TradeMe

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Trade Me Limited
Image:Banner_kiwi3.gif
Type Private company
Founded 1999
Headquarters Wellington, New Zealand
Key people Sam Morgan
Industry Auctions
Products Online auction hosting
Employees 70+[1]
Parent John Fairfax Holdings
Slogan Where Kiwis buy and sell online
Website www.trademe.co.nz
A screenshot of the TradeMe homepage
A screenshot of the TradeMe homepage

TradeMe is New Zealand's largest internet auction website, run by Trade Me Ltd. Sam Morgan founded the site in 1999, and sold it in 2006 to Fairfax for NZ$700 million. Trade Me Ltd also operates the websites Find Someone, Old Friends, Safe Trader and smaps.

Trade Me Ltd has become New Zealand's largest company of its type, and its flagship (http://trademe.co.nz) became the most popular website in the country in 2005. The group of sites collectively generate just over 50% of all web-page traffic originating from New Zealand-based servers.

During peak hours, Trade Me has approximately 60,000 people online, and 700,000 auctions running. Trade Me currently has 1,578,717 active members.[2] These statistics make Trade Me seem very popular, since New Zealand has a total population of around 4,100,000 people.

Participating traders can use New Zealand's banking system to settle payments. Many traders settle by bank transfer or by bank deposit, and Australian sellers must have a New Zealand bank account. Paying cash on pickup is common with larger items probably partially due to the concentration of the New Zealand population in a small number of urban areas. Trade Me transactions do not require PayPal, as Australian buyers can pay with cheques, which many New Zealand banks will negotiate free of charge.

Trade Me shares many features with other online auction websites, such as the American auction giant eBay. Some of these features include "Buy Now", "Auto bidding" and the Safe Trader escrow service. Members in New Zealand can become "Address Verified" by confirming their street-address, and the site may block unverified members from bidding. Significantly, despite its global reach, eBay has failed to make a sizeable penetration in the geographically isolated New Zealand market.

The Trade Me site also has a general messageboard, where members can participate in discussions on a variety of topics. People also ask questions and seek advice on the messageboard. Controversial postings or flame wars have occasionally resulted in auction interference by members with opposing views.

Contents

[edit] History

[edit] Origins and early development

Sam Morgan founded TradeMe during the first few months of 1999, building the site while working full-time for Deloittes as a technology consultant. At Deloittes he worked on internet projects and supply chain issues.[3] During this time he witnessed the successes of online businesses like eBay, Yahoo etc, as well as the disaster of the dotcom bubble.

According to TradeMe legend[4], Morgan, then 23 years old, decided to found the TradeMe site when he was unable to find a heater for his flat in Wellington. Despite searching the internet, he couldn't find what he was looking for anywhere. The Trade and Exchange site had a heater for sale, but listings were held back for a week before being published online and the item in question had already been sold by the time he made contact with the owner.

TradeMe was built in January and February, as Morgan describes:

"Some time later we were in a backpackers in Sydney and got evicted because it was overbooked. We went up to some backwater because it was the only accommodation we could find. Anyway, there was nothing to do, so that night I started drawing a data model. So it sort of started there really. Then when I came back to Wellington I literally sat on the couch and built the site on a laptop over a five- or six-week period."[4]

The site went online in March after Morgan pulled together as much funding as he could, gaining 155 members in its first week on the internet.[4] In its early stages Morgan humourously listed TradeMe for sale on eBay with a $1 million buy now price. Though eBay withdrew Morgan's auction, it sparked some interest among New Zealanders realizing the potential of online trading.

A former TradeMe logo from October 1999.
A former TradeMe logo from October 1999.

TradeMe's development was slow initially because its founder had little funding to pay for the costs of hosting and expanding the site. In addition, TradeMe was initially completely free for both buyers and sellers, a strategy for expanding its member base at the cost of short-term revenue. With little money and time available to work on the site, Morgan made the critical decision to sell almost half of his new company to his former Deloittes colleagues, bringing him around $75,000.

By August, membership had risen to 3500, and Morgan was able to dedicate most of his time and funding to the site. The site's early strategy was simply to increase its user base, encouraging members to refer their friends to the site. The Safe Trader escrow service was launched at this time.

For a snapshot of TradeMe's early development see the Internet Archive for TradeMe here.

[edit] Growth and expansion

In its early years TradeMe continued to struggle, slowly increasing its user base, but proving a challenge financially. Web banners were initially used, but prices for advertising were falling and it was not sufficient to cover expenses. Fees were introduced to auctions, first for features such as bold titles, then in September 2000 success fees were introduced. This proved the turning point for TradeMe, saving the site from financial disaster.

eBay was unsuccessful in its 2001 effort to expand into the New Zealand market.
eBay was unsuccessful in its 2001 effort to expand into the New Zealand market.

eBay tried to enter the New Zealand market in 2001, but had little success. TradeMe has remained the major internet auction site for New Zealand, with both international and smaller national competitors (e.g. Zillion) gaining little Market penetration. Morgan offers his thoughts on eBay's attempt to penetrate the New Zealand market in an interview:

"...I think there are big cultural issues there that are just not well understood. For example the Americans think that everyone has a zip code [...] they were a little late in and then they launched in US dollars."[5]

Morgan took time off from the stress of running the booming TradeMe site in September 2001, managing an IT team in London. When he returned to his role at TradeMe the site was not only profitable, but had a membership of 100,000 and growing. By April 2005 this number reached the one million milestone.

