Wednesday, Jun. 18, 2008 By ANITA HAMILTON

Kijiji’s sudden rise has lit a fire not just under Craigslist — which claims that eBay used its minority interest in Craigslist to steal its business secrets (while eBay maintains that Craigslist unlawfully diluted its shares) — but throughout the $15 billion market for online classifieds. Even as lesser rivals fall by the wayside — Microsoft’s Windows Live Expo is shuttering on July 31 — newcomers such as Kijiji and Oodle are gaining real traction. Better designed and marketed, these upstarts are reshaping a long-stagnant sector of the web. Meanwhile, the entire online classified market category has surged some 35% over the past year, as more sellers post ads online and more cash-strapped buyers hunt for bargains there.

Yet even as Craigslist continues to thrive — it’s expected to rake in some $80 million this year — the site’s design and user experience have changed little since it began. “There is a stunning lack of innovation in classifieds,” says Craig Donato, founder and CEO of Oodle, which doubled the number of monthly visitors to its site over the past year to nearly two million. The San Mateo, Calif., company with 50 employees and some $19 million in venture capital funding recently made headlines for its deal to host classifieds on walmart.com. Once just a search site that scraped listings from across the Web, Oodle has now partnered with some 200 businesses, including newspapers like the San Diego Tribune and the armed services site Military.com, to power their Web classifieds.

Whereas Oodle excels in technology, Kijiji is the only general-purpose classified site that is catching up with Craigslist in terms of actual listings. Three years ago, Kijiji didn’t even exist. Today it is the top online classified service in France, Germany and Taiwan. It’s also neck and neck with Craigslist in Canada. Combined with eBay’s other international classified hubs — which include Marktplaats in the Netherlands and Gumtree in the United Kingdom — eBay’s portfolio of classifieds actually get more unique visitors around the globe than Craigslist. (As eBay’s core auction business has slowed, its classifieds division has posted triple-digit growth over the past year.)