Trade Me battle
Auction website’s boss tells Tamsyn Parker he’s ready for giant rival
The Trade Me boss appears surprisingly relaxed for a man whose company may be only weeks away from a closer encounter with the competition- crushing giant that is Amazon. com. He explains why the auction website is up for the fight.
Jon MacDonald appears surprisingly relaxed and confident for a man whose company may be only weeks away from a closer encounter with the competition- crushing giant that is Amazon. com.
MacDonald has been chief executive of Trade Me since 2008, after joining the company in 2003 to lead its technology team, and firmly believes the online auction site is up for the challenge.
Analysts are picking that Amazon could launch in Australia within two months, making it much faster for Kiwis to order and have items delivered from its Melbourne warehouse.
“It is easy to be defeatist about Amazon or Facebook,” MacDonald says.
But Trade Me already has a track record of seeing off big players.
“We competed against eBay and won. We have continued to beat out competition who have far deeper pockets than us.”
MacDonald says Trade Me’s advantage lies in being smaller and more nimble than big “lumbering companies”.
He says the key is ensuring that it knows its local customers more intimately than global players.
And that is a part science, part art.
We competed against eBay and won. We have continued to beat out competition who have far deeper pockets than us
The scientific side is about using Trade Me’s rich data to tailor its offering, to make it more personalised and friction free.
“It’s about using data to improve the ability of users to get the most out of it,” says MacDonald.
The art side is about building personal relationships between its account management team and its business customers, such as real estate agents and car salespeople.
It’s also about nurturing its relationships with the average consumer.
MacDonald points to a Colmar Brunton survey which recently put Trade Me in the top 10 most loved brands in New Zealand.
But he says that despite that strong base, the company can’t sit still and has to continue building its offering.
Last week it launched Afterpay — an instalment payment service for buyers which allows people to spread out their payments over six weeks with no interest.
The service is designed to make it easier for people to buy new items and is expected to boost sales for retailers using the site.
Last year it partnered with courier services to help people get items delivered more easily. Already, more than 500,000 parcels have gone through this system.
“Things like this make buying and selling easier,” says MacDonald.
And TradeMe plans to continue to broaden its offerings.
On the development front is new technology which aims to speed up the process of selling an item.
In the past, people would take a photo on their camera, upload it to their computer and then fill out all the information about selling the item.
Now the company is looking at a system that would allow a seller to take a photo with their smartphone, and Trade Me will automatically recognise what it is and place it in the right category.
“All of a sudden you are three steps along the process,” says MacDonald.
“As we build out the range, we have got to make sure we remind Kiwis of the usefulness that we can provide for them.”
MacDonald also points out that only 12 per cent of Trade Me’s revenue comes from sales of new goods.
And when it comes to competing with the likes of Amazon, he says a lot of items are not well suited to shipping overseas.
Trade Me’s fastest growing categories currently are building and renovation, and home and living. “A good proportion is better suited to local than international.
“We do have something that is real and unique to offer.”
MacDonald says the current environment is just the latest challenge the company has faced in his time there.
“It feels to me that we have been through a few chapters of growth and each one has its own challenges.”
MacDonald joined the company after a catch- up meeting with founder Sam Morgan on returning from his OE. The pair had previously worked together in Wellington, in the technology team for accounting firm Deloitte.
“First we were privately owned and a small start- up — it was the best of times and the worst of times.
“We had a lot of freedom. We could see the job we had to do and the growth before us.” But he says Trade Me also had a really inexperienced management team and that led to growing pains.
The company then spent five years under the ownership of Australian media firm Fairfax, which bought Trade Me in 2006.
“That was our coming of age, where we became a lot more mainstream.” He says that also involved thinking about how to be a good corporate citizen.
Then, in 2011, Trade Me listed on the New Zealand stock exchange. “It was another challenge to come out from under the wing of Fairfax.”
MacDonald took over as chief executive from Morgan in 2008, after he decided to begin his exit from the company.
MacDonald was a general manager at the time Morgan approached him in the lift, with the offer of the top job.
“In practical terms, he ambushed me in the lift one day.”
MacDonald says he was genuinely surprised by the offer. “I said yes and as I wrapped my head around it, got increasingly enthused about it.
It was a bit of right place, right time.”
Even though Trade Me has been around for 18 years now, MacDonald says it is still just getting started.
Online retail is growing fast, but there is plenty of room for more growth yet, given that online sales make up just 8 per cent of all sales in New Zealand.
MacDonald points to the UK, where online sales are roughly double that, at 16 per cent.
He believes Amazon will be a boon to the New Zealand online market. “We see Amazon as helping to accelerate that.”
Despite nearly 10 years at the helm, MacDonald says he has no plans to move on. “I’m still having too much fun.
“Trade Me has changed fundamentally several times so it doesn’t feel like the same job. There is more to do than ever.”
These days he is not allowed to get hands- on with the technology, but says he still keeps abreast of tech through his 6- year- old daughter and 8- year- old son, who are just starting to get into coding.
“One of the things I love is how technology is becoming so accessible and consumable so an 8- year- old can be learning to code and building games. “That is kind of mind- blowing.” That has encouraged him to get back into computers to stay half a pace ahead of his son.
Now he just has to ensure Trade Me stays half a pace ahead of its rivals.
Trade Me’s advantage comes from being more nimble than bigger rivals, and knowing its local customers better, says Jon MacDonald.
Amazon is coming closer to New Zealand shoppers, as it prepares to launch in Australia.