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.

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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 Amazon.com.

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)