How Gumtree Makes Money: A Look Inside Their Business Model

Gumtree is an online classifieds platform connecting private buyers and sellers.
The company operates internationally and plans to keep expanding.
Gumtree makes money from listing fees, referral fees, product promotions, and banners ads.

Michael Pennington and Simon Crookall founded Gumtree in 2000. Since its inception, Gumtree has risen to become one of the leading international classified marketplaces. eBay acquired the company in 2005, selling it to Adevinta in 2021.

Gumtree has a large classified offering covering a huge range of categories. While it's not as popular in the US as sites like Craigslist, it has a colossal international footprint, and it's a preferred classified marketplace in these countries.

What does Gumtree do?

Gumtree is an online classified ads website that allows users to register and sell goods privately. The platform has a huge variety of categories, from cars and property for sale or rental to sports goods, services, and many more.

Currently, the company operates in several international markets, including the United States, the UK, France, Poland, Australia, New Zealand, Canada, Ireland, South Africa, and others.

How does Gumtree work?

Buyers can browse the classified listings on Gumtree without registering an account. However, if you want to sell on the platform, you'll need to register. After registration, you can create listings for items you wish to sell. Buyers contact you through your email address or phone, depending on your preferences.

Gumtree also allows businesses to register and sell on the platform, giving them the opportunity to use the site to extend their market reach. Real estate agents also sell and rent properties through the platform, as do car dealers.

Gumtree operates the marketplace, but they allow direct communications between the buyer and seller. There is no money exchanged through the platform. All transactions occur between the parties involved, with Gumtree taking no commission for any transactions.

How Gumtree makes money

Gumtree makes money by charging sellers and advertisers for listing services and promotional tools like banner ads and referral fees. Let's look at the Gumtree business model in detail.

Listing fees

Gumtree doesn't charge for its listings, but it does charge for premium listings that position your advert at the top of the search results. Without this option, your ad keeps moving down the listings, out of sight of people browsing the site.

The company's paid listing offers to encompass three packages, Plus, Featured, and Premium. These listing packages feature options like highlighted backgrounds, additional photo uploads, and top ads, which are listings shown above the organic listings.

Users also have the option of paying separately for product promotions. Users are willing to pay for these packages due to the additional exposure it gives their listing, increasing the chances of a sale.

Gumtree sells ad space on its sites, offering banner ads to companies and brands. These banner ads appear in native format within their search results. The website AI displays ads relevant to what the user is searching for on the platform.

Gumtree ads

Gumtree ads generate revenue for the company whenever a user clicks the ad. The site receives tens of millions of unique visitors each month searching for a wide variety of goods and services. As a result, it earns significant revenue through its advertising model.

Referral Fees

Gumtree also earns through its referral system. The company promotes offers from several insurance companies on its site. Suppose a user clicks a link to an insurer's offering and takes a policy. In that case, the insurer sends Gumtree a commission for referring the client.

The company doesn't disclose its percentage fee charged for referrals. The company works with "Compare the Market Limited," owned by the "BGL Group," for motor vehicle and pet insurance in various markets. Compare the Market Limited compensates Gumtree for all referrals to its business.