Lance Wiggs

Here is one for Westlife.

A lost opportunity for Trade Me perhaps, but ticketing is a tough market to get into as it is all about tying up the suppliers of the tickets.

However, given that, Trade Me (or whomever) still has the ability to enter the market by offering the same service at a cheaper price - so long as they can bring something else to the table. Trade Me could bring traffic, and they and others can bring website usability.

That’s right - that auction didn’t actually work for me. Perhaps I needed to be logged in, perhaps it does not work on Safari, but in either case a result other than a page reload would have been useful. Simple stuff really.

There is also no indication of how many tickets are being offered, whether there are other seats on offer or whether the winning bidder for a seat in a particular range pays their bid price or the lowest winning bid price for that range.

some work to do.

Not bad - strong profit growth of 40% versus last year, with Trade Me and Digital leading the way.

Trade Me showed $32m in EBIT, which is for the 6 month period to December 2007. That, apparently, puts them at tracking to hit the $60m required to complete the $50m earn out to March 2008. (That from the Dom Post - but if they really know then they have inside info., which they can’t, so they are guessing)

Actually it could be tight, and it all depends on how well Trade Me did in the 3 months to June 2007, and how well they do in the three months to March 2008. Basically revenue and profit in a rapid growth company move up month by month, and, while a mid year snap shot showed the right run rate, it isn’t over.

If the April-June 2007 period was not so good, then the Jan-March 2008 period needs to be extra good to compensate so that the whole year meets target. (It’s so much easier to predict things in the Nickel game)

Now January is a slack month downunder, but then things pick up - so it will be an interesting run to the end for Trade Me folk.

Arcgk. I really cannot comment any more, though I’ve sadly been out of it for a while. Good luck guys.

Massive changes today announced for eBay’s economic model, in response, I take, to the increasing power of Amazon and Google.

• Listing fees down 25 to 50%, especially for bigger sellers

• Gallery is free

• final value fees (commissions) are up - 8.25% under $25, which is up from 5.25% and huge. Most sales are in this range, and it forms part of the commison for sales greater than $25. For the next range, $25 to $1000, commission rises from 3.25% to 3.5% - a very big increase in revenue terms for eBay. (US figures)

• Big sellers that have high buyer feedback ratios get 5 to 15% commission fee discount.

Those four changes take apart the existing economic model and put it back together. Reducing listing fees increases items listed (Trade me already has zero listing fees).

Zero Gallery cost means every item can have a photo displayed in search, and this will natualy increase sell through rate anyway.

Final value fees are where the bulk of revenue should come from - after all when you’ve just sold something you are more likely to understand the value of paying a fee. Increasing these can make eBay a fortune, and they have covered concerns of big sellers (who look hard at these fees) by offering discounts.

These changes aim, therefore, at increasing listing numbers, sell through rates and final value fees. I’d expect eBay are anticipating a decent overall lift in revenue from this.

They have also played with the feedback system:

• Sellers can’t make negative  comments about buyers

• Buyers that are suspended/kicked out have their negative comments removed

• Time to write feedback reduced to 60 days from 90

• Sellers can block certain members  from buying

• Order in search results is adjusted for buyer feedback ratio

• Feedback percentages will include repeat buyers -  currently only one from each unique buyer counts.

Overall this helps big sellers (they don’t leave negative feedback anyway) and should makes eBay a friendlier place - i.e. a higher positive/negative feedback ratio. Again, these are fundamental changes to a foundation of eBay’s success.

Overall? Send as much money as you can to the USA and buy eBay stock. It is stupidly low right now, they have a globaly diversified income stream and these changes should do it well.

Michael Carney launches a pretty decent looking blog to coincide with the re-release of his book Trade Me Success Secrets. Check it out.

The murmurs are that eBay is going to be dramatically lowering listing fees and increasing final value (success) fees accordingly. Bear Stearns was the first to come up with this, and others have said that apparently this will differ by category.

Total rumour, but if true it is about time. The fees eBay charges are a barrier for new sellers, and prevent bigger sellers listing everything they have. This decreases the number of listings on the eBay market, but, in theory, increases the quality of listings.

