craig_Newmark,_2006
Entrepreneur

How Craigslist Is Killing Your Business

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

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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?

 

Featured Image Credit: Wikipedia

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Just a typical guy that enjoys an ice-cold beer, pizza, sports and music. Since venturing into the blogosphere many years ago to discuss his favorite tunes, Al has been known to write for online publications by Alpha Brand Media, such as EveryGuyed and Search Engine Journal, to discuss everything and anything that matters.

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7 thoughts on “How Craigslist Is Killing Your Business

  1. In all honesty, I don’t think Craigslist is as serious a perpetrator as a review site like Yelp is for businesses. Craigslist already has a reputation for being a skeezy site, so anything on there lacks credibility, including its ads.

    Yelp, on the other hand, still is viewed as a trusted source in the public eye. They do worse things than control how your ads look. In fact, reports show that they extort businesses with bad reviews for advertising revenue. They hide the good reviews about your business in their “spam filter” until you pay up.

    I think that’s a lot worse than anything Craigslist does currently.

    1. James, Yelp should not be viewed as a “Trusted Source”. Many businesses feel that if they don’t pay Yelp, then Yelp will not show their positive reviews.
      So, I’m not sure that you can trust a site that does this.

  2. Albert,

    In true, “trust me , I’m lying” (Ryan Holiday) fashion, you’ve managed to craft a headline engineered for clicks.

    Unfortunately this is where the value and creativity stopped. Meaning the article is silly.

    Yes, Craigslist disrupted the classified advertising Industry. Just as electricity disrupted the candle industry.

    Craigslist sends nasty letters when companies violate trademark. That’s correct. And?

    Craigslist provides a place for users to sell things, repurposing and recycling goods, preserving resources and avoiding consumerism….

    Wait, I get it: after re-reading this article I have to conclude you were joking. I hope.

    Aaron

  3. +1 for Aaron.
    Non sense article.
    If you start criticizing all major website for their impact on offline stuff, you better be ready to have a lot to do!
    CL helped me recruit people here in Manila. More than LinkedIn. True, quality is lower, but well, your job to judge.
    CL makes it easier for millions to post ads. Is that bad?

  4. A very interesting viewpoint none the less. I don’t think every business is affected by Craigslist (our business is press release service, which we have no fall out from), however I can see how it could be affecting classified. Maybe. Does one person look at classified’s from a traditional News Paper that has been in business for over 75 years in a different light than they would a posting on Craigslist? I don’t know the answer, but…

    Things are changing so swiftly, it is tough to keep up.

    Great view points none the less which really get you thinking…