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Wheedle's Rich List backer hits back at Sam Morgan – but site falls over on launch day

UPDATE / October 1: Rich Lister Neil Graham can give as good as he gets.

Trade Me Sam Morgan mocked Mr Graham on Friday for telling media that Wheedle – a Trade Me rival officially launching today – was backed by huge infrastructure. He accompanied his comments with a Twitpic of an error message on the new auction site's home page.

"Being rich clearly does not give you skills transferable to areas outside your domain of competence," Mr Morgan said.

"People don't like bullies, and they don't like overpricing," Mr Graham told NBR ONLINE over the weekend. "Good on you Sam, you’ve made no friends. Just worry about how good we are."

The free publicity was "marvelous", the Mainfreight co-founder (estimated worth: $65 million) told NBR. 

Mr Morgan's comments were off the mark, he added. Wheedle was "over-geared with quality servers. We can take a huge amount of hits at once".

One problem: around 6.45am today, Wheedle was down – again (see screen shot top right).

Today, the day of Trade Me's 5.3% auction fee rise, is the site's official launch. But it started running TV ads, and was open for listings, yesterday.

Mr Morgan wasn't the only one having sport. "Wheedle: verb. To struggle with technical problems. 'I've been wheedling away at this site launch for ages, but IIS keeps failing'," tweeted blogger and software developer Ben Gracewood.

Mr Graham brushed off the criticism. People would be impressed by the size of Wheedle's staff, and its infrastructure when all was revealed later today, he told NBR.

He has previously said the site is running on 40 servers at IBM's new Auckland data centre.

"We’re confident," Mr Graham told NBR. "But there are lots of knockers. You know what New Zealanders are like." (Although one suspects Mr Graham would have a few choice words for Mr Morgan if Trade Me had been down this morning.)

Trade Me had had the sector to itself for years, and some had got fed up with its greed, arrogance and bad service, the Rich Lister said. 

Beyond Wheedle's marketing campaign, which Mr Graham said would continue on TV for "several weeks", the Trade Me rival was relying on better pricing, and better service, to gain a critical mass of users.

"I know from Mainfreight it all comes back to service, reliability and being a good bloke to deal with."

The market was also price-sensitive, and Wheedle has a $1 flat fee on auctions above $20. "Watch us. People will go for where they get the best deal," Mr Graham said.

NBR isn't so sure. Sella (which offers free listings) has already shown that under-cutting Trade Me on fees is not enough.

Wheedle had been three years in the making. Mr Graham said he honestly did not know how long it would take to make an impact on Trade Me.

But he did allow it was not necessarily his ambition to be the biggest on the block, and that there was room for two or three players in the market.

At one point in our conversation yesterday, he riffs that one in 20 Trade Me users might check out the new competition.

On budget, he was again coy. When NBR asked if it was single digit millions, he replied "higher".

Meanwhile, a more modestly provisioned Trade Me rival, Christchurch-based listselltrade, also had error message problems over the weekend. A planned launch for last Friday was scaled back to opening registrations for a full launch this Thursday.

Right now, things are mixed on Wheedle. Its car section has opened for business chock full of classifieds. Its jobs section obviously had no pre-launch partners lined up, however, and the section is empty.

Good luck to Wheedle and listselltrade.

Mr Graham is charged up and sounds like he's relishing the fight.

And, of course, competition can only be good for Kiwi sellers.

But as Sam Morgan said in his sort-of apology for his Friday comments, "Brave souls. Can't think of a harder space for a start-up to crack!." 

So far, Trade Me shareholders are taking events in their stride. The company's shares [NZX: TME] were up 2 cents (0.5%) to $4.00 Friday and were up another cent in early Monday trading.

CEO Jon Macdonald has recently focused his comments on international competition, and Trade Me's drive to get more commercial retailers onboard.


Two Trade Me competitors line up for launch
Sept 27:
Is it something in the water?

Suddenly everyone wants to take on Trade Me.

Wheedle has broken cover on Stuff, and says it will launch Monday.

And now I've just spoken to Brenda Treacy, founder of listselltrade, which will launch tomorrow (Thursday) at 3pm (like Wheedle, the sight is live, if yet to be populated by listings, if you want to have a nosey around. Wheedle has been sometimes accessible and sometimes "down for maintenance" – something Sam Morgan was quick to mock).

You need to crack the chicken-and-egg thing...
As Tom Pullar-Strecker notes in his article on Wheedle, auction sites have a classic "chicken and egg" problem of attracting a critical mass of buyers and sellers. People won't list unless there is a mass of members to sell to, and people won't join if there are no listings.

