Leboncoin: how far will the classifieds giant go?

Leboncoin: how far will the classifieds giant go?

This article is from Capital magazine

"Selling gym mat in very good condition, plus a 3-kilo dumbbell, ideal for sports during confinement. 6 euros." This announcement posted from Sarthe on November 1, by a certain Nat, was far from being the only one of its kind on Leboncoin. While the epidemic forced the closure of fitness rooms and Decathlon stores at the same time, more than one individual had the idea of ​​emptying their garage, and in doing so helping athletes in need. Already last May, dumbbell offers had jumped 320% compared to May 2019 on online garage sales.

Everywhere in France, sellers had secretly met at the corner of the street to sell their goods – around 80% of transactions on Leboncoin are concluded in person, and preferably disinfected. Six months before the epidemic, the site had also put online delivery and payment into service, completing the process of making it a safe reflex for confined French people… even an alternative to classic e-commerce.

Because Amazon is not the only one to profit from the crisis. After marking time during the first confinement, Leboncoin started again this summer and at the start of the school year, with a 24% growth in visits in September compared to the same month in 2019. “It was more than a catch-up “, observes Antoine Jouteau, the general manager of the group. Why ? “People need to free up purchasing power, and they do this thanks to us by consuming better, close to home, giving objects a second life.”

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Ecology, social ties, good business: here is Leboncoin more than ever planted at the crossroads of all consumer aspirations. Whether they want to change their wardrobe, furniture, house, car or job, 29 million visitors connect there every month, almost as many as on Amazon. And they post some 800,000 ads a day. Enough to feed a nice cash machine: the company accumulated 375 million euros in turnover last year, and posted a 50.2% gross margin in this third quarter of 2020… Profitability worthy of the luxury sector , which allows its Norwegian parent company, Adevinta, to expand its empire ever further by multiplying acquisitions, in car, hotel and real estate advertising, in France and internationally.

Antoine Jouteau, present almost since the beginning of the company, contemplates the progress made sitting on a sofa in his brand new premises in the Sentier district, in Paris: "We will be comfortable there for the next two or three years" , he gauges. With 1,500 employees and 250 hires per year, Leboncoin is not “a site run by 50 people and created by an old man with a cap”, as some might believe, smiles Loïs de Jorna, an entrepreneur who recently joined the company.

The site was born in 2006 on the initiative of the Norwegian group Schibsted and a subsidiary of Ouest-France, which had identified in the digitization of classified ads a promising niche. Growth has never faltered since, and has been fueled by acquisitions to diversify the activity: in 2017, Agriaffaires (sale of agricultural equipment) and For sale for rent (real estate); in 2018, Videdressing (second-hand clothes); in 2019, L'Argus (used vehicles) and Locasun (holidays). The Norwegian headquarters, which already runs sites in Spain, Italy and Brazil, is thinking even bigger. Adevinta is preparing to buy eBay Classifieds Group, the classifieds subsidiary of the American e-merchant, which manages cousins ​​of Boncoin in Germany, the United Kingdom, Canada... This marriage will allow the whole to weigh 1.8 billion euros in turnover: “It is the birth of a new giant, capable of competing with the Gafa”, predicts Antoine Jouteau.

The challenge for its teams is to preserve the familiar DNA of its service while modernizing it. The orange color, the apparent simplicity, even outdated, of the layout of the ads, all of this is in fact very studied: “Making it simple and effective is far from easy”, repeats Antoine Jouteau. Behind each ad deposit hides, for example, an artificial intelligence system designed by its developers in Paris, which automatically filters illegal or questionable content (drugs, weapons, etc.). The ease of use of the site and the free advertisements are the two elements that have ensured its success, notes the sociologist of consumption Vincent Chabault in his book “Praise of the store. Against Amazonization” (Gallimard).

