Trade Me cites cost of mobile apps as auction fee hiked 5.3%
"I told you so when it went to public ownership! It will be the same scenario with the power companies, just you wait and see. Some piddly excuse every time."Featured comment
Trade Me [NZX:TME] is raising the “success fee” on its actions by 5.3% from Monday.
Forsyth Barr analyst Rob Mercer told NBR the auction fee rise, which follows a lift in fees for classified sections like motoring and property, was slightly higher than expected.
However, the sums involved were not large enough to move ForBarr’s current projection of a 7-8% increase in Trade Me revenue for its 2013 year.
The impact of incremental success fee increases would be limited.
It was also nearing a psychological ceiling.
Monday’s increase will lift the success fee on a $100 item from $7.50 to $7.90.
Mr Mercer saw most people balking if asked to pay $10 or more on a $100 sale.
“The real game changer won’t be a change in fees but a move to bigger ticket sales.”
ForBarr sees people becoming comfortable buying more expensive items on Trade Me.
It also sees the site’s move to sell more new goods and expand retail partners as positive.
However, anticipated growth is already built into Trade Me’s share price, and Forsyth Barr has a hold rating on the company.
More traffic, cost of mobile expansion
Trade Me head of marketplace Craig Jordon told NBR the fee rise was necessary because of an 18% rise in visits to the site of the past year, and the cost of expanding the service to new mobile platforms.
Mobiles now account for 25% of Trade Me visits.
Trade Me's mobile expansion has included an iPhone app, and Android app, a generic Touch app for tablets and a Trade Me Property iPad app (which features Westpac signage and Westpac mortgage calculator links).
The site last lifted auction fees in February 2011.
Fees will be raised as follows:
- On a sale price between $0.50-$199.99: fee rises from 7.5% to 7.9%
- On a sale price between $200-$1500: fee rises from 4.5% to 4.9%