58.com, the Craiglist of China, is making a massive push to pick up rural users as it hedges China’s economic uncertainties. During the third quarter, revenues grew 33.2 percent to $527 million and net income jumped 106 percent to $106 million year-over-year.
The classifies giant said in Thursday’s earnings call that it added over 100 million new users in 2018 for 58 Town, its app aimed at the new wave of internet users outside China’s megacities. Continued growth in the less developed regions, the firm believes, will act as a buffer against China’s economic uncertainties.
“Despite an uncertain macroeconomic environment, the China market remains massive and we continue to see enormous opportunities in lower-tier cities and towns where product innovation and technological advances are driving offline-to-online user conversion and substantially improving the services we can offer,” said the firm’s chief executive officer and chairman Michael Yao.
58.com, which went public on the New York Stock Exchange in 2013, became a dominant player in China’s classifies and listing market after gobbling up archrival Ganji.com in 2015. In 2017, it launched 58 Town as an extension of its urban-focused 58 Tongcheng, which means “intracity” in Chinese.
Like its sibling, 58 Town lets users list trading arrangements spanning from jobs to used furniture, akin to how Craigslist works. It has the additional flavor of a small-town life, such as notices of missing people, which would not work for a city with over 20 million people like Beijing.
The rapid growth of 58 Town is a testimony to the potential outside China’s urban centers. Cheap smartphones and the ubiquity of social media platforms, in particular, have accelerated the app’s growth, Yao said in the call.
With Tencent being its strategic investor, 58.com is able to tap into the massive user base on the social giant’s WeChat messaging app. Indeed, “WeChat-based [users] on 58 Town platform have grown beyond” the company’s “expectation since the summer of 2018,” said Yao. Users are able to access 58 Town via WeChat’s “mini-program” setup, a form of lightweight apps that run within the messenger without additional downloads.
Other internet players eyeing China’s hinterlands are Pinduoduo, an emerging challenger to Alibaba and JD.com that listed in the US in July, as well as Qutoutiao, a contender to ByteDance’s news aggregator Jinri Toutiao that also went public recently.
58.com says it’s not planning to monetize its Town app in the near term and is focusing on user penetration at this early stage. The firm earns the bulk of its revenues from advertising fees as well as subscriptions on Ganji and Anjuke, a property listing provider it acquired in 2015.