Trade Me has none of those insertion/listing fees, except for Motors, Property Jobs and other classifieds such as pets.  eBay charges a sliding fee based on the listing value of the item, and as a result the barrier to list something is much higher.

I’m a fan of variable fan by category, as some categories (CD’s, Books) have products of very low value, while others may need a fee to ensure quality and discourage scammers. The latest high tech goodness, such as iPhones, or Wiis attract scammers like rotten sheep to flies, an higher fees will help shut down that traffic. In the past the rule of thumb was that listing fees would halve the number of listings and double the sell through (completion) rate. It seems this my no longer be the case with the stagnant eBay market, and so it’s time to once again emulate Trade Me.

As with New Zealand, eBay failed to make an impact in Japan, and exited the market after Yahoo! established the dominant auction site. (eBay still talks about NZ as an eBay market though, which is pretty amusing)

Now eBay and Yahoo! have announced that they are linking forces to give Yahoo! Japan auction members access to eBay worldwide auctions and vice versa. Translation is part of the two services.

This is an interesting development, as there are plenty of hot electronic and media items available in Japan and only in Japan, and it opens the world up to Japanese buyers. I’d imagine that many of the bigger Japanese traders would already have dual accounts, but the sheer scale of sellers on both sides will now be unleashed.

The devil will be in the details of how the sites work - seamless integration is the key here.

Way to go - accuse Trade Me of not following good business practise, then be forced to cringingly back down in the face of overwhelming evidence. I’m not sure how this one played out, but is sure is amusing reading the resulting article.

(Auctioneers).. Association chief executive John Ward had said Trade Me did not help its customers with complaints, that its customers had no right of dispute and that Trade Me did not follow good business practice. Now he has written to Trade Me apologising and withdrawing his remarks.

He said the association understood that such statements and allegations about online trading sites did not apply to Trade Me.

and fair enough. Trade Me has 24/7 customer service these days, and if things are dire you can at all times get someone on the phone with the 0900 number. If you are dodgy then you can expect the police will get interested pretty rapidly.

Meanwhile my limited experience with offline Auctions was very much cavaet emptor and bugger off with it.

I’d hazard that the total number of sucessful Trade Me listings in the last 7 years would  dwarf the entire number of items ever auctioned offline in New Zealand.

Not bad. eBay’s new site let’s you combine with the masses to vote on popular auctions - and thus drive more traffic to those auctions and eBay in general.
It seems good on first appearance - there is the obligatory eye-candy - in this case the classic Web 2.0 rounded corners and Digg-like voting buttons with strange creatures attached:

The site feels cool - with a great, if greenish, look. (can you feel the however coming?)

However. Firstly if you want to vote you need to login, and after you login you are confronted with this:

It’s asking whether it is OK if I share my information with “another company”. But sadly and strangely there is absolutely no indication of what or whom that other company actually is. Perhaps it is just another eBay legal entity, or maybe this is a stealthy way for my eBay purchasing and browsing information to be passed to dodgy marketing companies. I declined the opportunity.

The other issue with the site, for those less paranoid than me, is that Auctions are ethereal, lasting only 7 days (usually). While rumour sites like Truemors can cope with that (they uses editors), other sites like Digg take time to identify hot items and them promote them to the masses. A new Auction listing may take 3 or 4 days to be discovered, and by then it is essentially too late as it is gone. It also remains to be seen whether old auctions will be visible - that would change the paradigm a bit.

So I am not holding my breath on this one. But nice eye candy nonetheless.

eBay reported a loss of a huge $936m - due to the recent huge write-down of Skype value. However otherwise theu showed some good signs, and some not so good signs.

Good - PayPal made $470m of revenue - up 35%

Not so good: Auctions (marketplaces) listings fell 5%, and GMV (the value of stuff that sells) rose only 14%. That’s a really low figure in this space.

and - signs of panic. eBay USA/Canada is reducing listing fees by 3% from now until November 5th. (50% if strt price is under $1).

This seems to go against their desire to reduce the amount of stagnant listings from huge sellers.

