LetGo Business Model | How does LetGo Make Money?

There is an estimated market of $381 billion worth of used but untouched goods in U.S. homes tapped by only two dominant players, Craigslist and eBay. LetGo is one of the recent startups by OLX’s co-founder, Alec Oxenford, which brought a revolution in this technology stagnant market with the introduction of artificial intelligence, geolocation listings, and other advanced features. It’s been two years since the company has started but the users are still wondering how LetGo makes money and will it be able to overpower the existing supergiant Craigslist? But before moving on to answering these questions, we need to analyze LetGo’s business model first.

What is LetGo?

LetGo is a free and easy to use digital classified platform to buy and sell items locally. Just like OLX and Craigslist, LetGo facilitates the trade of used goods. But unlike Craigslist, the platform is optimised for smartphones, supports video listings, and has a better interface and utilizes artificial intelligence and image recognition technology for listing the items.

LetGo Business Model

The business and operating model of LetGo is similar to Alec’s previous startup, OLX. The mobile application is a simple digital classified which is used to buy and sell used goods in over 35 countries. According to Alec:

Letgo helps to solve the world’s number one problem – the excessive resource consumption and pollution that is causing vastly negative effects on the sustainability of the environment and putting life on the planet at risk.

Just like OLX, Alec wanted to capitalize on the network effect to monetize this company as well. Now with over 20 million users, the company has monetized its platform by adding two premium features – Letgo featured listings and Letgo Pro, which we’ll discuss in the following section of LetGo’s Business Model.

How Does LetGo Work?

LetGo, just like other classifieds platforms, operates by listing advertisements in sections relevant to the users. The platform utilizes artificial intelligence, image recognition and geo-location technology to list advertisements based on the user’s preference and location. The advertisements are listed in a 50-mile radius of the user to increase the likelihood of transactions and person to person exchanges as the platform acts only as classifieds and not as a payment gateway. The actual exchange takes place offline.

As the company claims, it takes less than 10 seconds to post an item for sale. All you need is a picture of the item you’re willing to sell, and the application by utilizing the artificial intelligence and image recognition technology will automatically set title and the category for your listing.

Unlike Craigslist, posting an advertisement on LetGo is totally free for every category and region. The listings are sorted based on relevance and distance from the user. Another aspect which differentiates LetGo from Craigslist is that the platform only supports the selling of goods and not services.

You can filter your search based on the category, distance, price, and newness of the listing. The platform also lets you chat with the other party to clear your queries about the listed product.

How Does Letgo Make Money?

Is letgo free

The question of how does LetGo make money is common among many of its users as the platform is totally free to use and doesn’t even facilitate payments. Nevertheless, the classifieds mobile application has found a seamless and most appropriate strategy to make money by introducing two premium features – featured listings and pro.

Moreover, the company has also adopted OLX’s revenue-making strategy by including advertisements (Google ads).

Featured Listing

Featured listing is a premium feature which puts the listed item in the spotlight by placing it above the organic results to draw more attention to it. The company claims that the featured products receive 2x views compared to non-featured products.

The feature is still in its beta version and isn’t available to every user as the company wants the results (even the advertisements) to be as relevant as possible.

LetGo Pro

LetGo Pro is a special feature designed for the auto-dealers where the verified pro sellers get special benefits like –

  • Getting phone numbers and calls from buyers through the app
  • Major feeds integration which lets him list his cars on letgo automatically

The pro membership works on a subscription based model and starts at $99 for dealers with up to 30 vehicles.

letgo pro pricing

letgo ads

Just like Olx, the company works with partners who in-turn works with Google and other ad partners to act as ad supplier and ad mediator for the website.

These Ads works in juxtaposition with the OLX website, and its contents are displayed on the webpage itself. The number of Ad units varies on different pages of the website.

LetGo vs Craigslist

With around 55 million monthly visitors Craigslist is the leader of the digital classifieds market. Nonetheless, survival in the technology industry requires constant innovation which Craigslist lacks. The company hasn’t changed its interface since 1995, hasn’t launched its mobile application, and uses the same time chronology to update its lists.

Letgo, on the other hand, has brought a revolution by introducing artificial intelligence in a mobile-friendly classifieds application. The results are more relevant and users can contact the other party through the live chat feature and not emails.

Founded in 2015
Founded in 1995
Operates in 25 countries
Operates in 70 countries
20 Million monthly users
55 Million monthly users

With the above facts, it is clear that Letgo is growing at a faster pace than the old Craigslist. Letgo is among the fastest growing applications in the USA with over 75 million downloads overall. The company has also recently raised $100 million at a $1B+ valuation.

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  1. Had a terrible experience with Letgo. Sent pic and paid to have ad featured. Only response was fake lady (a.i.) responding to ad with answers that made no sense, even so far as to set a 7pm appt. and then not show. Don’t waste your money.

  2. Great article! Thanks for taking the time to write it. Where can I find more information about the market size number quoted “estimated market of $381 billion worth of used but untouched goods in U.S. homes”? I couldn’t find a source citation.

  3. Who has their email? I’ve bought and sold tons of things on letgo since they first started and I never give my number out, I do it all through the chat. Also who gives their email? It’s all done through the chat in the app??? I’m very confused by this.

    Also I sell to whoever gets to me first. I’ve held things for ppl and they don’t show up, so I’m sorry to the person who had a bad experience on let go. Take it like a yard sale. If your not holding it in your hand anyone can buy it before you do. Rule of thumb.

  4. I just read this Q&A and the Q on How does letgo make money is still unanswered. Skirted around the issue. Anyone know the answer?

  5. How is it people post an item, you click on it to see price ,says negotiable, no price quoted, that person now has you email address, this is why craigslist encrypts you email adress, this is called “PHISHING” thats why its prohibited on craigslist and oter web sites, i will not use LETGO until they change this, and if you login thru facebook, and have your cellphone number in your profile, then that ad on letgo, that person has access to your phone number.HEY LETGO< YOU NEED TO CHANGE YOUR FORMAT, and anybody reading this, better think twice before giving people in 25 countries access to your email address, thats how many countries letgo operate in.

  6. I had a very bad experience today on Letgo. I was going to purchase a square kerosene heater from a seller. We agreed on a price, meeting time and place. He then texted back and told me that it was no longer for sale. Very unprofessional!

    • that person nows has your email address, or facebook name, better change your password regularly for next 6 months, thats what called phishing, thats why craigslist, ebay, and other companies dont have you give access to peoples email address, letgo operates in 25 countries, and if they have access to your email address, you better beware, they have computers to hack your account, if you have paypal,if they get in your email, then they have access to your accounts


LetGo Business Model | How does LetGo Make Money?

by Aashish Pahwa