In this blog, we will discuss “how Gumtree makes money”, We will analyze how Gumtree functions, How the company came about, the history of Gumtree, and most importantly how Gumtree generates revenue. If you want to know the above, then keep on reading.

How does gumtree make money?

Gumtree makes money by allowing users to purchase and sell a wide range of items and services. Customers can shop in a variety of categories, including the ones listed below:

• Automobiles and other forms of motorized transportation

• Real estate for rent or sale

Gumtree generates money by charging merchants transaction fees. It does not gain possession of the things, and it is completely the seller’s responsibility to transport them. Stockholders gain from this strategy since it allows them to boost their earnings.

Furthermore, Gumtree has three strongholds. Business services, sports items, leisure goods, and automobiles are among them. The money earned by automobiles is divided with Gumtree in a proportion that varies depending on the type of vehicle. Because the employment section is a paid service, it provides revenue for Gumtree as well.

Furthermore, sponsored links and highlighted adverts greatly add to Gumtree’s revenue generation. Many companies want to be noticed; therefore they invest in marketing to attract qualified visitors. Because of its large user base, Gumtree is an excellent arena for this brand (buyers and sellers).

Finally, Gumtree has made it easier to share consumer experiences through social media channels such as Twitter, Facebook, Pinterest, Google Plus, and email. These platforms aid in the generation of visits to a website via word of mouth.

What is Gumtree?

Gumtree is a British online classified ad and community website established in Richmond, London, with its headquarters in Hotham House. Classified ads are either free or paid depending on the product category and the local market. As of November 2010, it was the most popular classified site in the United Kingdom, with 14.8 million unique visitors each month, according to a traffic audit done at that time.

How Does Gumtree Work?

As an instance, here’s how it works on Gumtree: The first step in connecting to the platform is to create a username and password for yourself. The user may afterward just browse through the different categories that are supplied to get relevant information.

If a customer is interested in purchasing a product or service from the owner and has questions regarding the product’s availability or other details, the consumer should contact the owner.

Payments and shipments are settled outside of the site, at a separate location. In accordance with the nature and quantity of the product (for example, a book vs a car), either pay in cash at the time of the meeting in person or by wire transfer A description, a few photographs, the location, and the asking price is all that is necessary if someone wants to sell something on Gumtree. That’s all.

Gumtree Company History

Michael Pennington and Simon Crookall established Gumtree in London in the year 2000. Pennington and Crookall worked for Hambros Bank, a subsidiary of Société Générale. Among the places they were assigned to work were Australia and Hong Kong. Sadly, many people were plagued by loneliness and failed to form social networks. Renting an apartment or getting a new phone were also difficult options. As a result of these terrible transactions, Gumtree was established.

During the dot-com boom of the late 1990s, they returned to London. When they realized there was a potential to connect others with similar needs, they jumped on it. Gumtree went public in March 2000 after months of preparing. One million Australians, New Zealanders, and South African residents in the United Kingdom were their target audience for Gumtree advertising.

In this way, the platform’s name came to be. To include all three distinct ethnic groups, they needed a title that could be used for all three countries. When the dot-com mania burst just a few weeks later, investors lost virtually everything they had invested. Fortunately, the company’s founders had set aside enough money to cover the company’s expenses while they worked.

Due to the lack of outside funding, the company’s founders were forced to think outside the box to attract website visitors. Because of metro advertising, they gained hundreds of new clients. An efficient method of promoting their product was for people to notice the ad on their way to work. Stickers and pamphlets were also placed in London’s public bathrooms and prominent thoroughfares by the organization.

Three years after its launch, Gumtree has become a household name in the United Kingdom, well beyond the initial target demographic of its developers. Companies that post job openings in the marketplace might profit from this strategy. An additional five countries were added a year later: Scots and Irish nationals. Because of its quick rise, it became a household name throughout the world.

After the internal expansion, eBay got in touch with the founders towards the end of 2004. They first resisted the idea of selling, but as the talk progressed, they realized that it was in everyone’s best interest to do so. Kijiji, eBay’s in-house corporate organization, had already been established at the time (which means village in Swahili). Because of their investment in Craigslist, the US classifieds giant, the marketplace gained direct knowledge of the appeal of an established advertisements company. Marktplaats, a Dutch online marketplace, was also owned by the company.

Gumtree was purchased by eBay in May 2005 for an unknown fee. They quit a month after they were purchased. On the other hand, don’t expect to see them sipping drinks on the sand anytime soon. A month after the acquisition, Slando.com was launched. In the same vein as Gumtree, Slendo was a Russian-language classifieds site. In October 2011, they sold Slendo to Naspers for $1 billion.

