Trade Me bat­tle

Auc­tion web­site’s boss tells Tam­syn Parker he’s ready for gi­ant ri­val

Weekend Herald - - NEWS -

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.

Pic­ture / Mark Mitchell

Trade Me’s ad­van­tage comes from be­ing more nim­ble than big­ger ri­vals, and know­ing its lo­cal cus­tomers bet­ter, says Jon MacDon­ald.

Pic­ture / Bloomberg

Ama­zon is com­ing closer to New Zealand shop­pers, as it pre­pares to launch in Aus­tralia.

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