Because Gumtree Cars has come relatively late to the Australian market, and therefore effectively inherits the benefit of hindsight, the company has been able to study from the sidelines to see where others have attempted to build better mousetraps to lure the majority of classified advertising support from Australian dealers.

While closely watching the car vertical business model, Gumtree has been building a huge national following of buyers and sellers across just about every item the community has for sale, and it is off the back of traffic created by this ubiquitous marketplace, including cars, that the company has declared that it is ready to win more dealers over to its platform and take auto classifieds leadership.

Foremost in the appeal of Gumtree Cars for dealers is that it is a very uncomplicated classifieds advertising model in which dealers basically pay for the number of cars they list (see separate story).

It takes online classified advertising for dealers back to its core purpose where buyers get open access to full details about cars for sale and contact details of the selling dealer rather than pay for ongoing blind leads which are the core of the market leader’s revenue model and the subject of much of the angst that dealers express.

Grant Denyer Image credit: Daniel Boud

There are various packages on Gumtree Cars but essentially dealers are better able to control their costs which is not so easy to do under a pay-per-lead method.

Gumtree has had a dedicated cars category since its launch in Australia in 2007 and, in 2017, launched the Gumtree Cars brand to show that it was serious about cars.

These days, Gumtree in total is visited by seven million Australians every month. The automotive category is the second most popular category on Gumtree. On average, 150,000 Aussies visit Gumtree Cars each day.

There are about 150,000 new and used cars listings on the site and 6000 new cars are listed each day.

One appeal of Gumtree Cars is that it casts its nets in a different market to Carsales because both companies came to the auto market from different directions – a broad-based marketplace versus a dedicated car site.

General manager of Gumtree Australia, Martin Herbst, who got his grounding in online business at Dow Jones and The Wall Street Journal and joined eBay in 2006, says the role that eBay/Gumtree play in the lives of so many people is an important advantage for the company.

“I would say that our lifeblood of the Gumtree marketplace has been people coming there as a community, into a community marketplace,” he said.

“Because we have a very vibrant home and garden category and the things that we do in real estate and with many other goods, cars becomes a natural category for our community to look into. So we can tap into that total demand that is out there compared with a very car-specific site.”

Mr Herbst told GoAutoNews Premium that Australians keep returning to Gumtree at what he calls “various life moments where they look for things as they go through various phases in their life. They go through different life stages.

“They are going to university, then they leave uni and they are getting married, then having kids and so on,” he said.

“So Gumtree is like a life management tool to kit out the things you need.”

Mr Herbst said that Gumtree already has a group of people who automatically check out Gumtree Cars when they come into the market for a car because they are part of that community.

So they are not necessarily navigating through Gumtree and happen upon cars, they are realising that they can find a good selection and good value when they go straight to Gumtree Cars as a destination.

“That is where we started,” he said.

“But, in addition to that, we are now seeing a lot of other people coming directly into the Gumtree Cars marketplace because they have already bought a car there before or because they have heard about it from someone else or maybe they have sold through Gumtree Cars as well.

“So they are not necessarily navigating through Gumtree and happen upon cars, they are realising that they can find a good selection and good value when they go straight to Gumtree Cars as a destination.

“So the cars category is really very vibrant for us. Therefore it was a really natural extension, with all that traffic and the car marketplace we had built up, to then open up the offering to dealers. We started doing that about five years ago and we have grown really fast since then,” he said.

Gumtree Cars has about 1600 dealers right now including two of the largest dealer groups in Australia and many of the mid-sized dealer groups.

Image credit: Daniel Boud

“Dealers like us because the dealers who are on Gumtree know they are getting good value,” Mr Herbst said.

“The revenue model is a very simple monthly subscription fee depending on the number of cars listed.

“Our model is unique compared with some of the other properties out there. It is a no-leads model. We try to keep it really simple and very transparent with a very open platform.

“At the end of the day what we are doing at eBay and Gumtree Cars is connecting buyers and sellers. So we don’t want to get in the way of that (by hiding dealer details). We don’t want to disintermediate that transaction. We want to facilitate that transaction because ultimately we are driving customers directly to dealers.

“So it is an open platform where dealers have their stock up on Gumtree Cars, they have their own dealer page, they have a link to their website, their own logo and we are offering a lot more these days in terms of extra value to those dealers in terms of packages that can enhance their inventory,” he said.

By John Mellor