However, Gumtree has been steadily expanding. In February and December of 2012, it released apps for iOS and Android. Apps for iPad were published in September of this year.

It also overtook news24.com to become South Africa’s most popular website during that month. Having spent 15 years working for eBay, it was time for a shift. For $9.2 billion in late 2020, Adevinta, a Norwegian classified site operator, will acquire eBay’s classifieds division from eBay.

When Adevinta started, it was just an ordinary classified ad website. British competition watchdog CMA has launched a probe into the purchase, which is a travesty. Other nations soon followed suit. In the end, the deal was finalized on July 1, 2021, which was great news. More than $13 billion was paid by Adevinta in cash and 540 million shares of eBay stock. Austria was the last country to give the go-ahead for the project. eBay will liquidate its current interests over the next 18 months. Since then, eBay has owned 44 percent of Adevinta’s stock and has a 33.33% stake in its vote.

Finally, Adevinta agreed to sell off some of its assets to remain in the running of the business. Earlier this year, Shpock was purchased by Russmedia Equity Partners, an online markets and SaaS hedge fund. Gumtree’s new look, along with a fresh logo, went online on January 7th.

How Does Gumtree Make Money?

Listing Fees

Most of Gumtree’s revenue comes from the listing fees it charges users for listing a good or service on the network. Users are generally free to list goods in most categories. However, a few do charge a listing fee, such as:

• Jetskis and boats

• property investment.

• Jobs

• Services Available for Hire

• Automobiles and other vehicles (except accessories and parts)

The fee is decided by the category as well as the package that has been picked. Gumtree offers three different listing levels: Plus, Featured, and Premium. Each level has its own set of benefits. Highlighted backdrops, the ability to publish more than 10 photographs, and top advertising (listings that display above organic/non-paid listings) are all examples of promotional elements.

Customers may also opt to purchase promotional items at their own expense. For example, a highlighted background advertisement that runs for seven days costs around £3.99, but a top advertisement that runs for seven days costs around £10.99. Promotional packages, as one might imagine, increase the exposure of a listing and, as a result, the likelihood of it being purchased. Putting up five photographs in a category, such as vehicles or real estate, may not be enough to generate sufficient demand.

Banner Ads

Gumtree generates revenue on its site through banner adverts and sponsored links. These advertisements appear in the search results naturally and are typically relevant to the category being searched. Gumtree earns money when a user views or clicks on one of these advertisements (i.e., an impression). With tens of millions of monthly visits, it almost certainly earns a large amount of money from these advertisements.

Referral Fees

As a final revenue stream, Gumtree receives fees from insurance companies advertising on its marketplace. Through cooperation with the BGL Group Compare the Market Limited, customers can acquire pet and automobile insurance (for cars, vans, or bikes).

Users that acquire insurance through a Gumtree link are paid for their actions. It makes no mention of the compensation it receives from referrals. In any event, it is logical to assume that insurance is of substantial importance.

In this blog, we answered the question “How does Gumtree make money”. We found out that Gum tree makes money by allowing users to purchase and sell a wide range of items and services. Customers can shop in a variety of categories. 

Frequently Asked Questions: FAQ How does Gumtree make money

Is it safe to give your bank details on Gumtree?

If you have a Gumtree account, you may receive a text asking for personal information such as passwords or bank account information. Delete it right away because Gumtree will never email you asking this question.

Does Gumtree have couriers?

Courier Services | Services | Gumtree.

Do I have to pay to sell on Gumtree?

Gumtree is normally free to use, however, we may charge a fee for specific services. If you utilize a service that charges a fee, you will be able to review and accept terms that will be fully revealed when you post your ad. … When the Gumtree fees are due, you are responsible for paying them.

Does Gumtree take a percentage?

Gumtree is normally free to use, however, we may charge a fee for specific services. If you utilize a service that charges a fee, you will be able to review and accept terms that will be fully revealed when you post your ad. Our fees are given in Pounds Sterling and are subject to change at any time.

Why can I see my Gumtree ad?

Your ad has been removed because it is against policy.

How do I delete expired ads on Gumtree?

After you’ve logged in, go to the “My Gumtree” option at the top of any Gumtree page. Then, on the “My Ads” tab, you’ll see options to edit, delete, or promote your ad.

References

Samuel. (2021, October 19). How Does Gumtree Make Money? Retrieved from How I Got The Job: https://howigotjob.com/business-model/how-does-gumtree-make-money/

What was missing from this post which could have made it better?

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.