In 2005, the business was rated the fastest growing Technology company in NZ's Deloitte/Unlimited Fast 50. [6]

[edit] Acquisition by Fairfax

On March 6, 2006 the Australian media company Fairfax acquired Trade Me in a deal worth NZ$700 million, with an additional NZ$50 million payable if the organisation meets earnings targets over the next two years. Sam Morgan and other executives remain with TradeMe.[7] Since the purchase TradeMe has become integrated with other Fairfax operations, for example the former Fairfax sites Jobstuff [1] and Propertystuff [2] have been discontinued in favour of TradeMe's respective sections for these listings.

[edit] Listings

TradeMe has increased its scope over time, and now offers a wide range of listing possibilities. It has most recently moved into the online job listing market, in competition with sites like Seek.co.nz. The following items and positions may be listed on TradeMe:

  • General items
  • Cars, motorbikes and boats
  • Property
  • Jobs
  • Rental property
  • Flatmates
TradeMe's Property marketplace.
TradeMe's Property marketplace.

In 2006 TradeMe laid a complaint to the Advertising Standards Authority over the advertising of it's largest property market competitor, Realestate.co.nz, had done. According to the complaint, Realestate.co.nz, run jointly by the Real Estate Institute of New Zealand (REINZ) and Property Page Ltd, had misled consumers with their advertisements with their slogan: "the only place with every place,” which TradeMe said was not true because they had properties listed on their website which Realestate.co.nz did not have. TradeMe also explained other causes why they had breached ASA's code of ethics and comparative advertising. ASA chose to uphold parts of the complaint.[8]

[edit] TradeMe sites

Trade Me Limited owns several other sites that are grouped together in tabs at the top of the TradeMe website, allowing navigation between the related sites. Trademe has recently expanded into the online maps area with smaps and added a link to the Fairfax site stuff.co.nz into the trademe interface.

  • TradeMe - Main TradeMe auction site
  • Find Someone - Matchmaking site
  • Old Friends - Finding old school friends and workmates (831,525 members)
  • SafeTrader - Escrow service
  • smaps - Online maps interface similar to Google Maps specializing in street maps without the satellite imaging.
  • Stuff - News and information site

[edit] Controversy

[edit] Fraud and controversy

As a fairly open marketplace, Trade Me experiences the same problems (such as fraudsters) any online auction website does, and users should exercise increasing vigilance. In recent times, TradeMe has not in all cases helped out victims of fraud.

Trade Me is made up of many sellers. Some of the sellers tend to have very bad feedback and can still continue to trade and sell. For example, a trader might have 1,500 good individual feed backs and could also have 150 bad individual feed backs. These 150 bad feed backs can be regarding; not sending goods (fraud) or not covering their stated warranty (not complying with the New Zealand Consumer Guarantees Act or other relevant New Zealand laws [3]).

Members can report fraud via the "Community Watch" feature or ScamBusters. (A community of users originated Scambusters — which has no affiliation with TradeMe — to report fraud on the site.)

To minimise payment problems and reduce fraud, Trade Me restricted membership to New Zealand and Australian residents in 2005. This affected around 20,000 international members.

TradeMe’s terms and conditions have always specified its restriction of membership to persons over eighteen years of age, as users under the age of eighteen can not negotiate a legally binding contract. However, prior to mid-2005 Trade Me did not restrict underage users even allowing them to enter in their correct birthdates upon signup. In June 2005 Fair Go,[9] a television-programme devoted to consumer-affairs, approached Trade Me regarding this issue and featured it on a broadcast episode. In response to this, Trade Me sent all the users who registered their date of birth as under eighteen an e-mail asking them to check and update their details if incorrect. Trade Me no longer allows users to register when entering a birthdates as under eighteen, but people under eighteen may simply claim to be eighteen or older when they join. As yet Trade Me has not undertaken action to remove any fraudulent members under eighteen years old.

[edit] Clashes with software developers

Various third party software developers have been threatened after developing software which interface with the Trade Me website.

On August 19, 2006 The New Zealand Listener published an article, Bidding War [10], on one such developer. Ciaran Riddell developed a piece of software, AuctionBar, which allows more detailed searches for goods on sale as well as bids and updates via text message and a tool known as a sniper, which acts as an automated bidding tool.

