Could a combined LetGo and Wallapop win the war to build the mobile Craigslist?

By Abhinav Agrawal

TechCrunch reported yesterday that the local online classified apps Wallapop and LetGo are in advanced talks to merge. What is the strategic rationale behind the merge? Is the merger a good idea? Will the combined company have the wherewithal to dominate the category? To find out, we turned to SurveyMonkey Intelligence, which provides detailed usage statistic for thousands of mobile apps.

Combined entity will become the market leader in the category

The local online classifieds vertical does not have a clear winner to date and is an extremely fragmented space with several players competing for market dominance. Part of the reason for the fragmentation, is that Craigslist never developed an app of its own — a very costly mistake from an extremely cautious and product innovation averse company. In fact, the company seems to be on the decline according to TechCrunch on the web after dominating the classifieds space for so long. They eventually licensed their content out (supposedly for an upfront fee of $5000 and 10% revenue share according to Bloomberg).

A listing of the various players and backers below shows that Silicon Valley has a big stake in this merger as it will impact a number of companies backed by a dizzying number of VCs. The market leader is OfferUp with the other players clustered behind them.

There are also a number of indie players who have built apps using Craigslist data including cPro Craigslist, Mokriya, Daily for Craigslist, Posting (for Craigslist), and Cityshop — Craigslist. Most of them are small except cPro Craigslist which has ~4M monthly active users in the US on smartphones.

Market power: A combined Wallapop and Letgo, if the merger goes through, will have almost 10 million monthly active users in the United States (30% bigger than the nearest rival) and may even be strong enough to compete with offerings from the internet giants: eBay, Amazon, and Facebook.

Overlap fairly low between user bases of LetGo and Wallapop

The user bases of the two companies are also quite unique. Only about a third of Wallapop users use LetGo today so the combined entity would significantly increase in total unique users.

The two companies are also a good match from a regional perspective with LetGo stronger on the West Coast (27% of user base on the West Coast versus only 19% for Wallapop) while Wallapop is stronger on the East Coast (17% for Wallapop versus 10% for LetGo in the NorthEast).

Combined company needs significant work to catch up to the leader OfferUp

However, the combined company will have some serious work to do to catch up with OfferUp. Both Wallapop and LetGo are behind OfferUp when it comes to operational metrics such as time spent per day and days used per week.

OfferUp’s churn (opposite of retention, so lower is better) is also better than Wallapop or LetGo.

Wallapop also does not seem to be attracting as many new users as it did at the beginning of the year, but the combined company will still have a healthy lead over OfferUp in new users.

Overall, our data shows that the merger between LetGo and Wallapop will lead to a market leading player by monthly active users and will be poised to lead the category. We may also see further consolidation in the wake of the transaction, as other players like OfferUp, Mercari, Close5 etc. try to find potential partners.

Lastly, the space could get even more interesting if Craigslist finally woke up from its deep product slumber to enter the mobile space forcefully with their own authoritative app!

This post originally appeared on May 12, 2016 on the blog of SurveyMonkey Intelligence, a competitive intelligence product for mobile apps.

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