The case of Boncoin “shows the error that there would be in qualifying online commerce as dehumanized and dehumanizing: it is here the source of social relations, of face-to-face encounters,” he writes. However, one of the first requests from aficionados was to introduce delivery, which has become part of consumer habits. It's done, since last summer: delivering a vinyl or a jacket is possible via La Poste, or Mondial Relay up to 30 kilos. The operation is the responsibility of the buyer, and Leboncoin releases “a small margin” on its amount, explains the DG.

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This shift towards "transactional" or "intermediated" sales is a way for the company to develop new revenues. 21.1 billion euros in transactions were recorded between sellers in 2019 (i.e. 0.87% of French GDP!), who often favor cash. By buying the e-commerce site Videdressing, Leboncoin eyed the know-how of its teams in terms of online payment, a service also offered since last summer directly on the site. It comes with a commission of 4% of the amount, with a minimum of 0.99 euro per article. Highly requested by buyers, this system should also help to avoid scams. We noticed it by selling our sofa there (three seats, gray fabric, Scandinavian style).

Our ad was immediately followed by a very dubious SMS: "Your ad interests me a lot, please contact me by email with your final price." The interlocutor then invited us, still by email, to communicate a PayPal account, and announced that he wanted to pay a bonus of 30 euros compared to the initial price, “for the reservation”. Tantalizing... The scam is well established: an e-mail supposedly sent by PayPal indicating that the payment has been made is then sent to the pigeon, who is thus duped if he does not check his account. “I would like to send a carrier to your home for recovery”, warned our scammer... Many too gullible Internet users, on the forums, lament having sent an iPhone or a computer without being suspicious...

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This role of trusted intermediary is strategic for Leboncoin, which continues to want to expand its territory. Starting with the flourishing used car market. “We have 2.5 times more ads than our first competitor,” observes Olivier Flavier, the new managing director of the Argus group, publisher of the famous rating of used vehicles, whose takeover was finalized last year. . Under each Leboncoin ad, from now on, an Argus price range is displayed for information purposes (the exact price remaining payable): one more service offered to buyers. The Argus is a reference for individuals but also dealers, who use its specialized software to manage their vehicle stocks.

Leboncoin ads will help these pros sell their used models better. “We will be able to tell a Dijon dealer how many people in his region are looking for a Clio, and therefore whether he should increase his stock or, conversely, lower the price,” explains Olivier Flavier. For sales between individuals, attention has also been paid to secure payment thanks to the acquisition of the start-up PayCar, which has developed a system for securing funds until the conclusion of the sale.

If the site is very popular in France, this audience is mainly monetized with professionals, who generate between 80 and 85% of Boncoin's turnover, whether they are real estate agents or companies that are recruiting. Because, for them, the ads are paying. In all, 500,000 pros in France use it in one way or another, or 15% of French companies. And that's just the beginning. Leboncoin launches the offensive on a new target, hoteliers. Very dependent on the all-powerful Booking.com, to which they pay commissions ranging from 15 to 17% of the price of the room per reservation, they could soon prefer the French site already acclaimed for its advertisements for vacation rentals between individuals.

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To attract them, Leboncoin bought Pilgo, a reservation service supported by the hoteliers' union, which has undertaken to cap its commissions at 10% of the price of the room. Loïs de Jorna, designer of Pilgo, knows that he will find there the audience he was missing: "90 to 95% of Boncoin's traffic is not dependent on Google", he underlines. Like the residence rental advertisements of Locasun, another site acquired, those of hoteliers will find themselves mixed in the requests of Internet users, creating a large generalist tourist portal. The Accor or Logis chains are likely first partners. Loïs de Jorna thinks that there is no contradiction in associating a brand like Sofitel (Accor group) with that of Boncoin: “That's where the most used Porsches are sold. Once you figure that out..."

