Avito.ru merges with rivals, becomes 3rd classifieds site in the world

12 Mar, 2013

I wrote last week about the free classifieds market and how huge it is. If you wanted a reminder just how huge: Avito.ru, the biggest Russian free classifieds site, just announced a merger with Slando.ru and OLX.ru, two smaller sites owned by South African player Naspers. The deal is worth over $ 570 million, reports the FT.

The two smaller sites will be incorporated in the Avito brand, creating the world’s third largest free classifieds site after Craigslist and Chinese 58.com. Avito will command about a quarter of the Russian classifieds market in terms of traffic, for 15 percent of the revenue in that market.

Avito was started in 2007 by the Tradera group, and Avito’s executive team and part owners Filip Engelbert (photo) and Jonas Nordlander have been on board since 2007, when they were invited by Swedish investment company Vostok Nafta, who had bought a stake in Avito.

Nowadays, Avito gets 140 000 new listings every day, for more than one million unique visitors per day. One in five used cars in Russia is sold through the site, as well as a huge number of pets (1.9 dogs are listed every minute). Now that the site is clearly the number one classifieds site, the team will start to focus on generating revenue, Engelbert said. In 2012, it generated about $ 30 million in revenue.

Engelbert and Nordlander’s learning curve of doing business in Russia was at times steep. The first thing they had to do after accepting the job to run Avito was fire the general director of the company, who promptly took off with the company car, as well as all the brand names and the URLs, all of which they already paid for when they bought the company.

The manager then proceeded to extort thousands of dollars from them to get their property back. Engelbert blames the situation partly on his ‘Swedish’ approach to firing, which he says doesn’t work in Russia. “I fire people differently now,” says Engelbert in a talk to the Swedisch School of Entrepreneurship (see video below). It took them more than two years to get the dispute through the Russian courts and get the car back. “I actually drove it for a week, but decided it was bad karma so I sold it,” Engelbert told the FT later.

The video of Engelberts talk is well worth a watch if you’re interested in doing business in Russia. It’s an interesting and candid interview about how he started, fired people, was hit by the kriziz and ultimately succeeded. He also warns entrepreneurs that people will constantly tell you that something that is taken for granted in the West can simply not work in Russia.

“People will tell you every day that your idea won’t work, because “this iz Russia”,” he says. “Use it as a reverse indicator, because “what works in the West (like Craigslist or Blocket) will work in the East”.

It will just be a lot more work. And you need investors who know that in Russia, “shit happens”.

[FT, FT, GoalEurope][photo: still from SSES video]

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About the author

Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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