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For OfferUp’s first seven years in existence, it had Craigslist in its crosshairs. Next up? Taking a shot at stealing business from eBay, as many have tried and failed to do.
OfferUp is the maker of the No. 3 most popular shopping app on Apple devices in the U.S., which up to now has resembled a virtual garage sale that connects buyers and sellers of used goods who live in the same neighborhood or city.
But the startup is now adding a shipping option to its app that it believes will broaden the catalogue of goods available to buyers and — in a potential big change — attract a new set of sellers that are businesses rather than individuals.
In a press release, the company promised that, “With shipping, OfferUp’s core local buying and selling experience does not change, but gives users the opportunity to discover more value and make their best deals.”
But the app now gives goods that are available for shipping just as much real estate as local goods, if potential buyers click on the “Ship to me” option prominently displayed at the top of the app, above the stream of product photos that depict items for sale.
So why would OfferUp spread its focus outside of local commerce when it is still battling fellow startup LetGo, as well as Craigslist and the Facebook Marketplace in that space? For one thing, the company says its customers have been asking for the option to still buy stuff that’s located further away than they want to travel for a pickup.
Following the money, however, provides some other answers. Recode reported late last year that OfferUp was generating revenue in the single-digit millions each month, mainly off promoted listings and ads from big brands.
That’s not a ton for a seven-year-old company that has raised more than $200 million in venture capital and is valued over $1 billion. Nor for a company that was, reportedly, attempting to raise a new $100 million investment last year, according to a report from The Information.
Enter the shipping feature, which allows OfferUp to court merchants as sellers that are looking for other ways to reach shoppers online that are cheaper than eBay or Amazon. OfferUp is charging them 7.9 percent per transaction, including payment fees.
EBay charges at least a 10 percent fee for most categories of items, and Amazon typically charges sellers between 8 and 17 percent, depending on the category of goods. So, at least in theory, it is possible that OfferUp can steal some of this business by charging lower fees than these competitors and by making the listing process as easy as it is currently for regular individuals using the app.
The bigger outstanding question, however, may be whether there are enough consumers willing to pay shipping fees on OfferUp that will range from around $5 on the low end to $20 on the high end for USPS delivery, depending on the size and weight of an item.
Amazon has trained more than 100 million Prime members worldwide to expect no extra fees for deliveries. And eBay sellers make millions of items available for free shipping, too.
No matter how many new sellers the shipping feature attracts, both sides of the marketplace will need to find value to give if this initiative is going to have a shot.
This article originally appeared on Recode.net.
