Trade Me loses the plot

It's a summer weekend, the sun's beating down outside and you can almost hear the waves crashing on the nearest beach.

But you've got a wodge of surplus goods in the corner of the dining room you said you'd get rid of.

While others are sunning themselves on beach towels or splashing in the surf, you spend hours meticulously logging items on auction website Trade Me.

If you've done this over several weekends, depending on the success of your items, you might wonder if it was worth it.

Price hikes
Trade Me hiked its auction fee by 5.3% last year, making the gain from some low-price items marginal at best.

Take this example: a $1 reserve item sells for the minimum amount, costing you a 25c gallery fee and a 50c success fee.

Sure, the winner pays for postage but when you add in your time – for writing up the auction, exchanging information with the buyer and the wait at the inevitably-long Post Shop queue – it's a fair question to ask if there is any gain at all.

Not all auctions are like that.

The choicest, ripest low-hanging fruit of your excess items might go for $100, $200 or more, snaring success fees for the website of $10 or more, but there will only be so many of those.

The rest might be an eclectic collection of books and CDs which are hard to group together, thereby necessitating the laborious attempt to sell them one by one.

Growing pains
Now Fairfax has sold out of Trade Me it will be under pressure from investors, particularly institutions, to leverage its market dominance to lift volume and returns.

There's even a suggestion it should become an auction-house for unemployed workers.

Other auction websites are waiting in the wings but are unlikely to challenge NZX-listed Trade Me's well-established market power.

NBR ONLINE wonders if it is customers the company should be worried about, not rivals?

On the recommendation of an acquaintance, one Trade Me user packed a suitcase full of second-hand CDs and pitched up at Christchurch store Penny Lane Records.

After a swift 20-minute assessment the happy buyer walked away with $500 cash for 200 CDs. No fuss, hardly any effort.

The same source has also sold dozens of books to a local second-hand book store in Onehunga – for bargain basement prices but, again, for little more effort than filling a box and dropping it off by car.

The lure of quick cash
Our source tells NBR ONLINE he's more likely to favour this sort of selling in future and leave his Sunday afternoons for playing at the beach or park with his family.

The argument goes time is precious and when you factor in even a minimum wage to the hours taken to sell things on Trade Me, some people are probably thinking again. 

One wonders if there are many in the same boat and if, collectively, they are more of a threat to Trade Me's bottom line than a string of unproven start-ups.

Trade Me has signalled it is after more acquisitions. That and diversification might offer a more acceptable form of revenue growth, rather than hiking fees again, if the experiences of some Trade Me users are a guide.

Earlier this week, Trade Me shares (NZX: TME) were trading at $4.60, up 32.6% on a year ago.

dwilliams@nbr.co.nz