Trae Me and eBay customers can breath easy - the Nobel prize wining trio of Hurwicz, Maskin and Myerson are fans of auctions as the most efficient way to clear a market when information is not freely available to all. (Actually - their work helps to understand which auction mechanism is best in which situation.)

The theory shows auctions are typically the most efficient way to sell private goods to a given set of potential buyers (WSJ)

We all knew that of course, which is why Trade Me is so big, but it’s nice that some folk got a Nobel for the Mechanism design that that explains it all.

here’s the more prize press release and explanation of their work:

Mechanism design theory, initiated by Leonid Hurwicz and further developed by Eric Maskin and Roger Myerson, has greatly enhanced our understanding of the properties of optimal allocation mechanisms in such situations, accounting for individuals’ incentives and private information. The theory allows us to distinguish situations in which markets work well from those in which they do not. It has helped economists identify efficient trading mechanisms, regulation schemes and voting procedures. Today, mechanism design theory plays a central role in many areas of economics and parts of political science.

and for the real background, read the, err, Scientific Background.

I missed the first time, but it seems Trade Me exceeded 1 miilion listings yesterday, October 13th, according to the TM message board.

Right now the site is running at just under 1m, but expect it to steadily grow.

Amazing.

Meanwhile eBay Australia has  just over 1m items for sale located in Australia.

Remember that eBay Australia do charge a listing fee, but really eBay Australia by rights should have 3 or 4 times the listings of Trade Me.

This is a classic symptom of why eBay is scurrying to try to refind its auction mojo these days. A lot of what they are trying to do reeks of Trade Me, and for good reason.

So as Sophie points out, Stuff confirmed the Trade Me policy on “no iPhones” this morning.  Adam also helpfully points out that perhaps I was behind the times -  oh the horror.

But yes - Trade Me has recklessly decided to arbitrarily ban sales of the absolutely essential and patently legal to sell iPhone.  This really really annoys me, as it also did when the policy was to ban sales of PSP’s and PS3s’.

(Hope you are listening Dean and Sophie.)

(Keep listening though - it gets better…)

Although I am royally annoyed (not really - after all I am in Australia until the weekend), it is tough-love policies like these that have made Trade Me so sucessful.

When you shop at Trade Me, you are a lot more confident in the quality of the sellers than you are on eBay. You are more confident because Trade Me has much tougher standards, and those standards are backed up by a community and Customer Service staff that have an eye for finding bad sellers.

Trade Me starts by banning essentially all foreign sellers, continues by listening to the community (the community watch link at the bottom of each listing), then has strict policies on what you can and cannot sell and finally does not tolerate scammers and dodgy sellers staying on the site.

eBay is much more tolerant, preferring to take the more dodgy listings and sellers in order to boost sales. Make no mistake - what Trade Me does is hard work, and doesn’t make friends in the short term. However, eBay may sell more in the short term, but that lowers the natural growth, which they try to maintain using expensive advertising. If this sounds familiar, then you may have been reading here two days back.

So - how to console myself? Trade Me won’t sell me an iPhone, and eBay Au is too dodgy. Well - that’s easy..

So the iPhone is in the UK - with O2. The interesting thing is that, like the USA, the iPhone is not coming with any 3G high speed mobile internet. Instead Apple and O2 have signed a deal with The Cloud, giving iPhone users free WiFi access at 7,500 UK locations.

We don’t have that option in New Zealand, so perhaps we’ll have to wait for late 2008 before we get the ‘proper’ 3G iPhone. So you may as well be like the Australians, and buy one.

Sadly Trade Me seems to be lacking iPhones, perhaps because of high scammer potential. Is TM is removing these? If so why? and please stop - there is a real market and I can’t think why we can’t buy them.  Meanwhile eBay has a bunch, but watch for scammers as they are attracted to the latest greatest kit.

Apple is apparently making big dollars from the telcos, who are kicking a decent percentage of their fees for the privilege of being launch operators.

One great thing Apple has done for the UK market is to get O2 to launch ‘all you can eat’ EDGE and WiFi broadband. That seems to be a market first, and hopefully the others’ will follow.