Raising your profile with a marketing blitz is one way to try and crack this conundrum.

Perennial wannabee Sella has survived to nip around Trade Me heels year after year by dint of being bought by Herald publisher APN (along with stablemate GrabOne).

Wheedle is backed by Mainfreight co-founder Neil Graham, whose worth was put at $65 million on the 2012 NBR Rich List – presumably Graham will have a little lettuce he can put towards Wheedle – although a full frontal assault on Trade Me could easily account for his entire fortune faster than you can say "Telecom Ferrit" or "Flying Pig".

As it is, he says he will spend an undisclosed number of millions promoting the site in "an extensive television and radio campaign". (So at least old media is going to make a little dosh out of it. Oh, irony, etc)

There will be iPhone and Android apps from the get-go. And Wheedle apparently has 40 servers at IBM's swish new data centre in Auckland (although, hopefully, its October 1 performance will be better than its patchy effort today).

In terms of listselltrade's marketing effort, Treacy told NBR ONLINE a four-page tabloid flyer will be printed the weekend after next, then dropped in every letterbox in the country.

She says she is no Rich Lister, "just a regular Kiwi woman" trying to make her way. Marketing will be ongoing she says, but funded from cashflow or her own pocket. There is no moneybags partner waiting in the wings.

...and you need an angle
A new site also needs a point of difference. 

Wheedle is promising to under-cut Trade Me's auction "success fee" – which rises by 5.3% on Monday – taking only $1 on sales over $20. Its classified rates also undercut Trade Me, although $49 to list a property is still pretty robust for an unproven site. 

Listselltrade will offer a flat $10 a month fee for all-you-can list – and small businesses will be free to promote the life out of their own websites if they want to do so in their listings.

(Sella has no fees for its basic service, replying on people to buy extra options for more prominence.)

E-commerce and web design chops
Treacy owns Treacy Advertising and Web Design, a 15-year-old Christchurch business. 

She says that for a long time she has listened to business clients complain about Trade Me's success fee.

When the quakes hit and many clients left town, she and her team knuckled down to work on listselltrade. (That name! I keep having to scroll back up to check if I've got it right.)

At any one time over the past 18 months, at least eight staff have been working on it, she told NBR. And, however things turn out, the cleanly designed site will be a showcase for her company's skills.

Can they do it?
There is, of course, a reason that Trade Me can charge more than Sella, and various challengers over the years. 

It has a bigger membership, and more people participating means good auction for a higher price. 

And there are other factors, including the fact Trade Me runs almost glitch-free.

And, despite its Australian ownership, it is an ingrained part of Kiwi culture. It has become a verb ("So what will you do with your iPhone 4S now you've got the 5? Trade Me it?").

Good luck to the new challengers. I hope they provide the incumbent with a modicum of opposition.

Dylan Bland, who once had a tilt at Trade Me with Zillion, is blunt about their odds of success. "No chance," he told NBR.

Trade Me's real competition
But, to be honest, the real thing that will keep Trade Me on its toes in the months and years ahead – especially as it sells more and more new goods – will be fighting for the hearts and minds of Kiwis who shop at offshore e-tailers (and, conversely, to win the attention off overseas retailers looking for an easy way to tap the New Zealand market).

I hope Treacy does well. It must take a lot of moxie to not only stick it out in Christchurch, but launch a new business. She said her team would be working through the night to meet tomorrow's launch target, which was moved forward after Wheedle broke cover today.

But, of course, the end game doesn't have to be knocking over Trade Me.

Sella found a home at an old media company, and things have worked out for Bland, too – who sold Zillion to Sella – and is now part of successful e-tailer MightyApe.

ckeall@nbr.co.nz

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Comments and questions
51

Absolutely dumbfounded that anyone would attempt to compete in this space.

Sounds like some fast talking entrepreneur has 'wheedled' Graham out of his millions. I think he should be sticking to freight, or chuck some of his funding behind some Kiwi startups with at least an original or innovative product, not another success story clone.

buyselllisttrade (??) - who launches a static homepage with dummy links instead of actual inks?Every user who visits will think the site is broken! And a site counter? Might as well put an 'under construction' .gif up there with a little man in a hard hat. Hello 1998

Al, it's much more likely that Graham is interested in this business model as he can then control the shipping of goods via his freight business.

At the higher levels NZ ain't a capitalist country, despite what the media tells you. It's a mercantilist one of monopolies and cartels: Fonterra, Progressive & Foodstuffs, the energy monos, Telecom, Fletchers & CHH, the city councils, PDL, PGG/Wrightsons, Tranzrail, the fishing companies & wholesaler cartels etc. Isn't this what makes NZ one of the most expensive countries in the world despite having a GDP that puts us next to Greece? Any competition should be welcomed.

