Latest / Best of Business / Bodo Lang: Massey University marketing professor on Trade Me marketplace being hit with $138m write-down

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Bodo Lang: Massey University marketing professor on Trade Me marketplace being hit with $138m write-down · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks EDB. Follow
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  Speaker 2: Right back home. Bad news for the country's leading online
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  Speaker 2: buy and sell website, Trade Me's written down the goodwill
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  Speaker 2: value of its online marketplace from two hundred and seventy
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  Speaker 2: five million dollars to one hundred and thirty seven million.
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  Speaker 2: The reason for this has been given as a restrained
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  Speaker 2: short term future growth for that part of trade means business.
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  Speaker 2: Bodolange is a marketing professor at mass University and joins
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  Speaker 2: me now Voda.
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  Speaker 3: Good evening, Good evening, Ryan, How are you very well?
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  Speaker 2: Thank you? So people basically aren't selling their stuff on
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  Speaker 2: trade me. Is that what's going on here?
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  Speaker 1: Yeah?
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  Speaker 3: I think there is effectively that so that I think
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  Speaker 3: the company had to adjust its growth expectations and they're
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  Speaker 3: just they're still the market leader, but that market leadership
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  Speaker 3: is i think increasingly coming under threat, and so what's
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  Speaker 3: happened is we've got more competition and as a result,
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  Speaker 3: I think their growth expectations are just much lower, and
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  Speaker 3: so that's why they've produced their their goodwill is face.
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  Speaker 2: You know, there's Facebook marketplace that I know lots of
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  Speaker 2: people are using but are we buying less? You know
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  Speaker 2: it is it other secondhand outlets and online shops that
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  Speaker 2: we're going to, or is it actually that we're buying
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  Speaker 2: lots of Team O stuff, new stuff that's just as cheap.
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  Speaker 3: Yeah, I think it's a mixture of things. I think
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  Speaker 3: it's so there's definitely more competition in the second hand space,
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  Speaker 3: and so the biggest one is obviously Facebook Marketplace, but
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  Speaker 3: then there's other sites as well. So back in the
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  Speaker 3: back when trade we started, there was no competition and
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  Speaker 3: so that was the only place really we could sell things,
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  Speaker 3: and in fact they did effectively a couple of other
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  Speaker 3: businesses out of business. So I think maybe we're seeing
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  Speaker 3: this now slowly occurring here. So there's other used goods
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  Speaker 3: retailers or sites rather, and then there's also certainly brand new,
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  Speaker 3: very cheap Chinese products that we can buy on huge
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  Speaker 3: I mean massive platforms that provide an incredible amount of choice.
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  Speaker 3: And so that's the second factor. And I think the
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  Speaker 3: third factor, to be honest, is also the arrival of
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  Speaker 3: really big box retailers in New Zealand, like Ikea. I
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  Speaker 3: mean now that we have Ikea in the country, it's
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  Speaker 3: pretty easy for anybody anywhere in New Zealand to order
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  Speaker 3: fairly inexpensive, really innovative, creative, modern goods that just weren't
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  Speaker 3: available previously. And so if you're after a lampshade or
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  Speaker 3: I don't know, whatever it might be, you know there
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  Speaker 3: is now another really big name Intel.
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  Speaker 2: Is trade me kind of at risk here? Like is
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  Speaker 2: this potentially a terminal development for them? Or do they
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  Speaker 2: just operate as a smaller business into the future and
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  Speaker 2: is there anything they can do to turn that sort
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  Speaker 2: of brand thing around.
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  Speaker 3: Yeah, that's a great question. I think it's certainly a
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  Speaker 3: business model issue. And so the business model is on
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  Speaker 3: a threat, and that's because there's much more competition. I
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  Speaker 3: think consumer sentiment has moved on. Why why I deal with,
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  Speaker 3: you know, other consumers buying something online that's used that
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  Speaker 3: may or may not be good when you can buy
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  Speaker 3: something brand new and dirt cheap from a Chinese retailer.
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  Speaker 3: So that's I think a big, big problem that that
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  Speaker 3: sort of changed, or the threat to the business model,
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  Speaker 3: and what can they do about it? I think, you know,
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  Speaker 3: it's time for innovation, and it's time to really listen
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  Speaker 3: to customers and to think about, you know, what does
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  Speaker 3: the research tell us. So I'm sure trade me you know,
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  Speaker 3: has focused groups and all sorts of other tracking studies
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  Speaker 3: and they would be listening very closely to what are
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  Speaker 3: the you know, the barriers or what are the turnoffs?
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  Speaker 3: So why do people stop selling things via tradeing marketplace
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  Speaker 3: and why is that? And then turning those things around,
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  Speaker 3: And it might be some of those things might be
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  Speaker 3: very easy to fix. It might be that they feel
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  Speaker 3: that the fees that are being charged at to excessive
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  Speaker 3: or that the processes to cumbersome, and so you know,
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  Speaker 3: there there sculpt to improve these things. But it's certainly
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  Speaker 3: big picture. It's a threat to the business model because
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  Speaker 3: there are others in the market and then there are
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  Speaker 3: other other big brands that sell brand new products that
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  Speaker 3: are not that expensive.
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  Speaker 2: Good point, buddy, Thank you for that, Body Lang, who's
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  Speaker 2: a marketing professor at Massi University.
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