Trade Me plans to shake up the online recruitment market by undercutting the listing fees of market leader Seek by 70-80 per cent when it introduces a jobs category on its website later this year. Founder Sam Morgan says moving into recruitment advertising is the web business' "No 1 priority". But he says Trade Me is also fomenting plans to help people buy new goods such as music and consumer electronics online once it has the second-hand and classifieds market wrapped up.
"Catalogue-based shopping for new goods is something that is on the medium-to-long term horizon." Mr Morgan expects Trade Me will begin advertising jobs online early in the second half of the year. ASX-listed Seek charges $150 per job listing in New Zealand and Mr Morgan says Trade Me will probably come in at "20-30 per cent of their cost".
He says Trade Me will examine what extra features and functionality it can provide, but says its main competitive advantage will be the volume of traffic to its website. "The nearest competitor in the market is Seek and Trade Me has 10-15 times their number of visitors."
Mr Morgan says Trade Me's revenues and sales jumped 20 per cent from February to March in the wake of its $700 million purchase by Australian newspaper publisher Fairfax. Sales "flattened out" in April but Trade Me is on track to grow another 10 per cent this month, he says. Mr Morgan attributes the March jump to interest generated by the Fairfax purchase and seasonal factors. Melbourne-based Seek chief executive Paul Bassat is confident the company can fend off competition from Trade Me without dropping its listing prices. "People associate Trade Me with buying, selling and trading, and Kiwis associate Seek with finding a job," he says.
Seek has a market capitalisation of A$1.34 billion, having seen its share price double since its successful listing a year ago.
"At the end of the day, the reason people advertise is because of the outcomes, rather than the price," says Mr Bassat. "Compared to print advertising, our prices are very competitive and we are not expecting our prices will come down."
Mr Bassat says Seek is developing a new search engine that will make it easier to search for jobs on its site. However, Mr Morgan is confident advertisers will turn to Trade Me in time. "The advantage we have is being a diverse business we have the ability to run a job category and have it make no revenue for an unlimited period of time if we so decide. "We have got the ability to grow that space by doing whatever it takes and we will continue with our philosophy of doing no marketing whatsoever because we don't need to. If all we did was jobs, we would have to approach it slightly differently."
Mr Morgan says that once the jobs category is ticked off, Trade Me will have "pretty much done all the newspaper classified sections". The business is then likely to target "convenience-driven e-commerce shopping". About 40 per cent of goods on sale on Trade Me are new goods, more than a third of sales are made using the "Buy now" feature and the trend is toward people dispensing with the auction process, he says. Trade Me would not sell goods itself and manage fulfillment, as Amazon does in the US, but would let shoppers search for specific items and choose whether to purchase second-hand or direct from retail partners, he says. It would likely partner with smaller retailers, rather than the likes of "Noel Leeming", he says.
"The Amazon model is illustrative of what can be done, but I think their back-end is something we wouldn't look to replicate."
Mr Morgan is relaxed about emerging potential competition from community-based sites offering local content and free classifieds, such as the recently-launched iworldpeople.
"We don't focus too much on the competition, but what the trends are."
Trade Me has recognised a "big trend" for people to trade with others in their immediate vicinity and is likely to respond, he says. "A huge proportion of our sales are now local sales – people in Wellington selling to people in Wellington, for example. When you are dealing with items such as coffee tables and fridges, it is uneconomic to ship things.
"The internet space is changing really rapidly and we are continuing to hire people in their 20s who can try to inform us about what is happening on the Web. We have got 50-60 people who spend all day sitting here trying to improve things."
, May 22nd 2006