How Does Offerup Make Money?

Offerup’s main source of income is the commission that they receive from the sales. Typically, Offerup collects a minimum fee of $1.99 or 12.9% of the sellers’ sales price. Moreover, Offerup makes money from the listing promotion/advertising and the Verified Dealer Program. The Verified Dealer Program allows car dealerships to sell cars on Offerup.

Key Takeaways

• Offerup is a mobile-based consumer-to-consumer (C2C) online marketplace where users can sell and buy everything like eBay, Craigslist, etc.
• Offerup is a phone application and people can only access Offerup from their mobile devices
• According to a recent statistic, the net worth of Offerup is approximately 1 billion dollars
• The business model of Offerup is to make money by charging promotional fees for products and selected programs
• Offerup makes money from transaction fees, pay-per-use services, service fees for shipping, etc.

What Is Offerup?

Offerup is an online marketplace that was started as a mobile-first app, available on both iOS and Android. Basically, Offerup is a C2C marketplace where users can buy and sell items that include clothes, electronic devices, cars, furniture, gadgets, and many more. The business model of Offerup is to make money by charging promotional fees for products and selected programs. This platform/app is completely free to download as well as listing products is also free.

Overview Of Offerup

1. Company: OfferUp

2. Founder(s): Nick Huzar; Arean Van Veelen

3. Initial release date: 2011

4. Headquarter: Bellevue, Washington

5. Number of Employees (Dec 2018): 266

6. Type: Private

7. Products & Services: E-commerce, Direct Buying, And Selling Goods

8. Competitors: eBay, Craiglist, Facebook Marketplace, Letgo, etc.

How Was Offerup Started?

Offerup started its journey as a competitor of Craigslist. It came into the marketplace in 2021 and the founders are Nick Huzar and Arean Van Veelen. Both the founders realized a need for a mobile option to buy and sell products online. Nick Huzar had worked as Product Manager with Microsoft and T-Mobile while Arean Van Veelen worked in product and consultant roles at various companies before he co-founded Offerup with Nick Huzar. They discovered a lack of mobile options in terms of buying and selling products and they realized it when they were trying to sell their used items to create space for their newborns. Therefore, they decided to create Offerup to provide a solution for this problem.

How Does Offerup Work?

In Offerup, people can list their items and products in different categories for sell and the buyers can browse the categories to find their desired products and buy them directly from the sellers. Both the sellers and buyers have to download the Offerup app on their mobile to use the platform. In Offerup a buyer can directly interact with the seller over the app, as well as ask any kind of questions about the product or negotiate the price. Once, both the buyer and seller agreed upon the price, they can complete the deal. Once the transaction is completed the buyer and seller can rate each other and leave reviews on each other’s profiles. It helps other buyers and sellers to find the right person. After the deal is completed, Offerup collects a commission from the sale.

How Does Offerup Make Money?

Many people have curious about Offerup’s revenue-generating sources. If you compare other competitors of Offerup you will realize Offerup’s business strategy is completely different. Initially, Offerup was completely free for the sellers. This is because the founders wanted to attract buyer and sellers. It was their marketing policy and once they have a user base they are attracted to charge vendors for their services from 2016. Offerup has various money-making sources. They are –

1. Transaction fees

2. Pay-per-use Services

3. Monthly Subscription to Promote Plus

4. Service Fees for shipping 

5. Investors Funding

Transaction Fees

Many people think that Offerup has no charges, which is a complete misunderstanding. The actual thing is, sellers can add their products in Offerup freely, and they are not charged for the listing. However, the sellers have to pay the shipping expenditures or service fees. Offerup charges 7.9 percent of the payment of item which is sold. 

Pay Per Use Services

Offerup offers pay-per-use services to the sellers so that they can quickly sell their products. Offerup offers services like Promote & Bump. When you list your products you can buy promote or bump option to get your item seen by more people as well as promote your product n Offerup.

1. Promote: This option gives your item or product premium featured position among the top 50 products of Offerup

2. Bump: This option automatically, relists the item and moves it to the top of the list      

Monthly Subscription To Promote Plus

Promote Plus is a special feature of Offerup that allows you to promote your items for any period. If you subscribe to this feature then it means you always have a promotion available. You can utilize this feature for any of your products and give it featured placement. If you want to promote another product then you can remove this feature from the old item and put it on the new item. This feature is a paid monthly subscription and you can cancel at any time. It is an optional feature but a very effective one.

Service Fees For Shipping

Offerup charges a nationwide service fee for the shipped items and the sellers have to pay the fees. The sellers have to pay a 9.9 % service fee of the final price of the sold item. The shipping costs are excluded from the service fees. When you will list the item, you will see the rate.