You are so correct, but forgot to mention TAB, Lotto, meat co-ops, licensing trusts, producer boards, Landcorp et al, all these and those you mentioned have the ear of parliament by way of their clients money they can throw at political parties in election year.
It's so sad because NZ's progress from settlement to a world trader was only possible on the strength of "owner operator" endeavours.

LOL, sounds like you're a Trademe shareholder. Trademe doesn't 'own' this space in NZ. If another company wants to get in on the action then good on them. Either they will succeed or they won't, but either way they will force Trademe to compete on price, which will reduce Trademe's profits and the returns to its shareholders. Oh well, such is life.
Competition's great, eh?

What a naiive thing to say. Do you really believe that a start-up auction site will force TM to compete on anything? You're on another planet if you do.

Al so true.

Fundamentally someone must compete - reaction to recent price increases show this. When a business has reached the point where it operates without close competition and has great profit are clear indicators that the time may well be ripe. Many users would welcome competition in this space...preferably something delivered with style.

It's a shame Sella.co.nz didn't take off like they expected. I would like to see them succeed more, their site is clean and well maintained only two things let them down not enough users and the search function. Hopefully with the rising fees on Trademe people will now attempt to see what other options are available. Sella.co.nz has the same business plan "no success fees". So if they have only managed to scrape by the last few years, how do wheedle & listmetrade?sell? expect to get by on the same principle. It is great to see more competition, similar to how Telecom held a monopoly for so long and now there is drive for lower rates through healthy competition. Unfortunately most people don't embrace change very quickly or at all, even if it is in their best interest, they would prefer to keep with they know and is familiar.

"Only two things let them down not enough users and the search function" (sic).

Sadly, in a business that relies on being able to find the thing you want to buy (search function) and find parties willing to contract (critial user mass), those two things are essentials, not nice to haves.

Hard to see how any newcomers will make a dent on Trademe's business because they are so entrenched. We know that because they keep ratcheting up their fees.

Yes, this space and the trademe monopoly need to be challenged. As with anything online, the key will be content. These upstarts will need stuff to sell. And that is always the challenge when it comes to online - no content - no views - no deals.

Freight = big bucks, so well worth a punt if you've got the $ to bank roll a serious and long term assault - and lots of good exit options to quit the online and keep the freight. Treacy is deluded. She's been pushing a proprietary (closed) cms onto customers for years.. Nuff said..

Look at ever country in the world and there is only one winner in each country, mostly eBay. They will not succeed. Hell, why would they succeed if sella can't and sella is free.

yahoo
myspace
napster

the internet is littered with once great leaders,

I hate having to pay % for selling $2000 goods on trademe, when I know they provide no more service then if i list a $20 item

the world is flat, flatten the fees!

You hate paying it...yet you still do. That is the point.

Those other examples you cite failed because they couldn't find a way to generate cash. Whereas Trademe has found a way to print it...

Google
Facebook
iTunes

The internet is littered with highly successful businesses who are still market leaders.

I don't really get your point - TradeMe will fail because other businesses on the internet has failed (or lost dominance) in the past. As the other reply says you are free not to use TradeMe to sell your $2000 item. You are paying for access to potential buyers from all over the country that no other website (or conventional 'classifieds') can match.

Like a lot of business areas in our small economy there is good business to be had for one maybe two players, split it three and you have a procession of start ups going broke and a lower service offered from the main player to survive. Trademe will eventually follow the path of the warehouse was the first to run a new model well but will end up tired and struggling, tradmes financial monkey of debt will eventually have to be reckoned with . But as technology and the market changes which it will so will the trademe model start to gather dust.

Trademe is the only cash cow left in the stable so they're milking it for all they can. The timing is right for a new competitor as there are a lot of people looking for an alternative....let see how the playing field looks in 6 months...

great to see a new player start up. i only hope that wheedle's takes off.
as trade me is to dam greedy with it,s profit up 75.6 million. if you kiwis
leave trademe and go to another site. they will drop there prices. you wait and see. just a matter of time.join new site now come on.

Why would you spend good money listing on a site with no traffic?

Makes TM look like a bargain when they have 50000 + people on there each hour of the working day!

I would do it if i was sick of being taxed on every sale - and especially if the spend was low.

Listselltrade charges $10mth - at that price what have I got to lose?

My money is on Shortland St's nzbuyandsell.co.nz

mtadealers.co.nz was setup to also compete in the automotive area. It's worth a look. Nice to see more players entering the market. It's about time. The days of Trademe dominance is ending. I feel sorry for those that paid big money for shares. They will fall albeit slowly.

