It was announced fairly quietly on Monday, but if you didn’t hear, eBay launched Kijiji in the US this week.

Click here to go to the site, now live in over 200 cities across the country.

It has been interesting to read the reactions and articles on the launch. It seems like the consensus is that while this is a smart move for eBay, as the online classifieds business continues to grow in potential, most people feel like Craigslist has nothing to fear.

Henry Blodget wrote on his blog the following:

Second, Craigslist is run by socialists who appear to have no interest in turning it into a real business. This means Craigslist is likely to be free or near-free in perpetuity. And this, in turn, means that if eBay ever tries to make Kijiji US a real business, the few buyers and sellers who ARE using Kijiji will probably laugh all the way to Craigslist.

Sorry, Henry. Kijiji has been quite successful for eBay outside the US, and that is without ever charging fees for listings except in very specific categories. (Craigslist, for example, does charge to post job listings).

What eBay does have on its hands is a platform that was designed to easily scale, to roll out new categories and cities across the world almost effortlessly, and one that was designed to be profitable. They have iterated on the model in global markets where classifieds are far more competitive with e-commerce than in the US, and they are now bringing those lessons to the US.

The eBay position described here, in this article, sounds about right:

Kijiji, a site eBay has operated overseas for two years, is now available in about 220 cities across the United States, spokesman Hani Durzy, said Tuesday.

“We’re targeting young people and young families looking for bargains locally,” Durzy said. “For now it’s a free service and our focus is on building the user experience…”

“I think Craigslist has been an incredible success but we think there is market for more players,” Durzy said.

Don Dodge seems to think that Craigslist has a secret-sauce, built around not running Classifieds like a business. It’s possible, but it’s also possible that Craig Newmark is quite happy running effectively a large lifestyle business, where he has a lot of influence, plenty of income, and complete control over his dominion.

eBay has challenges here, no doubt. There are network effects around the classifieds business, to be sure. It’s not like Kijiji in the Bay Area is going to be able to displace Craigslist.

However, where some people see strength in Craig Newmark’s resistance to profit-motive, I see a potential weakness.

Theoretically, eBay will push to innovate on the revenue model for classifieds more aggressively than Craigslist. Google innovated on their natural search business, and gave birth to a multi-billion dollar industry. It’s possible that the craigslist team is missing out on significant opportunity, largely because they aren’t interested in anything more than slight profitability.

It’s also likely that eBay will reinvest those dollars into continued enhancement of the Kijiji experience and business. For example, Kijiji will likely launch in far more cities than Craigslist. Since the network effects are local, Kijiji in a new city should have an outstanding chance at blocking others from expanding. eBay will likely also have more dollars to invest into real problems like Trust & Safety around classified ads.

Craiglist has been a phenomenal success, largely because it creates amazing value for its users. One weekend, as an experiment, I posted a Craiglist ad for two oak dressers and a table on Saturday night. I asked for $400, and that the buyers pick up the furniture no later than Sunday night.

By Sunday at 5pm, I had $400 cash in my wallet, and 3 buyers had come to pick up the furniture and take it away. Amazing.

The online classifieds business is for real, and despite the natural worries about cannibalization, it’s good to see eBay moving on this opportunity.

I guess I’m playing devil’s advocate here by saying that Kijiji could be a real business for eBay in the US, and more importantly, it could be real competition for Craigslist if they aren’t on their game.  Of course, this will only work for eBay if they aggressively invest their profits from the business back into the business, to keep pushing the bar higher for the online classifieds experience.