Naspers profits from Russian classifieds website purchase
by Ilya Khrennikov,
2016-03-16 05:50:53.0
MOSCOW — Naspers spent $1.2bn to gain control of Russia’s largest classifieds website last year. That hefty bet in an economy mired in recession is paying off as consumers buy more second-hand clothes, pets, and used cars on Avito.ru, boosting the site’s sales 55% last year.
Valued at $2.4bn in the Naspers deal, Avito would be Russia’s third-largest internet company by capitalisation if it were listed, after social-networks operator Mail.ru Group and search engine Yandex.
Last year, its sales grew the fastest of the three, as Russia’s oil-price-induced economic woes offer support for the business model.
"The number of consumer-to-consumer deals is surging during an economic crisis — we prefer to sell something that we would’ve normally thrown out, or to buy a second-hand item instead of a new one," said Fedor Virin, a partner at Moscow-based Data Insight.
The number of listings at Avito has increased 43% since March 2014, when the rouble started a near-50% plunge against the dollar, as geopolitical tensions over Ukraine and lower oil prices sent the Russian economy into a tailspin. Women’s clothing and used iPhones were the items most in demand on Avito recently, according to the company.
In the quarter ended-December 2015, Avito’s sales rose 70% to 2.1-billion roubles ($30m). Adjusted earnings before interest, tax, depreciation and amortisation rose 86% to 908-million roubles.
Jonas Nordlander and Filip Engelbert founded Avito in 2007 as a clone of eBay. They switched the business model to one more similar to classified advertisements website Craigslist after discovering that Russians, at least at the time, did not like auctions or making online payments. Avito has since become a one-stop site for second-hand items, house listings, used cars, and online jobs. It also helps connect local service providers, such as painters, plumbers, and therapists with customers.
Avito has expanded despite local competition, and partly by acquisitions. Naspers merged its Russian classifieds operations into larger rival Avito in 2013 in exchange for a minority stake, and last year, boosted its ownership to just less than 68%.
Vostok New Ventures kept its 13.3%, while Mr Nordlander and Mr Engelbert own a combined 10%, and private-equity firm Baring Vostok controls part of the rest.
With TV ads asking Russians "How much is your mess worth?" Avito has tried to get consumers accustomed to the idea of garage sales, and has sought to raise brand awareness across the country of about 140-million. While Avito charged users who wanted to promote their ads to the top of the page starting in 2012, basic listings were free until last year.
It is an approach that has allowed Avito to pass the former market leader Iz ruk v ruki, according to Mr Virin.
Avito had 30-million unique visitors in January, according to researcher TNS. To better monetise this audience, the site has gradually started introducing listing fees.
Bloomberg
Picture: THINKSTOCK
MOSCOW — Naspers spent $1.2bn to gain control of Russia’s largest classifieds website last year. That hefty bet in an economy mired in recession is paying off as consumers buy more second-hand clothes, pets, and used cars on Avito.ru, boosting the site’s sales 55% last year.
Valued at $2.4bn in the Naspers deal, Avito would be Russia’s third-largest internet company by capitalisation if it were listed, after social-networks operator Mail.ru Group and search engine Yandex.
Last year, its sales grew the fastest of the three, as Russia’s oil-price-induced economic woes offer support for the business model.
"The number of consumer-to-consumer deals is surging during an economic crisis — we prefer to sell something that we would’ve normally thrown out, or to buy a second-hand item instead of a new one," said Fedor Virin, a partner at Moscow-based Data Insight.
The number of listings at Avito has increased 43% since March 2014, when the rouble started a near-50% plunge against the dollar, as geopolitical tensions over Ukraine and lower oil prices sent the Russian economy into a tailspin. Women’s clothing and used iPhones were the items most in demand on Avito recently, according to the company.
In the quarter ended-December 2015, Avito’s sales rose 70% to 2.1-billion roubles ($30m). Adjusted earnings before interest, tax, depreciation and amortisation rose 86% to 908-million roubles.
Jonas Nordlander and Filip Engelbert founded Avito in 2007 as a clone of eBay. They switched the business model to one more similar to classified advertisements website Craigslist after discovering that Russians, at least at the time, did not like auctions or making online payments. Avito has since become a one-stop site for second-hand items, house listings, used cars, and online jobs. It also helps connect local service providers, such as painters, plumbers, and therapists with customers.
Avito has expanded despite local competition, and partly by acquisitions. Naspers merged its Russian classifieds operations into larger rival Avito in 2013 in exchange for a minority stake, and last year, boosted its ownership to just less than 68%.
Vostok New Ventures kept its 13.3%, while Mr Nordlander and Mr Engelbert own a combined 10%, and private-equity firm Baring Vostok controls part of the rest.
With TV ads asking Russians "How much is your mess worth?" Avito has tried to get consumers accustomed to the idea of garage sales, and has sought to raise brand awareness across the country of about 140-million. While Avito charged users who wanted to promote their ads to the top of the page starting in 2012, basic listings were free until last year.
It is an approach that has allowed Avito to pass the former market leader Iz ruk v ruki, according to Mr Virin.
Avito had 30-million unique visitors in January, according to researcher TNS. To better monetise this audience, the site has gradually started introducing listing fees.
Bloomberg
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