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| Naspers’ CEO, Koos Bekker |
South African Media Giant, Naspers has agreed to merge its two classifieds companies (Slando.ru and OLX.ru) with rival Avito.ru to create the third largest Classifieds company (Avito) in the world. According to Financial Times, this deal is worth $570 million setting the stage for consolidation in Russia’s internet sector. (The top two classifieds companies are Craigslist.org of the US and 58.com in China.
As part of the deal, Naspers will also invest $50 million in cash into Avito, giving it an 18.6 percent stake in the newly created group. Other investors include Kinnevik Investments and Vostok Nafta, both Swedish investment funds, Northzone Ventures.
Avito, which launched in 2007, is now expected to hold 25 percent share of the Russian classified market in terms of traffic and 15 percent share in terms of revenue. Last year the company generated $30 million in sales. Now that it has secured a large and stable user base, the company plans to start focusing on revenue generated from users and advertisers. The Web site currently has 140,000 users listing items each day, 40,000 of whom have never used the Web site before.
In order for Avito to boost its revenue, it needs to have more sales coming from professional sellers who set up “stalls” to sell used goods on the site. About 4,000 small businesses currently pay for that kind of service, while it is free for consumers to list an item (they can pay for extras such as highlighted ads or more prominent search results).