I agree - the truth is TrdeMe appears smug about entry barriers to competitors and as such is losing the battle for hearts and minds of sellers. They now seem less kiwi-DIY and more overseas-contolled-corporate. Corporate profit motives mean they can only continue in that direction. Alot of people have bought into a belief about their unassailability - but no business is immune to old age or resentment

Maybe true - although the corporate profit angle is rubbish: do you think these new wanna bes a in it for the love?

No I'm saying success and size breeds a bigger and more fucused profit imperative - Trademe isnt short of staff and overheads and has a parent company and shareholders to feed - I think that's undeniable. Unless you think small and very large businesses are the same?

As a commercial seller on Trademe I think the new fees are a show stopper, I think a lot of the big traders will jump aboard with wheedle very quickly. It will be interesting but I would put my money on Wheedle at this stage. More the case of Trademe being greedy and pricing them self off the market.

Be prepared to lose your money then...

listselltrade looks good so far as a buyer. I like the 2 buttons where you can click to limit your search to either "private sellers" or dealers.

Competition is always good. But you have to be able to compete - not take the main market player head on - TradeMe is an extremely well run business. I love Sella, great team, great deal of really cool innovation - facebook integration, shell sites, better interface than Trademe. But as a commercial seller on Trademe for 8 years I struggle to justify even the time for dual listing because of a lack of buyers. What is really missing here is the integration into the postal industry - and no i don't mean the technical side - plus the promotional side - how are you as the site going to help me compete with the Warehouse? (which by the way we try and avoid as much as possible .... cause they are good).

site up now, but part of Wheedle front page requires Flash player, so invisible on iPhone etc

I'm using youshop and landing stuff from the US, so much easier and cheaper

Site up...but cannot complete registration.

I could register fine

I'd suggest a great way to turn $65 million into nothing is try and take TradeMe on, and it looks as though he's jumped in to a gun fight with a toothpick given the technical problems and lack of executive nous he has on board.

The layout is almost a exact copy of Trademe, is that even legal ?

The site looks pretty similar to Trademe, just different colours. Same old, same old.

Can someone please add comma's to the prices on the real estate section. All the numbers together hurt my eyes.

Wheedle looks ok and has listings with incentives for more till the end of November. It will attract sellers with these so it needs to focus on attracting buyers.

Competition is good.

I use Trademe and sella for advertising and selling our products.
Both are successful. Trade me has more hits according to the listing information. I think Trademe has not looked at the impact on price and margins it's web site has had on NZ business. To sell of Trade me one needs to be the lowest price which means small margins.
That lesson is one TradeMe as a business has refused to acknowledge, so the market place is ripe for a switched on competitor. It is not if, but when.

Sella is more clumsy to use than trademe and few listings are picked via search engines like Google. Fix that and the site will Zoom.

And Sam really does know that "being rich does not give you skills transferrable to areas outside your domain of competence".... just look at the failed Pacifc Fibre project!

That is just being snidy. Totally unrelated. They were trying to raise $400m and couldn't find enough investors. That doesn't mean they did a bad job of giving it a decent go.

Tried clicking on a few buttons, but nothing happened. I might try again tomorrow.

So Wheedle even copied every category name from Trade Me exactly. I guess imitation really is the sincerest form of flattery

Ii just feel sad that the cash blown on this fiasco could have supported a number of much more credible opportunities.

Already signed up for wheedle, what an absolute joke, lots of bad or broken links within the site and many bugs, I had a few items listed and had so many problems I have removed all items and cant even close my account lol, back to trademe. wheedle has not be tested properly for bugs, epic fail

hay don,t give up yet good things take time as you know. like tuneing
a aston martin !!! go go go.

There *are* opportunities in e-commerce but they are *not* in cloning Trade Me. I would have far more respect for Wheedle if they at least tried to do a different take on it. Trade Me will probably fail one day but it isn't anytime soon.

PS: "Trade Me it" - I've never heard anyone use that. Sure Trade Me is part of NZ culture as much as L&P but "Trade Me It" doesn't work as verb. "Chuck it on Trade Me" is more the phrase you're looking for,

We are a technology company and we did a very quiet roll out about a month back and then quietly dealt with the code that presented issues. It pays to test in the market first.

I just signed up for the Business account and needed to Enter an activation key and never got it. Also on the resend, I never got it.

So I am a officially a non member, member.

Al
www.yogasync.tv

It is a real shame that Wheedle has made such a mess of the launch. You don't get two bites at the cherry. Trademe does need competition but it wont be Wheedle. Who were the developers? Offshore perhaps?