Sadly though Apple appears to have a country by country strategy, so those international roaming charges, especially data charges, will still be an issue. While Apple is shaking up the market structure, how about a global iPhone, or at least a pan-European iPhone?

eBay UK is placing ads on TV that feature listings with prices that are 20 seconds old. That’s some pretty cute technology, which requires slick systems from end to end.

Now the media companies have a system that can deliver ads that quickly, it’s a short leap to designing, creating  and placing ads that are related to current events.

Of course eBay UK would do a lot better to follow Trade Me’s example, and abandon wasteful spending of money on TV advertising.

As Rowan explains, people that go to a website becasue of word of mouth are far more likely to stick around. Blowing money on ads makes for good member numbers when reporting each financial quarter, but gives lower profits and lower movement from membership to advanced active membership.

While you are watching the eBay ad (it is just a few seconds long), check out the Cadbury Gorilla ad. For me it embodies everything great (the imagery, sound and production are excellent) and terrible (complete lack of reference or relevance to the product) about the advertising industry.

eBay is still figuring out this auction thing.

For a start, all eBay neutral feedbacks are now counted as negative, as from a couple of weeks back. If big sellers start getting a bad karma ratio, then the amount of stuff they can post to sell will be restricted. They’ve also been playing with the fees, with a few promotions.

A fascinating stat is that apparently 1% of sellers generate 35% of bad karma feedback. So think about it - as a business wouldn’t you want to just be rid of those sellers that are ruining it for everyone?

Trade Me is ruthless in getting rid of lousy sellers - and the community is doubly ruthless in identifying them. It seems to me that eBay has been putting short term greed ahead of good business, and choosing to do business with lousy sellers rather than turf them out of the site. This is growth at the expense of long term sustainability, and the sort of stuff lousy management consultants wuld recommend to make this quarter’s earnings look good.

But the site in the meantime is rubbish compared with Trade Me (yes I am biased).
I’ve been using eBay over here in Australia, as it seems that, like in New Zealand, eCommerce otherwise doesn’t exist. Well except for my great folly, the Apple Store.

It’s a completely different experience from Trade Me.

For a start eBay is an intimidating place - it just feels disorderly with too much stuff (not necessarily a bad thing), wildly different product pages and a majority of the items posted by enormous passionless sellers. It feels like the bazaars in Istanbul or Isfahan- you know you are going to get a bargain, but you are just that little bit worried, and you sure know you have to work at it.

I searched for a Nokia E90 on eBay AU, and found one from a seller based in Hong Kong. I decided to trust the seller as he had a huge number of transactions, and committed to the deal. But the experience differed wildly from Trade Me.

Firstly, the confirmation screen was of little use, and it took me about 30 minutes to pay by paypal (I have a US and NZ account and… oh never mind).

Secondly, although I received an auto-confirm email from the seller, I heard nothing more for several days. More than enough days for the phone to have arrived, so I dropped him an email. It seems the colour I chose wasn’t in stock, and wouldn’t be for at least a week. No big deal, so I changed the colour. Again I heard nothing until a few days later I receved a tracking email and finally the package.

The phone’s great (Vodafone is not - more on that some other time)

But through the whole transaction I felt unloved - there was no personal touch from the seller, and there was not follow up email at any time - not even an acknowledgement that the colour change was ok. The eBay site wasn’t a fun place to be.

In contrast Trade Me feels like a giant family. Even the huge sellers are careful to send out emails after I purchase, after any changes and after they ship. I’m always kept fully informed about what is going on. Morever there is no messing with Paypal in foreign countries, or with sending money overseas - It’s bank to bank or Trade Me’s new Pay Now service. The site itself is fun to use, and the experience enjoyable, and it is because the sellers are great and the site is great. There is a more equal dynamic between buyers and sellers, whereas on eBay the sellers dwarf the buyers.

This user experience difference is the primary reason why Trade Me is so much more successful in NZ than eBay is in Australia.

Right now eBay Au has 1.3m items on sale, but only 1.13m are located in Australia. Meanwhile Trade Me has 966k listings right now - getting perilously close to that magic 1m.

So eBay - please keep on copying Trade Me - after all I do own your shares, and believe that you will get it eventually. Start by getting rid of some of those MBA’s and ex consultants, and scale back on that off line advertising.