[edit] Recent enhancements to the website

  • September 2006 - It is now possible for buyers to send a template email containing an address where the auctioned goods can be sent.
  • August 2006 - Text bidding introduced, a buyer can be sent an SMS text message during the auction informing that he or she has been outbid and the buyer may then text a higher bid.
  • June 2006 - Automated email introduced where a seller may have an automated email sent to the winner of an auction when the auction is won, this email can contain bank account details so the buyer can instantly deposit the funds.
  • 28 November 2005 - Date and time on answers and comments (questions and answers on auctions now get time-stamped with the times of asking and of answering)
  • 28 November 2005 - Email to watchers when "Buy Now" added (watchers receive an e-mail if the seller of an item adds a "buy now" price to the listing)
  • 21 November 2005 - Improved photo-page to make it easier to browse photos. When viewing an enlarged photo users can now see thumbnails for all images without having to return to the listing itself.
  • 11 November 2005 - Local tag displayed in auctions (an icon now displays in auctions indicating whether the item up for auction currently shares a province of New Zealand with the enquirer)
  • 11 November 2005 - "Buy now" price shown on category pages (rather than having to go into the auction to see the "buy now")
  • 1 November 2005 - New icon for brand new listings
  • 20 November 2006 - New TradeMe front end launched, with design input from the TradeMe community.

[edit] Unusual sale items

  • A 'comfort hug' was auctioned in April 2005 to promote love and good feelings. The auction received considerable media attention.[11]
  • In 2005, a red paperclip allegedly sold for $749.00. The auction became one of the most-viewed auctions in Trade Me's history, and the seller received approximately 200 questions about the paperclip, all of which he answered in a humorous fashion. [12]
  • In late 2005, a member offered a time-machine for sale through auction (or swap for "anti gravity machine"), with the highest bid reaching $300,000,000,001,999. The seller withdrew the auction shortly before its close-time. News of the auction reached some New Zealand newspapers, which ran a story on it. Currently this auction holds the record for the highest number of questions asked and answered.[13]
  • In 2006 a user attempted to auction the Optus B1 satellite following a malfunction. [14] The opening price stood at NZ$200,000,000. When Trade Me withdrew the auction there had been 231,908 page views.
  • In May 2006 a member tried to sell Australia, using humorous descriptions of the country. The auction drew over 100 questions, and had more than 11,000 views. The country sold for $200,045,400, with a reserve price of 50 cents. In the end, Trade Me admins withdrew the auction. One News (a television programme) ran a report on this auction.[15]
  • Also in May 2006 a member tried to sell his leg that had been amputated a year earlier as a result of Diabetes. The auction was withdrawn within hours and Body Parts was added immediately to the Prohibited Items list. [16]
  • In June 2006 Wellington Hurricanes player Tana Umaga hit team-mate Chris Masoe with a Roxy handbag at the "Jolly Poacher" bar in Christchurch after Masoe got into an altercation with a patron. The owner of the bag auctioned it via Trade Me for $22,800, generating a large media-story and over 1 million page views before the auction closed. [17]
Main article: 2006 rugby union handbag controversy
  • Also in June 2006 Lisa Lewis decided to streak across the field at the All Blacks Game against Ireland held at Waikato Stadium. Days later the Bikini Lisa was wearing ended up for Auction. [18] The winning bid of $4,010 was later revealed not to be genuine [19]
  • In December 2006, one of several icebergs off the eastern coast of New Zealand was offered.[citation needed]

[edit] Prohibited items

Trade Me bans the sale of the following items, and a site administrator will withdraw auctions including them:

[edit] References

  1. ^ TradeMe Newsletter March 2007
  2. ^ TradeMe Statistics
  3. ^ "Sam Morgan’s e-Business strategy - an i-Start exclusive" Date: March 2006 Accessed: 9 December, 2006
  4. ^ a b c Hard road to online fame and fortune - 11 Mar 2006 Accessed:10 December 2006
  5. ^ TradeMe: Big Fish In A Small Pond August 21, 2006, Accessed 10 December 2006
  6. ^ NZX: By Company Released 6 Mar, 2006; Accessed 10 December 2006
  7. ^ Fairfax To Acquire Trade Me, New Zealand's Leading Internet Business 6 March 2006, Accessed on 10 December 2006
  8. ^ Complaint to ASA (.rtf)
  9. ^ Fair Go - Episode 14
  10. ^ The New Zealand Listener - Bidding War
  11. ^ TradeMe Auction 25682983
  12. ^ TradeMe Auction 31231669
  13. ^ TradeMe Auction 36725938
  14. ^ TradeMe Auction 52360702
  15. ^ TradeMe Auction 55824140
  16. ^ TradeMe Auction 57001645
  17. ^ TradeMe Auction 58555525
  18. ^ TradeMe Auction 59664487
  19. ^ Bikini bid 'a hoax'

[edit] Further reading

  • Trade Me Success Secrets : How To Buy Better & Sell More Profitably On New Zealand's Most Popular Auction Site by Michael Carney, Activity Press, 2005, 294 p ISBN 0958263418
  • Trade Me : your ultimate guide by Juha Saarinen (foreword by Sam Morgan), Penguin 2005, 179 p ISBN 0143020447

[edit] External links

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