- Alec Oxenford and Fabric Grinda launched OLX in 2006
- They adopted a “Martian approach” to international expansion, launching in India, the largest available market, rather than in the United States.
OK, so you have a great start-up idea running with an innovative product and enough funding to take it to market – where do you start? For many the answer is simple: kick off in your home market. You know the customers, the laws, the culture and you have a good network to get your business up and running. In the age of the internet is this always the best approach? . . . The people at OLX don’t think so; and with this “inverted” approach which has been called the martian approach, They have built OLX into the largest online classified marketplace in world with over 11 billion page views, 200 million monthly active users, 25 million listings, and 8.5 million transactions per month.
In 2006, Alec Oxenford and his friend Fabric Grinda were looking for the next big thing to channel their energy to when they came up with OLX as a Craigslist alternative for the world outside of the United States. Where most companies launch in their home countries because that’s what they understand best, OLX started with the biggest available market: India. The company didn’t launch anything even in Alec’s home country, Argentina, until four and a half years later.
Alec says “It’s rational to believe you know local markets, but people are always the same in each country. They think the same way. They have different priorities, but they all want to progress in life and that’s what drives Internet behavior.” He believes OLX helps people progress in life by acting as a wealth creator in emerging markets, where users can easily monetize their possessions by selling them to each other.
Noteworthy also is that many successful startups don’t worry about marketing until their growth has hit a plateau, relying on cultural relevance, momentum, and public relations outreach in the early days. However, OLX invested heavily in television advertising. As Oxenford believes that adoption of the internet by more than three billion people has made television more effective as a driver of traffic to websites or apps than it was during the early dot-com period, when television advertising didn’t work well for websites.
Now, the company is in a position of strength in many of its markets, and its biggest three – India, Brazil and Poland. As Craigslist and eBay’s lasting success have shown, it’s hard to disrupt a marketplace once it has liquidity. Highlighting another one of Oxenford’s contrarian decisions, he has no desire to compete in the U.S. or other developed countries. There are so many opportunities elsewhere.
For entrepreneurs, tackling an overseas market comes with unique challenges. You need to have an inherent understanding of cultures and behaviors of your target market. You have to gain access to intimate knowledge of local markets that enables you to check your assumptions:
Infrastructure: If you are based in a western market you might be forgiven for thinking that everyone is happy signing up to a credit card-based payment system. However, the reality for many markets is that cash is still very much king. Even mobile-only companies like Uber, which has run a globally-oriented central product organization from day one, have had to adapt their payments approach in key foreign markets.
Innovation: Similarly, many western businesses still devote resources to desktop whereas many high-growth markets including India and Nigeria have leapfrogged desktop entirely – internet access is predominantly via mobile. Ironically, e-commerce players in those mobile-heavy markets are now finding that desktop is still important for converting transactions with some affluent consumers.
Interests: Cultural interests are diverse and yet not always immediately evident. In India, there is a long-held stigma against buying second-hand goods, which creates an interesting barrier to entry for consumer-to-consumer marketplaces. Knowing this, OLX is gradually reversing the stigma, particularly among younger Indians, and business is growing fast.
Success in overseas markets often comes down to leveraging solid market knowledge, understanding local intricacies, and responding to local consumer needs. We live in a globalized world, the thinking of many entrepreneurs may automatically start with their home market, but entrepreneurs who take the martian approach can seize huge hitherto inaccessible opportunities.
Who is Alec Oxenford?
- Raised in Argentina, Oxenford received a BA in Business Administration from the Pontifical Catholic University of Argentina and an MBA from Harvard University.
- Worked for the Boston Consulting Group in Madrid and Buenos Aires on projects in Argentina, Brazil, Chile, Spain, Mexico, and Venezuela
- He cofounded Ambatana Inc, deneromail.com. OLX.com and letgo – a smart-phone focused marketplace for buying and selling used goods.
- OLX has become the largest online classified marketplace in a world with over 11 billion page views, 200 million monthly active users, 25 million listings, and 8.5 million transactions per month.