Faced with the giants of American tech, presumed to be cynical, the company is positioning itself as the friend who wishes you well. With the first strong argument, the amount of taxes, levies and social charges paid in France: 142.5 million euros in 2019. Leboncoin has also been working for months to become a "mission-based company", which sets out its statutes in its statutes. social or environmental purpose, as Danone recently did. Is he so virtuous as that? An informed Internet user criticizes him for the lack of transparency on the use of his users' data. In a post entitled “The great sale of your personal data on Leboncoin”, this anonymous working in advertising tech identified the “snitches” tracing Internet users who arrive on the site’s home page. Surprise: even if visitors refuse these “cookies”, as permitted by the European Data Protection Regulation (GDPR), they remain tracked by Google and Facebook trackers. 15 to 20% of Boncoin's turnover depends on advertising targeting, and its management has collected the preferences of 63 million anonymized profiles, which it markets to advertisers: a business in which it is almost impossible to do without Gafa. The company still considers itself “GDPR compliant”.

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With all these irons in the fire, does he still have areas to clear in the world of classified ads? We naturally think of the dating business, which makes Antoine Jouteau smile. “We said years ago, for the joke, that we would do “Leboncoup.fr”, but it is in fact a saturated sector, on which we would not bring anything. The CEO, however, assures that there are still many opportunities to explore. Without being more specific, he says he is eyeing the personal services market, where no player has really established himself. If thanks to him the search for a locksmith or a plumber is facilitated, we can only congratulate ourselves.

With the first confinement, research on these products exploded*

Its employees experience the future of work

Here, even the boss doesn't have a designated office! Welcome to Boncoin's brand new premises, 8,500 square meters deployed in a modern building located in the Sentier district, in Paris - this "Silicon Sentier" where many start-ups are concentrated. On each floor surrounding the glazed patio, numbered lockers contain the computers and personal effects of the employees, who all work in flex office and choose their office when they arrive in the morning. Of course, the pandemic has temporarily changed the situation: "Only 15% of employees are present on the site today", noted Antoine Jouteau during our visit at the end of October.

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Very attached to cultivating a good atmosphere and closeness between its teams, Leboncoin has organized a mutual aid program during confinement, where volunteers who are passionate about sport give boxing or Swedish gym classes remotely to their colleagues – others offer an introduction to pottery. Virtual aperitifs are also organized. Normally, about 250 employees, mostly tech-savvy, are hired each year. Faced with the difficulty of recruiting these highly sought-after profiles, a cooptation bonus of 1,000 euros is planned for those who will help recruit an acquaintance.

Will closed businesses prefer Leboncoin to Amazon?

Hecatomb to come? While the closure of “non-essential” businesses was renewed during the second confinement, the survival of many businesses hangs in the balance. The government aid planned for the digitization of small businesses, authorized to deliver or to practice in-store collection, has above all highlighted the weak online presence of many of them, destitute even after the experience of the first confinement. The major e-commerce players quickly offered their help to these SMEs, not always disinterestedly.

Cdiscount has offered merchants the possibility of putting their products online free of charge, and has halved its commission in the event of delivery. Amazon has chosen to exempt them from the registration fees for its platform, of 39 euros monthly, for three months, but without giving up its commissions of around 15% per sale. And Leboncoin? He decided to offer 80 euros in credit per month for two months on their “pro account”, so that they can post advertisements and thus sell their merchandise. After all, many furniture manufacturers or sellers, for example, already use it as a preferred sales channel.

Paradox: so far, the site was rather considered by traders as a formidable competitor. The boss of a large furniture brand recently confided to Capital that he fears Leboncoin more than Ikea… In fact, even the Swedish is afraid of large garage sales. On November 6, according to our records, the search for the keyword “Ikea” returned 207,430 results on Leboncoin, and that of “Decathlon” returned 211,060 results. So many lost sales for these brands, despite the use made of their precious brand image. The boss, Antoine Jouteau, has noted a change in attitude on the subject: Ikea, for example, is starting to resell refurbished items in Sweden. Another clue is that many stores have been testing the sale of refurbished stock on their site for years, with very good results. “Their perception has pivoted on this second-hand market. The fact that they enter it will make the market explode, structure it. They realized that their customers are valuable.”

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