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

Two Trade Me competitors stumble at the start line. Let's hope they pick it up. "People don't like bullies and they don't like over-pricing," Neil Graham says.

Mon, 01 Oct 2012

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.

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