The problem is that eBay traditionally purchases auction sites, then brings over the content to their own site and use their own model. They struggle to see the world any other way.
Trade Me outperforms eBay, and so this approach would destroy value. Moving the site over to eBay’s version would sharply reduce listings, lower income and reduce profits for Trade Me. Listings would drop as members are confronted with eBay’s Byzantine systems, income would drop as sales drop due to the same and gross profit would get eaten as the spend on advertising goes way up.
It gets worse. eBay doesn’t understand the motors and property markets, whereas Trade Me has succeeded, while Jobs is something that they are also nowhere near. Don’t even start me on selling advertising.
So Trade Me was, and is, more valuable to a financial or media purchaser than to eBay.
Fairfax, a media purchaser, kept Trade Me at arms length since purchase – allowing the business to continue to develop along some pretty impressive curves.
The results are obvious – today Trade Me has 1.19m listings in NZ and eBay Australia has just 1.16m items located in Australia. That’s right – there are more items for sale in NZ than Australia, and that’s a country with well over five times NZ’s population.
But wait. If eBay are smart then they would see Trade Me as an opportunity to improve their own businesses around the world.
While the list of things that I would do if in charge of eBay has been covered before, I have to confess that buying Trade Me was not on the list – and it absolutely should be, and I’d pay a lot for it.
But after the purchase what should eBay do?
They should leave Trade Me alone, and not tell them how to do anything. Instead, I’d help the rest of the eBay organisation learn as much as they can from Trade Me’s success.
I’d send people from eBay’s senior development team to Trade Me – to work under the direction of Trade Me staff – and to do really entry level stuff. They can learn, and spread the word to the rest of eBay.
I’d send Trade Me senior staff over to the US, to spread their message of simplicity and usability.
Then time for some fun – I’d replace eBay’s Australian site with Trade Me’s platform. This is a massive migration, but the listing numbers alone say that something is seriously sick with eBay Australia. Let’s see how that goes, and it everything goes well, then start hitting other smaller markets.
And so on.
But is eBay smart enough to pay enough for Trade Me? I think not.