Facebook starts testing Marketplace in India, to take on OLX, Quikr

According to a report by Google India and KPMG released in 2016, India’s digital classifieds industry is estimated to become a $1.2 billion market by 2020.

Facebook takes on take on OLX, Quikr and Sulekha. (REUTERS)

Marketplace, that Facebook's vehicle to make its foray into India's booming e-commerce industry, predicted to reach $200 billion by 2026. It is an OLX-like platform which allows users to buy and sell items in their communities.

Facebook has confirmed that it has begun testing Marketplace in Mumbai before a wider roll out in the country.

"To make it easier for people to discover, buy, and sell locally, we are testing Marketplace, a single destination to buy and sell goods and services on Facebook. People in Mumbai can visit Marketplace by tapping on the Marketplace icon inside the Facebook app," said a company spokesperson.

Facebook had launched Marketplace in 2016. In a blog post, the company pointed out that the trend of buying and selling items within Facebook Groups had grown significantly. "More than 450 million people visit buy and sell groups each month — from families in a local neighborhood to collectors around the world," it noted.

Marketplace is essentially a dashboard where users can list their items for sale with product description, photos and location, just like any other e-marketplace. Users can also look up items, custom search through filters such as Household, Electronics and Apparel, and even use built-in location tool to find the items available in their nearby locations. Interested buyers can also send a direct message to the seller.

It is worth noting that Facebook does not facilitate the payment or delivery of items in Marketplace.

The Competition

According to a report by Google India and KPMG released in 2016, India's digital classifieds industry is estimated to become a $1.2 billion market by 2020. Facebook's entry into the India is likely to heat up the competition in the e-commerce segment.

While Flipkart and Amazon dominate the traditional (business-to-customer) e-commerce segment, the online classifieds segment (customer-to-customer) is led by the likes of OLX, Quikr, Just Dial, and Sulekha.

With more than 200 million users in India, Facebook certainly enjoys a big edge over the competition. While Facebook Marketplace can see a fast adoption in the country, but user base alone cannot drive the vertical in a long run.

One of the challenges that the company faces is winning users' trust when it comes to selling or buying products online - a common issue that C2C players face in India. It also remains to be seen how Quikr and OLX respond to Facebook's new Marketplace.