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Trade Me
Trademe logo
Trade Me main page
Trade Me page as of 2007
Type of site
Auction site
OwnerTrademe Ltd/Fairfax Media
Created bySam Morgan
Employees70+
URLhttp://www.digg.com/
RegistrationFree

TradeMe is, as of 2007, the largest internet auction website operating in New Zealand, and is operated by the company Trade Me Ltd. New Zealand entrepreneur Sam Morgan founded the site in 1999, and after many years of rapid growth sold it to Fairfax in 2006 for NZ$700 million. Trade Me Ltd also operates several sister websites including 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. In a country with a population around 4,177,000,[1] TradeMe currently has 1,578,717 active members[2], with approximately 60,000 people online and 800,000 auctions running during peak hours.

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. Many buyers pay cash on pickup with larger items — probably partially due to the concentration of the New Zealand population in a small number of urban areas. TradeMe transactions do not require PayPal, as Australian buyers can pay with cheques, which many New Zealand banks will negotiate free of charge.

TradeMe shares many features with other online auction websites, such as the American auction site 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 sizable penetration in the geographically isolated New Zealand market.

History

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. Within Deloittes, Morgan 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 disasters of the dotcom bubble.

According to TradeMe legend,[4] Morgan, then 23 years old, decided to found the TradeMe site when he could not 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 held back listings for a week before publishing them online, and by the time Morgan made contact with the heater's owner, the item in question had already sold .

Morgan describes the initial designing and building of TradeMe thus:

"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 1999 after Morgan pulled together as much funding as he could. It gained 155 members in its first week on the Internet.[4] In its early stages Morgan humorously 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 who realized the potential of online trading.

A former TradeMe logo from October 1999.

TradeMe developed slowly initially, because its founder had little funding to pay for the costs of hosting and of expanding the site. In addition, TradeMe initially offered a completely free service 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 1999 membership had risen to 3500, and Morgan could dedicate most of his time and funding to the site. The early strategy for TradeMe involved simply increasing its user-base and encouraging members to refer their friends to the site. TradeMe launched the Safe Trader escrow service about this time.

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

Growth and expansion

In its early years TradeMe continued to struggle, slowly increasing its user-base, but facing financial challenges. The site initially used web-banners, but falling prices for advertising made web-banner revenue insufficient to cover expenses. TradeMe then introduced fees for auction services: first for features such as bold titles; then in September 2000 it introduced "success fees". This action proved the turning point for TradeMe, saving the site from potential financial disaster.

File:EBay NZ.jpg
eBay proved 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 in New Zealand, with both international and smaller national competitors (such as 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, and went to the United Kingdom to manage an IT team in London. When he returned to his role at TradeMe the site had become profitable, with a membership of 100,000 and growing. By April 2005 this number reached one million.

In 2005 New Zealand's Deloitte/Unlimited Fast 50 rated TradeMe the fastest-growing technology company.[6]

Acquisition by Fairfax

On March 6, 2006 the Australian media company Fairfax acquired TradeMe in a deal worth NZ$700 million, with an additional NZ$50 million payable if the organisation met earnings targets over the next two years. Sam Morgan and other executives remained with TradeMe.[7] Since the purchase, TradeMe has become integrated with other Fairfax operations, for example the former Fairfax sites Jobstuff [2] and Propertystuff [3] have disappeared into TradeMe's sections for these listings.

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. Customers can list the following items and positions on TradeMe:

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

In 2006 TradeMe laid a complaint with the Advertising Standards Authority (ASA) over the advertising of its largest property market competitor, Realestate.co.nz. 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". TradeMe stated that it had properties listed on the TradeMe website which Realestate.co.nz did not have. TradeMe also explained other causes why Realestate.co.nz had breached the ASA's code of ethics and comparative advertising. The ASA upheld parts of the complaint.[8]

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

Trade Me Limited owns several sites which it groups together as tabs at the top of the TradeMe website, allowing navigation between the related sites. Trade Me Ltd has recently expanded into the online maps market with "smaps" and added a link to the Fairfax site stuff.co.nz into the TradeMe interface.

Fairfax's sites includes:

Controversy

Fraud and controversy

As a fairly open marketplace, TradeMe 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.

TradeMe involves many sellers. Some of the sellers tend to have very bad feedback, but 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 might (for example) involve 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: see http://www.consumeraffairs.govt.nz/).

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

To minimise payment-problems and reduce fraud, TradeMe restricted membership to residents of New Zealand and of Australia 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 sign-up. In June 2005 Fair Go,[9] a television-programme devoted to consumer-affairs, approached Trade Me Limited regarding this issue and featured the matter 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 if they enter a birth-date indicating their age as under eighteen, but people under eighteen may simply represent themselves as older when they join. As yet, Trade Me has not undertaken action to remove any fraudulent members under eighteen years old.

Clashes with software developers

Various third-party software-developers have received threats after developing software which interfaces with the TradeMe 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 messaging and a tool known as a "sniper", which acts as an automated bidding tool.

On May 7, 2007 TradeMe released a Windows Vista Sidebar Gadget to run in the Windows Sidebar. This gadget is available on the TradeMe site making it the first sanctioned application to work with TradeMe. As the Vista Gadget requires an XML Feed, this gadget caused further discussion in the developer community about why TradeMe did not have an API. It also led to other creations by the developer community on top of Vista Gadget.

Unusual auctions

  • A "comfort hug", 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. TradeMe withdrew the auction after 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, TradeMe 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 — amputated a year earlier as a result of diabetes.[16] TradeMe withdrew the auction within hours and swiftly added "Body Parts" to the "Prohibited Items" list.[17]
  • 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 TradeMe for $22,800, generating a large media-story and over 1 million page-views before the auction closed. [18]
Main article: 2006 rugby union handbag controversy
  • Also in June 2006 Lisa Lewis streaked across the field at the All Blacks game against Ireland held at Waikato Stadium. Days later the bikini Lisa had worn ended up for auction. [19] The winning bid of $4,010 later proved not genuine [20]
  • In November 2006, one of several icebergs off the eastern coast of New Zealand went up for sale. [21].

Note: TradeMe recently changed its policy such that Q&A sections can no longer be viewed on past auctions

References

  1. ^ New Zealand census 2006 final figures, including overseas visitors. {{PDFlink|[1]|370 KiB
  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 March, 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. ^ "Banned & Restricted Items". Retrieved 2007-05-26.
  18. ^ TradeMe Auction 58555525
  19. ^ TradeMe Auction 59664487
  20. ^ Bikini bid 'a hoax'
  21. ^ Iceberg Auction

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
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