Jiji Acquires Cars45: Expanding Beyond Online Classifieds

The Shift from Classifieds to Transactional Marketplaces

Traditionally viewed as innovative platforms, classifieds are increasingly being superseded by transactional marketplaces. However, certain classifieds platforms in Western countries, such as eBay, have successfully adapted over time, now facing competition from businesses operating under both models.

This transition is also occurring in Africa, particularly for classifieds businesses that have remained viable. Jiji, a leading classifieds marketplace in Africa, exemplifies this trend. The company has announced the acquisition of transactional car marketplace Cars45 for an undisclosed sum.

A Complex Ownership History of Cars45

This acquisition is noteworthy for several reasons. Before delving into those, it’s important to clarify Cars45’s ownership changes over the past three years, as tracking them may have become difficult.

In 2017, Cars45 secured $5 million in funding from Frontier Car Group (FCG), a Berlin-based company specializing in used-car marketplaces in emerging markets. This investment established FCG as the majority shareholder and parent company of the Nigerian car business.

Subsequently, in 2019, FCG received a $400 million investment from OLX Group, a division of Prosus, the Netherlands-based holding company of South African tech conglomerate Naspers. This valued FCG at $700 million, with OLX Group gaining a controlling interest. In 2020, OLX Group, through its OLX Autos brand, completed the acquisition of Cars45 from FCG.

OLX Autos discontinued FCG’s operations in Berlin earlier this year, but retained control of Cars45 alongside CarFirst in Pakistan and WeBuyAnyCar in the U.S. However, a company announcement indicated a strategic shift towards Asia and Latin America, suggesting a potential sale of Cars45. Today’s announcement confirms this, indicating OLX Group may be divesting from most of its African ventures, with the exception of South Africa. OLX Group has not yet responded to a request for comment from TechCrunch.

Previous Collaboration Between Jiji and OLX

This isn’t the first instance of business dealings between Jiji and OLX. In 2019, the Naspers-owned online marketplace transferred its assets in Nigeria, Ghana, Kenya, Tanzania, and Uganda to the seven-year-old classifieds platform. Consequently, Jiji now boasts 10 million unique monthly visitors and 3 million active listings, according to company data.

Why This Acquisition Matters

According to Jiji co-founder and board member Vladimir Mnogoletniy, vehicle listings represent the second most popular category on Jiji’s platform. He states this category accounts for over $3 billion in listings, out of a total platform value exceeding $10 billion – with real estate accounting for approximately $7 billion. He further asserts that Jiji holds leading market positions and is potentially the largest e-commerce company in Africa by GMV.

The acquisition is expected to facilitate growth within the vehicle category. Cars45’s operations in Nigeria, Ghana, and Kenya will be integrated with Jiji, as the classifieds marketplace aims to strengthen its position in the automotive sector. Moreover, the acquisition is intended to address trust and safety concerns that have occasionally affected Jiji, offering a distinct car-buying and selling experience through a transactional model. Cars45 users will also benefit from Jiji’s strong presence in the online classifieds space.

Jiji co-founder and CEO Anton Volyansky explained that integrating the platforms will provide benefits for both entities. He highlighted the convenience for sellers to utilize both marketplace and auction models, creating a streamlined selling process.

The Value of Cars45’s Inspection Network

Jiji CFO David Ojo emphasized Cars45’s network of inspection centers as a key asset. These centers conduct comprehensive inspections, evaluating vehicles based on over 200 parameters. Unlike classifieds marketplaces with often inadequate verification processes, transactional models like Cars45 provide quality checks and detailed reports on a vehicle’s condition, utilizing extensive databases.

This marks Jiji’s first venture into a business model beyond its traditional classifieds approach, which has proven profitable for the company. Volyansky describes this as a significant step towards shaping the company’s future.

Future Outlook and Competition

However, the future will present competitive challenges. Jiji currently faces regional competition from Swiss-owned ROAM and Jumia Deals, as well as horizontal competition from Autochek. Volyansky believes the Cars45 acquisition may be the first of several transactional marketplace acquisitions, differentiating Jiji from its competitors.

He stated that while opportunities exist within the classifieds sector, Jiji already holds a leading position in Africa. The company’s primary focus will be on acquiring businesses similar to Cars45, leveraging its classifieds leadership to gain exposure to transactional marketplaces. The strategy centers on acquiring complementary business models.

Cars45 CEO Soumobroto Ganguly commented, “We are proud to have built a trusted buying and selling experience in autos. It makes sense to combine online and offline expertise. Merging with Jiji is aimed at creating a new kind of automotive retail experience for users in Africa. We are confident of jointly building an African Champion in the O2O Automotive Sector. Together we look forward to making transactions transparent and convenient for our customers, dealers and franchisees across all our current and future markets.”