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Trade Me signs deal to lure Aussie retailers

UPDATE April 13: Trade Me today confirmed it has signed an aggreement with Channel Advisor, as flagged during February (below). The pair say Australian retailers will be able to use Channel Advisor to reach Trade Me buyers by Christmas.

Trade Me shares [NZX:TME] were up 0.58% to $3.45 in midday trading.


Trade Me gets serious about retail push

Feb 23: Most people still think of Trade Me as an auction site for second-hand goods.

But 40% of its sales now new goods - and it wants to expand retailers' activity.

CEO Jon Macdonald told NBR his company is in discussions with several so-called retail aggregation companies (the best known of which is Channel Advisor, which handles all logistics for a retailer that wants to sell goods across multiple sites, such as eBay and Amazon).

Discussions included talks with Australasian aggregators, including one that handles online sales for Kathmandu, EziBuy and Briscoes.

Things are getting to the sharp end.

Many small retailers already use Trade Me. It means they don’t have to build their own website.

They also gain access to Trade Me’s giant audience, and the trust factor that comes with its community ratings, and oversight of sellers.

Mr MacDonald said large retail chains would always sell through their own websites.

Why would they also sell on Trade Me, giving the site a cut of their profit?

The CEO said the big retailers might want to access Trade Me’s giant audience to generate additional sales.

Or they might want to use Trade Me for selling specific products such as end-of-life items or returns that they might not want to be seen heavily discounting on their own sites.

Trade Me could also be used as a retail platform for overseas retailers looking for a way to reach the New Zealand market without setting up a physical presence here.

Like chairman David Kirk, Mr Macdonald sees new goods playing a major role in Trade Me’s growth over the next few years.

However, over the next 12 months the initiative will not have a meaningful impact on Trade Me’s bottom line, the CEO said.

Mr Kirk earlier stressed to NBR that Trade Me did not want to become a local

While it wanted to provide retailers with a user-friendly e-commerce platform, it had no desire to hold any inventory.

Alienating users?
Mr Macdonald agreed that US site eBay was further down the track in terms of getting retailers on board.

NBR’s correspondent complained that when he made an occasional visit to eBay he found it annoyingly difficult to find any second-hand goods.

Many searches yield dominated by retailers offering buy-now products.

Mr MacDonald said part of Trade Me’s success came from the fact it was close to its community of sellers. Scaling for population, the Kiwi site was roughly twice as popular as eBay.

Did Trade Me risk pleasing shareholders but alienating its mass audience of second hand buyers and sellers if pushed too hard on retail?

It would be a balancing act, Mr Macdonald said. The impact on the site would be carefully accessed at all stages.

Now that he’s head of a public company, he faces another tricky balancing act: impressing shareholders with initiatives to increase fees while avoiding the wrath of Trade Me users.

An increase in premium listing fees, Trade Me Motors fees and a new charge for withdrawing an auction all helped boost Trade Me revenue.

Mr Macdonald said the higher fees had not dampened listings.

Premium fees (for extras like a higher ranking, photo or bold headline in search results) were optional, and provided good value for sellers.

The new withdrawal fee would cut down on the annoyance of items being pulled from auction.

RAW DATA: Trade Me's presentation to analysts (archived webcast; audio with slides)

More by Chris Keall

Comments and questions

Great news. Next up , launch and really start taking on Ebay!!!

Think you will find Ebay has some very very solid patents and trademarks preventing Trademe moving offshore

Good news let the GST rought continue!!

This is really taking on Amazon etc than ebay. (brand new goods from retailers verus second hand goods). I just sold my 'Warehouse' shares. Anyone can see where the future retail scene will be!!
Trademe will likely be NZ's first tech company to reach a market cap of $10billion within the next 10 years.

[Macdonald said TradeMe didn't want to be like Amazon - that is, holding stock and building distribution infrastructure.

Rather, it wants aggregation partners like Channel Adviser to help out retailers with that side of things.

eBay, which sells a lot of new goods, is a closer analogy.

I think Trade Me's aim is as much to give overseas retailers a cheap way of reaching the NZ market (and boost its new good sales in the process) as much as stopping NZers going to etc - CK]

Given Trade Me's aspirations - sell your retail property portfolio/shares and stop advertising with Fairfax.
Trade Me will do more damage to the retail landscape than the Warehouse ever did.
Bye bye Westfield.
More tax shortfall due to no GST and duty.

shopping around the world for everything from designer clothes, shoes, specs, fragrances, cosmetics, you name it - and all from the boudoir.

haven't set a foot inside smith & caugheys , or most other 'high street' shops, for at least 2 years and have saved thousands!

wait till TM links with the the likes of paypal...

New Zealanders are already spending a lot on ebay. I know I sell and spend more on ebay than trademe. Paypal is owned by ebay so that is one way ebay can hold trademe back, I doubt ebay will let trademe use paypal. Paying for items using bank accounts is pretty annoying and that is holding back tradme.

You can by directly on trademe to sellers by creditcard via the Paynow function.

Not good news for Nz retailers,at a number of tax and license disadvantages.

You are right. The seller can choose paypal as a payment emthod on trademe and I already do that but no one as chosen that option yet. I guess paypal will be happy to be the bank at the take roughly 3% on every transaction. But really this is big news for NZ and will bring into question the gst issue. The law at present says the parcel must declare the value on it and if it is over $400 in NZ then gst is due. So we can buy in lots of $399 items but if they are more expensive we would break them into their components.
Tradme may not gain alot on this as there are already a lot of individuals importing gear from overseas and selling it new into NZ. The cosat of some items such as shoes is going to come way down and put some of thoses businesses under pressure.

Shipping time will be a factor here. Local supplier +$10 get it tomorrow or wait a few weeks hmmm. Not to mention the shipping cost will surely add up to the saved duty.

Not so fast bud.

Buy local = c**p service, over priced and no stock... but we can get it in for you...

If New Zealand wholesalers were not so greedy then the retail prices would be more in line with global prices and there would be no room for the overseas companies to enter, everyone blames retailers but the real problem is coming from the wholesalers and distributors that are marking products up to achieve 50-60% margins, the average retail margins are currently around 37-43%