As you can see from my article on The Evolution of Marketplaces, Craigslist is facing a great unbundling. Startups are attacking Craigslist category by category by offering a better user experience in a safer environment. They are successfully taking share from Craigslist despite the fact that they charge and that Craigslist is free. Moreover, by not addressing a few fundamental issues, Craigslist is failing in its stated mission of providing a free public service to the community.

All that said Craigslist has tremendous strengths. The site still has extraordinary liquidity and strong network effects. Despite being out of date, the site has three great things going for it from a product perspective: it’s simple, super-fast and mostly free.

Despite the obvious improvements that Craigslist could do to its user interface, this should actually not be its first priority. First and foremost Craigslist should focus on content quality. Great ads are the lifeblood of the business. Second Craigslist should focus on traffic quality and make sure the buyers are legitimate. Everything else comes after that.

Here are some suggested changes in order of priority:

1. Pre-moderate all the ads:

The number one complaint that potential buyers (and I use the word “buyer” liberally to mean anyone who is looking at ads) have on Craigslist is that there are lots of fake, spam and scam ads. Worse because it takes a bit of time for the ads to be moderated by the community and for the site to remove the ads, the very first ads we see on the site are the ones with the lowest quality or that have been deleted. This creates a terrible user experience.

The solution is to pre-moderate every ad using a combination of tools and experts per category to keep the site clean. The system automatically flags ads that are too cheap for the type of product / city it’s in for instance. It’s a lot of work, but it’s completely worth it from a user experience perspective as the visitors never see bad ads. No ad should go live without manual review.

Many sites in the world get upwards of 1 million ads per day and manage to moderate them within 30 minutes of them being posted. The moderation team also makes sure that the site stays close to its consumer to consumer roots: no ads are allowed with stock photos or promoting new items for sale. Likewise users are prevented from posting their ad repeatedly.

It’s worth noting that given that classifieds are a local or hyper-local, one of the features of the tool is to block postings from foreign countries. If a scammer from Nigeria posts an ad, he (and people from Nigeria) can see the ad, but no one else can see it.

2. Moderate replies to ads:

The number one complaints sellers (and I also use the word “seller” liberally to mean anyone who is posting ads) have on Craigslist is that there are lots of spam and scam replies to ads. There are many ways to address the issue through a combination of automatic tools and manual review.

The moderation tool should automatically block replies to ads from outside the country. It should look to the buyer as though the message has been sent, even though it’s actually not sent. Exceptions can be made for specific circumstances. For instance people in Mexico and Canada near the border with the US might be allowed to reply to ads in the US.

Likewise the tool should use the typical keyword analysis to filter spam and scam replies to ads. For instance, all replies with the words “Western Union” should never reach sellers. All replies with known scams (e.g.; “send me $50 so that I can ship you the key”) should also not be sent even though we pretend to the scammers that we send them.

3. Move personals and prostitution to another site (or close them):

Women who head households are the most important demographic for classified sites. They are the main decision maker in the purchase of cars, houses, etc. They hire household help (babysitters, cleaning ladies, caterers, etc.).

Our research indicates that these women by and large do not want to be exposed to personals and prostitution as part of their experience on a classified site. Regardless of my personal social liberal leanings, I acceded to their request on OLX and it was one of the most effective things we ever did. Removing personals dramatically increased engagement from what turned out to be our most important demographic.

Craigslist should move its personals to a separate site, e.g.; Craigsonals, or remove them altogether.

4. Offer a first class mobile experience:

The world has already gone mobile. Mobile devices account for over half of the traffic on the web on most sites. Classifieds are no exception. Around half the traffic at OLX and other classified sites is already mobile through a combination of a mobile web offering and iOS and Android apps. In some developing countries where Internet access is predominantly mobile 90% of the traffic actually comes from mobile devices. Shockingly Craigslist has neither a mobile web site, nor mobile apps.

I bet the bounce rate on Craigslist from mobile devices is much higher than from the web. Likewise engagement in terms of page views per visit, time on site, etc. is probably dramatically lower. It’s too bad because smartphones and classifieds belong together. Your phone automatically geolocates you, automating the first step of a classifieds site experience. It also makes it extremely easy to post pictures of whatever you are selling.

Craigslist should offer a compelling mobile website and mobile apps ASAP.

5. Change business model:

Craigslist makes money by charging a fee to employers who want to post job listings and brokers who want to post real estate listings in certain cities. Charging a per listing fee is not the right business model. It does decrease spam and scams, but it also decreases liquidity. Having 100% of the good content in a category is a game changer and charging even a little leads you to lose many ads. If you pre-moderate the ads and block international postings, as mentioned in the first recommendation, spam and scams are no longer an issue.

As demonstrated by countless vertical job sites, car sites and real estate sites, professionals are willing to pay to have access to classifieds sites. To the extent Craigslist wants to monetize them, it’s better to sell them a subscription package that allows them to post 100% of their inventory on the site.

Another extremely effective mechanism is to sell bump ups and featured placement. A bump-up is typically sold for a one off payment of say $1.99 for the ad to go back to the top upon purchase, or for a subscription where the ad goes back to the top of the results automatically once per day for a week. Featured ads are typically on top or to the side of the results. They are marked as such and appear in the first 2 or 3 positions of the search results of the relevant category on a rotating basis. These can be purchased by both consumers and professionals.

6. Improve the user interface:

When you talk to entrepreneurs about Craigslist, the first thing they always mention is how bad the user interface is. It can definitely be improved dramatically, but Craigslist starts with strong fundamentals as the site is already fast and simple.

That said I would love to redesign the site with a flat design on a 960 pixel grid with a 100% header and footer. The category page would include large thumbnails to help buyers decide earlier whether they want to get the ad details.

7. Add optional features:

This is much lower priority than all of the above, but Craigslist could offer a few optional services to better protect itself from disrupters. The key would be making these services optional and integrating them seamlessly such as not to impact the fundamentals of speed and simplicity.

Some of the optional features and services that come to mind:

• Allow users to display their profile and social graph to improve trust like on Airbnb
• Offer an escrow and payment solution for transactions in the for sale category
• Verticalize the site to offer best in class search in the most important verticals, especially cars, real estate and jobs

Conclusion:

Craigslist may not realize it, but it’s facing an existential threat. Granted if they do nothing their network effects will allow them to muddle along for a very long time. However, those very network effects would put them in a very strong position going forward should they choose to react and implement the 7 point strategy I outlined above. Globally the market has spoken in favor of my stated strategy: Craigslist has failed to gain traction in the countries that Schibsted or OLX have focused on despite being present there.

It’s worth pointing out that Craigslist should implement my recommendations, not in order to make more money (which they could always give to charity if they so wanted), but because it’s the right thing to do. By not providing the best site they possibly can, Craigslist is failing on its mission to provide a free public service to the community. I would love to help them make up for those failings.