With many physical stores closed and online retailers facing shipping delays, it’s difficult to buy just about anything amid the COVID-19 outbreak.
OfferUp wants to help.
The Bellevue, Wash.-based peer-to-peer marketplace made headlines this morning with a fresh $120 million funding round and its announcement to acquire rival Letgo.
The deals will give OfferUp a footprint of 20 million monthly active users who use its platform to buy and sell both new and used goods. OfferUp already has about 20% of the adult population in Seattle using its app every month.
The fresh cash infusion comes at a unique moment for OfferUp. With shelter-in-place mandates enforced and various brick-and-mortar retailers temporarily shut down, OfferUp is seeing a significant increase in buying activity across categories such as home and gardening, video games, sporting goods, and more.
“America really needs a marketplace like OfferUp right now,” OfferUp CEO Nick Huzar told GeekWire.
There has never been a more important time for this. America needs our help. https://t.co/UHW64o5pGk
— Nick Huzar (@nickhuzar) March 25, 2020
OfferUp plans to invest in product innovation and will hire for open roles — a stark contrast to many tech startups that are trimming headcount due to the ongoing economic crisis.
While the company is seeing more usage of its app recently, it is also dealing with price-gouging. Business Insider reported last week that OfferUp removed hand sanitizer; toilet paper; protective masks; and disinfecting products from its platform last week.
We caught up Huzar to learn more about OfferUp’s role amid the coronavirus crisis, and what’s ahead for the 9-year-old company. This interview was edited for brevity and clarity.OfferUp raises $120M, will acquire rival Letgo; OLX Group to own 40% of combined entity
GeekWire: Thanks for speaking with us, Nick. Hope you and your family are healthy. How did this deal come together?
OfferUp CEO Nick Huzar: First off, clearly we’re living in an unprecedented time right now and I think there’s a lot of local communities and people and businesses that are struggling. OfferUp has always been focused on local and really helping people get value from the things that they have in their houses, but also for people that need things. This was already a big part of OfferUp and it always has been.
So why come together with Letgo? A lot of our strengths have been historically in the big coastal cities. In Seattle, about 20% of the adult population is using OfferUp every single month. In Los Angeles, we’re over 17%.
Letgo, conversely, has strength in other parts of the country, especially in the Midwest. By coming together as a company we’re able to service the markets we’re in even more. So now when you look in Seattle for a bike soon, you’re going to see a lot more bikes.
We also have a shipping business that benefits from this. The shoes I’m wearing, for example, I bought via shipping from someone in New York. So we can better help connect buyers and sellers anywhere in the country, especially right now when people need things and are maybe more isolated in their homes.
GeekWire: Talk about how you’ll use the $120 million round.
Huzar: We will be very thoughtful in how we deploy that capital. We will definitely be focusing a lot more on product innovation and bringing more to market faster. We’ll continue to invest in growth and invest in our sales team. We literally just signed the deal yesterday, so there’s still a lot to be figured out. But expect us to continue to grow and hire.
GeekWire: What effects are you seeing from the COVID-19 outbreak on how people are using OfferUp?
Huzar: We’re seeing a 50 to 100% increase in certain categories — home and gardening; video games; sporting goods. People are buying video games or bikes for their kids because they are home now. A woman I talked to yesterday bought a trampoline for her daughter. She wanted to buy it at a store down the street but it was forced to close, so she looked on OfferUp and was able to get it from someone down the street for 30% of what she would have paid at the store.
We’re seeing more engagement with gym equipment since people can’t go to the gym. We’re seeing a 30 to 40% increase in our shipping business. People can’t leave the house as much.
Other shifts we’re seeing is that non-essentials are down. Fewer people are buying a nice dress to go out on a Friday night, because they aren’t going out. Collectibles, artwork, jewelry — people are just not spending as much time with these given the current environment right now.View this post on Instagram
"Fact: Everything in this picture I found on @offerup , other than the pillows inside the basket, book weight, and brass candles.) It is amazing what you can do when you save!" – @farhemian_inspo #OfferUpFinds
A post shared by OfferUp (@offerup) on Mar 25, 2020 at 7:55am PDT
People tend to turn to us in a time of need for things that they want. We want to do more faster to help people as fast as we can. I can’t tell you how many calls I’ve had with local businesses that are on OfferUp already about how we can better support them. We have 2,500 auto dealers right now that are spending more time online and figuring out how to adapt to this new world we have. I’ve heard stories of people doing all the paperwork and looking at the car virtually and the dealer actually will bring them the keys and bring the car to their house. That’s kind of a new way of doing things.
There’s also a furniture store in the Seattle area that has sold millions of dollars of furniture on OfferUp. I talked to the owners a few weeks ago, trying to see how we can help them. They are spending more time on OfferUp to promote things on their store, and they are also offering free delivery. Maybe you’re stuck at home trying to set up your work environment and you don’t have the furniture. And they’re saying, we’ll just come bring it to you. It’s been nice to see how we’re able to help some of these local businesses.
GeekWire: How are you thinking about the larger marketplace industry? You’ve got competitors such as Craigslist, eBay, and Facebook. How do you see this evolving, in terms of people using these services to buy and sell items?
Huzar: 85% of commerce today is still not online. We see a really big opportunity to unlock value that’s sitting all around us that we can’t see. When I started OfferUp, the a-ha moment was looking at the smartphone thinking that one, we’re all going to have these devices, and two, there’s going a lot of rich functionality that we can leverage to help unlock local value. That could be an unused bike in your garage, or it could be a bike from the bike store down the street.
We tend to think of what we’re building as a platform for local commerce, not just used goods. In fact, 25% of the items on OfferUp today are brand new. We want to be the app for local and that’s really what our focus is. We still feel like there’s a huge opportunity because there’s just so many things around us right now that we can’t see. So if we can partner with more people, we can help to bring more items online.
GeekWire: You started the company in Seattle in 2011. It’s traditionally been a cloud computing and enterprise software town. You’ve said that it was almost a disadvantage to be in Seattle because investors didn’t understand the consumer world as much. But you’ve kept the company here — one reader today called the company a “remarkable local success story.” What does it mean to you to have built OfferUp in this region?
Huzar: I’m a Seattle native, so I’m extremely proud of that. We’ll continue to grow and hire here in Seattle. We have a great tech community to build a company like this. I couldn’t be more proud of building OfferUp here in Seattle versus anywhere else in the country.