Trade Me – New Zealand’s online retail powerhouse

New Zealand online marketplace Trade Me is a household name in its home nation, with 4.1 million member accounts in a country with a population of 4.8 million.

Brands and retailers from around the world sell their goods on the platform, although there are more UK retailers selling cross border on Trade Me than from any other nation.

Retail Connections caught up with David Swift, Global E-Commerce Manager at Trade Me, to hear about New Zealand retail and understand the opportunities for UK brands in that market.

Retail Connections (RC): To what extent do you see marketplaces as the future of online retail?

David Swift (DS): Online marketplaces are expected to account for 40% of the global e-commerce market by 2020, which is just two and a half years away. You need only look at the number of global brands who are now developing a dedicated marketplace strategy to understand the importance they will play for anyone looking to make a success of online.

Marketplaces are the start of most consumers’ online purchase pathway. It’s where people go to analyse prices, compare products or read peer reviews. Marketplaces also have a social element to them, which leads to them to spending more time on the site.

Consumers will often simply browse, as they would do at a conventional mall, but from the convenience of their laptop, tablet or mobile device. As a proposition, it’s difficult to compete with that.

RC: Why would retailers choose marketplaces as a route to new territories?

DS: Breaking into a new market is never easy. The time and investment needed to establish your brand can very quickly escalate.

Marketplaces offer cost effective access to large volumes of instant traffic. As an example, Trade Me has 4.1 million member accounts in a country with a population of 4.8 million.

Moreover, marketplace customers are most comfortable when shopping on a platform they understand and enjoy. Paying for goods online is still a sensitive area and being present on a reputable marketplace gives consumers confidence to complete transactions they may not do on an unfamiliar website.

From a cross border perspective marketplaces are a no brainer. Apart from instant access to large audiences, they allow you to leverage cross seasonality, reducing your need to discount goods coming out of season in your domestic market by selling them in season overseas.

There is no need to invest in translation software as they are often multi-language platforms or you can choose to target English-speaking markets. Finally, any reputable marketplace should provide you with in-country customer support providing access to data and assisting you to optimise your listings ensuring you maximise your return on investment (ROI).

RC: What’s been the hardest part of attracting sellers to your site and what are the key challenges in helping them achieve successful growth?

DS: Perception – both in terms of geographical distance in regards to shipping and the potential ROI given the population size.

People are always surprised to hear that New Zealand isn’t just about Hobbits and we have a thriving e-commerce industry worth over $4.9 billion, which is the equivalent to over $1,000 spend for every person living in the country. The main reason so many Kiwis turn to online is the lack of domestic options available. If you want variety of brand or range, online is really your only option, and Trade Me is the place they can source safely from all over the globe.

Some people in the UK expect the NZ market to be a smaller version of home but it that really isn’t the case.

We see a similar confusion regarding shipping. People’s immediate reaction is that they won’t be competitive if they have to ship their goods literally halfway around the world. However, when you factor in the high duty threshold ($400NZD) the fact domestic goods are more often than not expensive and that there are some excellent logistics options from Britain we’ve seen UK retailers thrive on our platform. So much so we have more UK retailers selling cross border on Trade Me than from any other nation.

RC: If I’m selling in the UK and want to try cross border, why would I choose New Zealand?

DS: New Zealand and Australia both have dominant marketplaces that can provide instant access to the entire market in Trade Me and eBay respectively. UK retailers don’t have to worry about a language barrier, although some subtle nuances exist (flip flop sellers beware!). Both countries have cross seasonality with the UK providing longer sale opportunities. Also in the case of New Zealand, you’ll face very limited competition from domestic retailers.

For a less obvious choice, I think what’s happening in Africa could be worth watching with interest. With a population numbering over one billion and internet connectivity growing rapidly across all African countries, the opportunity in nations like Nigeria and Kenya could be substantial. Combine this with the fact that 80% of African internet connectivity is mobile and you have an environment that is perfect for online marketplaces to flourish.

RC: What’s the next big thing in eCommerce technology?

DS: The next major step is to incorporate augmented reality (AR) into a mobile offering. The value in having the ability to browse online and, with a swipe of your thumb across your smartphone, be instantly able to see how a kettle and toaster set will look in your kitchen or if that shade of lipstick is perfect on you. AR’s ability to help explore how more complex machines actually work cannot be overlooked either.

By removing the guesswork, AR would remove an advantage bricks-and-mortar has over online. The increased confidence it would give consumers would have a positive impact on conversion rates, meaning I feel this is a question of ‘when’ not ‘if’.

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