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Craigslist competitor Letgo tried to engage its rival OfferUp in merger talks

The two are battling Craigslist and Facebook in local commerce.

The Letgo app on a mobile screen held in a hand, as seen in one of the startup’s TV ads.
The Letgo app as seen in one of the startup’s TV ads.
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

One of the startups trying to unseat Craigslist as the U.S. leader in online local commerce tried to engage one of its heavily funded rivals in merger talks, multiple sources told Recode.

Letgo, which counts the South African internet giant Naspers as its largest investor, attempted this year to interest Seattle-based OfferUp in a merger, these people said.

It is not clear if the attempts resulted in any significant talks. In a statement, a Letgo spokesman said, “The company is not engaged in merger talks” — note the present tense. An OfferUp spokesperson declined to comment.

But in a conversation with Recode in early December, Naspers Classifieds CEO Martin Scheepbouwer would not dismiss a hypothetical merger with OfferUp, noting a long list of countries where Naspers Classifieds’ companies have executed them successfully.

“[A]t this stage, we are focused on execution, on growing the user base, to improvements in product and technology and with targeted marketing, which is much lower than it used to be,” he said. “But at the same time, if an opportunity arises to merge with OfferUp, we’ll look at it.”

“It’s kind of difficult to plan,” he added. “A merger takes two to tango and it might never happen. It might happen in a few years. So we need a standalone business case, which we have.”

Both Letgo and OfferUp are going after a void on mobile left by Craigslist, which dominates the online classifieds business in the U.S. but does not have its own app.

Users of Letgo and OfferUp can post listings for free for a wide range of products they want to sell to people in their area -- from used cars to furniture to second-hand clothing. The focus of the user experience of both apps is a stream of product photos that is easy to scroll through.

Both have raised considerable investments as they battle not only each other and Craigslist but also Facebook, which launched a competitive Marketplace section last October.

OfferUp has raised more than $200 million, but has recently had trouble raising a new round of $100 million, according to a recent report from The Information.

Letgo has raised $375 million in investments, in part to fuel large marketing campaigns to try to gain market share among consumers. The company is run by execs including Alec Oxenford, who previously sold OLX, an online classifieds powerhouse in emerging markets, to Naspers.

Both apps are currently ranked in the Top 10 among free shopping apps for Android and in the Top 15 for iPhone.

Still, neither company has yet built large businesses compared to the investment they’ve taken on. OfferUp currently generates revenue per month in the single-digit millions, according to a person familiar with the company’s finances. One of the ways the company makes money is by charging users to promote items that haven’t yet sold back to the top of the feed.

Letgo’s revenue could not be learned, but Naspers executive Scheepbouwer said the company is still mainly focused on building an audience and is only doing some “light monetization” — which also includes charging fees to boost listings higher in the feed. He said the app will eventually focus on making money from “professional sellers.”

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