Eligibility Criteria For Shipping

1. Sellers must use the label that is provided by Offerup

2. Items must weigh less than 20lbs and the box size must be no longer than 18 inches

3. The sellers have to list the item at a sale price between $1 and $750

4. Event tickets cannot be shipped

5. Items must be eligible for immediate shipping and drop-shipping is not allowed

Offerup’s Verified Dealers Program

Since its establishment, Offerup has become a very trusted platform for people to buy and sell their products. There are more than 44 million users in Offerup and a good number of car sales is done through the app. Therefore, more car dealers are showing interest in this platform and Offerup created the Verified Auto Dealers Program for the car dealers. Offerup shares their car selling information with the car dealers so that the car dealers can generate leads from the Offerup audience. Some of the key benefits of the Verified Auto Dealers Program are – 

1. Car dealers can list their vehicles by connecting to their inventory feed

2. Dealers can show a vehicle’s Carfax report

3. Use the chat or click-to-call option to connect with the potential car buyers

4. With the help from Top Lead Indicator, car dealers can generate leads

5. Car dealers can use the advanced advertising feature to enhance their listing’s exposure    

Investors Funding  

Over the years, Offerup has expanded and strengthened its business by collecting investors’ funding. Offerup has backed up itself with a powerful group of investors. In the last few years, Offerup has collected almost $ 372 million from various investors. Some investors of Offerup are Andreessen Horowitz, Warburg Pincus, GGV Capital, T. Rowe Price, Tiger Global, Coatue, and Allen & Company.   

What Listings Are Allowed In Offerup?

Offerup allows everything to list on their platform as long as they are not illegal in the USA. They are – 

Electronics & Media

Audio & Speakers, Cell phones & Accessories, Cameras & Photography, TVs & Media players, Video games & Consoles, Computers & Accessories, Books, Movies, & Music, Wearables, Drones, Virtual reality, etc.

Home & Garden

Furniture, Household, Appliances, Kitchen & Dining, Bathroom, Tools & Machinery, Home Improvement, Lawn & Garden, Home décor, etc.

Clothing, Shoes, & Accessories

Women’s clothing, Men’s clothing, Women’s shoes, Men’s shoes, Jewelry & Accessories, Girls’ clothing, Boys’ clothing, Baby & Toddler girl clothing, Baby & Toddler boy clothing, Baby & Toddler accessories, Girls’ shoes, Girls’ accessories, Boys’ shoes, Boys’ accessories, etc.

Baby & Kids

Girls’ accessories, Boys’ accessories, Bathing & Skincare, Car seats & Accessories, Diapering, Feeding, Baby gear, Health & Baby care, Nursery Furniture & Décor, Potty training, Pregnancy & Maternity, Baby safety, Strollers, Baby toys, etc.

Vehicles

Cars & Trucks, Motorcycles, Campers & RVs, Boats & Marine, Power sport vehicles, Trailers, Commercial vehicles, Tires & Rims, Auto parts & Accessories, etc.

Toys, Games, & Hobbies

Toys, Games & Puzzles, Outdoor Toys & Games, Stuffed animals & Plush, Dress up & Pretend, Trading cards, Musical instruments, etc.

Sports & Outdoors

Exercise, Yoga & Pilates, Mixed martial arts & Boxing, Bikes & Cycling, Skateboarding, Fishing, Camping & Hiking, Water sports, Ice & Snowsports, Lawn games, Team sports, Golf, Fan shop, etc.

Collectibles & Art

Art, Arts & Crafts Supplies, Antiques, Collectibles, Handmade, etc.

Pet supplies

Pet collars & Leashes, Pet Clothing, Accessories, & Shoes, Pet toys, Pet feeding, Pet bedding, Pet furniture, Pet carriers & Houses, Pet Health & Wellness, Training, Pet Gates & Fences, etc.

Health & Beauty

Haircare, Bath & Body, Makeup & Cosmetics, Skincare, Fragrance, Personal care, Tools & Accessories, etc.

Wedding

Jewelry, Invitations & Paper, Gifts & Mementos, Decorations, Accessories, Clothing, Shoes, etc.

Business equipment

Farming & Agriculture, Building materials & Supplies, Cleaning & Janitorial Supplies, Electrical Equipment & Supplies, Facility Maintenance & Safety, Fasteners & Hardware, HVAC, Light industrial equipment & Tools, Material handling, Office Equipment & Supplies, Restaurant & Foodservice Equipment, Printing & Graphic Arts, Retail & Services, Industrial fuel & Energy equipment, etc.

What Listings Aren’t Allowed In Offerup?

There are few items that you can’t list on Offerup because they are not allowed. They are – 

1. Alcohol, drugs & tobacco

2. Adult & mature content

3. Animals

4. Wildlife products

5. Counterfeit and replica items

6. Dangerous items

7. Recalled items

8. Food items

9. Gift cards

10. Illegal items or encouraging illegal activity

11. Intangible items

12. Medical & healthcare items

13. Offensive materials

Final Thoughts

Offerup has an excellent business model and the company is growing rapidly as well as increasing its net worth. The overall revenue generation strategy and tactics of Offerup have made it one of the highest valued mobile-based online marketplaces for buying and selling products in the USA.

References:

1. https://productmint.com/offerup-business-model-how-does-offerup-make-money/
2. https://entrepreneur-360.com/how-does-offerup-make-money-17511

Last Updated on October 26, 2022 by Magalie D.