The NZ selling market is a mess. What is going to happen?

We all know about Trademe.  They have recently raised their rates,  Trade Me said the fee for selling an item valued at $50 – about its average trade – would rise from $3.75 to $3.95, an increase of 5.3%.  The highest rise would be for items priced at $1500, for which success fees will increase by 8.1% to $79.50. There will be lower increases on higher-priced items and no change to the maximum $149 success fee.

Some users reported indignation as a couple months ago Trade Me reported an 8.4% jump in its annual profit to $75.6 million.    But it is hard for rivals to offer much competition as they lack a critical mass of buyers.

Who are the players in this market?

Trademe

I will start with Trademe because they are the biggest player in the New Zealand market.

Looking today, they have:

  • 61,481 cars
  • 121,502 properties and houses
  • 11,000 jobs
  • 60,996 People online right now
  • 3,069,281 active members
  • 2,218,319 current listings

So, clearly they have good volume.  It is fair to say their volume is bigger than everyone else combined.

What are their fees like?

  • Basic listing     Free
  • Gallery     55c (25c for books and CDs)

Then if you sell, they charge a success fee:

  • Up to $200     7.9% of sale price (50c minimum)
  • $200 – $1500     $15.80 + 4.9% of sale price over $200
  • Over $1500     $79.50 + 1.9% of sale price over $1500 (max fee = $149)

This is the major area of contention for users and competitors, as most competitors starting up new businesses are advertising lower fees or no fees.

Sella:

Sella.co.nz has a web page that lists the pros and cons, comparing them with trademe but obviously some of this may be marketing hype.  The primary difference is Sella is free of commissions or success fees.  Their description is:

Pure and simple, it’s free to buy or list. Our business model is to make money selling advertising on the site as well as offering featured listings, where for a small fee, users can buy priority ranking (ie: display their listings above others).

Having said that, while the listing may be free, the volume is a lot lower than trademe.  Here are their stats:

  • 550,000 members
  • 480,000 listings
  • 415,000 users per month

Wheedle

Mainfreight co-founder and Rich-Lister Neil Graham is taking on Trade Me with a new online auction and classified site, Wheedle.co.nz.  Wheedle promises to be a lower cost alternative to trademe.

But after opening, and trading for a couple of days, Wheedle announced it woud close its online marketplace while it carries out a ”thorough update” of its systems and processes.   Managing director Carl Rees did not give an indication of how long that might take.

He said Wheedle would not reopen until its management team were ”completely confident its performance and processes meet the standards expected by New Zealand consumers”.   Wheedle’s website went offline after a blogger identified a fault that let people change the reserve price of other members’ auctions.

Asked in October when the site would reopen, general manager Carl Rees told NBR,

“At this point in time I have no idea. Hopefully before Christmas but it could be the New Year.”  “The fixes are minimal compared to the size of our entire source code and development. We identified the areas where we had problems and we have engaged an independent company to do the fixes … for peace of mind.”

It is not clear what fee if any will apply for under $20. Sellers won’t like a fee if it does not sell at all. But the fees are a lot cheaper than Trade Me. However the major factor is price. Say your item sells for $50. Then it is $1 on Wheedle and $3.95 on Trade Me making it a net $49 vs $46.25.

Knomee

Knomee.co.nz promises to be another alternative, with free listings.

http://www.facebook.com/Knomee is the only information at the moment until their site goes live.  Today is the day it is supposed to happen but no sign of life yet.  Sounds like it is supposed to happen at noon.

Knomee charges no commission on sales and no success fee.

http://www.knomee.co.nz/Holding-Page.jpg

EBay

The elephant in the room that nobody is talking about is Ebay.  Your guess is as good as mine why they do not have a presence here.

My assumption is that the market is just too small for them to care.  If they do try and gain a foothold here, I believe they will have an easier time (at stealing market share from trademe) than the other new players, because they have a proven website, and there will be no growing pains.  But until then, we need to pick from trademe or one of the newer alternatives.
Which do you prefer?

About Andy Dingfelder

Andy is a Technology Manager with over 20 years of experience in Software Development, Project Management and Team Management in Telco, Healthcare and General SDLC. Full bio is available at: http://www.linkedin.com/in/dingfelder Follow at http://twitter.com/dingfelder Andy Dingfelder lives in Hawkes Bay, New Zealand with his wife and two daughters.
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2 Responses to The NZ selling market is a mess. What is going to happen?

  1. Gavin Todd says:

    I think that going head to head with the incumbent in the internet space is ludicrous. Would you try to go head to head with google? Just because a percentage of people are complaining about a 5% fee does that mean you would start an entire business enterprise based on that. These competitors must be out of their minds if they think they will topple TradeMe. In the new world it’s winner takes all. That’s it. With a network effect you cannot beat it through price, design, gimmick or determination. These people should have been building their machines in the late 90’s when Sam was if they were serious. You can’t waltz in 15 years later and think you can join. This isn’t a chain of pizza restaurants we are talking about. It’s network effects. These new entrants are confused. They think that they are looking at the business by going to TradeMe’s website when that is only the tip of the iceberg. When these people got overcharged $300 on a car extra that they were not happy about did they start a car manufacturing company? It’s the same thing only different and these people don’t ‘get’ it and will spend so much money, time and effort to realize what I just wrote here.
    Thank you for exploring this and I certainly don’t think that TradeMe is invincible. They are actually ripe for disruption but you can’t build the same thing as the thing you want to disrupt and expect it to disrupt. 🙂

  2. Pingback: wheedle is back – trademe’s competition? | Computing As You Like It

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