New Zealand is a nation entirely comfortable with ecommerce—Nielsen counted over 2 million online shoppers as of 2015—and there’s only really one player around: TradeMe.co.nz.
Expat Englishman David Swift, Global Development Manager at Trade Me, spoke to eCommerce Insights about why New Zealand is such a ripe ecommerce market, some tips for UK cross-border sellers and the considered way that the company approaches innovation.
In 1999, Trade Me was launched as a purely C2C marketplace from a flat in Wellington by founder Sam Morgan. Since then it has grown many limbs, including a focus on new goods sold B2C (the balance is currently 75%/25% new/used) as well as automotive, real estate, employment, accommodation, insurance and online dating verticals. At some point after it introduced auctions, the site earned the nickname of ‘New Zealand’s eBay’ but these days, that moniker is misleading given the scope of the platform.
A considerable proportion of the country’s domestic web traffic that Trade Me commands (as high as 75%, although it fluctuates), meaning that Swift isn’t boasting when he says that “it was described to me as a basic human right for Kiwis to have a Trade Me account. It’s referred to in the same way you might say that you’re going to ‘google something’—the kind of household brand awareness that you just can’t put a dollar value on.”
Rather than expand internationally—not even to Australia—the company’s stated aim is to continue to expand its services to Kiwis, increasing what they can buy and do online and further entrenching the brand in terms of consumer trust.
According to Nielsen, online shoppers in New Zealand spent $4.7 billion on 20.6 million items in 2015. Swift states that: “Per capita, Kiwis spend more online than any other nation, partly because there is such limited domestic supply.”
Amazon is not currently available domestically in New Zealand, although it is scheduled to launch in Australia later in 2017. eBay operates in Australia and, through its ‘.com.au’ site, serves Kiwis—in some ways Trade Me’s fiercest rival.
Following beta testing in the country, Facebook Marketplace launched in October 2016—a free Classified Listing Feature for locally buying and selling items. That service currently touts its loose regulation and lack of fees compared to Trade Me, although it is questionable how willing the social media giant will be to get involved in the nitty gritty of consumer protection and dispute resolution.
Swift admits that “somebody like Facebook moving into the market is potentially a huge threat,” but that “ecommerce is organic, constantly evolving and ripe for disruption.” For now, Trade Me’s level of trust with consumers is extremely high, but the company “can’t afford to sit on our laurels. We’ve got to make sure that the customer experience is as enjoyable as possible.”
“When I’m talking to retailers in the UK, I always describe selling cross-border into New Zealand as a ‘why not?’ rather than a ‘why?’ It’s an English-speaking country, there’s huge demand for the goods that those retailers are looking to bring in and reverse seasonality means you can sell goods that are out of season in the UK.”
There are, of course, a few barriers to cross-border trade, such as remittances being in New Zealand Dollars and actually getting the goods to the almost exact opposite point on the globe. “New Zealand is a very long way from everywhere—we’re three hours flight time from our nearest neighbour. In terms of getting the freight-forwarding piece right, or shipping if they’re going to go direct, that is a potential stumbling block. Also, given recent political changes in the UK, people are always aware of the volatility of the pound.”
Despite these challenges, Swift points out that New Zealand recently dethroned Singapore as the ‘easiest place to do business’ according to the World Bank. “Once you can overcome those hurdles then it tends to be a relatively straightforward process. You don’t have to have a licensed, registered company in New Zealand or a bank account here to start selling.
“One of the potential pitfalls of selling cross-border into Australia and New Zealand—or any other English-speaking nation—is that retailers have a habit of assuming that the market will be just like the UK so they stick to the same tactics. Each of those markets is very different.”
A misconception he has seen crop up in his dealings with UK retailers is that people underestimate the size of the opportunity of trading in New Zealand because of the small population (4.7 million). “What they don’t factor in is that it is a much less fragmented market than in the UK, where customers are going to eBay, Amazon, Tesco, Argos and so on.”
So Swift says, consumers are only going to one platform—if you want to sell to Kiwis, you’ll want to sell through Trade Me. “In order to make that attractive to retailers, we try and make the whole process of setting-up, starting to sell and communicating with consumers, as simple as possible for all parties.”
That said, Trade Me’s international seller programme has only been running for two years, growing out of a demand from consumers for a greater range of brands and goods. It also involves a vetting process to check international sellers before they can operate.
In terms of countries, the programme is dominated by UK and Australian retailers, closely followed by those from the US. The fastest growing of these groups is UK retailers who, since the result of the Brexit vote, have inundated the marketplace’s inbox as well as the New Zealand Department for International Trade with enquiries. “We saw a shift of nearly 40% and it hasn’t slowed down.”
International retailers are only selling to Kiwis: Trade Me’s audience is 99% New Zealand-based, with the 1% mostly being “Kiwis who have moved to Australia”.
The UK government has a website dedicated to selling online overseas, including more information on marketplaces in different territories.
“Look to make sure that the goods you are listing are going to fall under the duty threshold. For New Zealand, that threshold is $400 NZD or, if you’re selling clothing, it’s $220 [New Zealand Customs Service has more details].
“If your items are above that then the consumer is going to be responsible for paying customs duty. That’s not always a deal-breaker depending on what they’re purchasing as those goods are still often cheaper than those available domestically, but it’s a question of making things as simple as possible for the consumer.”
Put simply: “Be aware of what the duty thresholds are in any market you’re looking to enter.”
Swift believes that there is plenty of slack left for improvement of the entire ecommerce marketplace experience, not just Trade Me’s. “The ecommerce space can be disrupted, it changes on a regular basis. You have to be constantly evolving.” In general, marketplaces “have got some growing to do when it comes to personalisation, making sure that delivered content is what the customer is actually interested in.”
But the overall drift is towards platforms like Trade Me: “There’s been a seismic shift of retailers looking at marketplaces. Major brand retailers are now developing marketplace strategies because they realise it’s one of the ways to hit a large audience relatively quickly and establish a loyal customer base far more cost effectively than investing in trying to promote and drive traffic to their own website.
“The square meterage of retail space across most of the Western world is shrinking because consumers know that they can do detailed research online and marketplaces are increasingly becoming the place to start that journey.” For some, marketplaces are the default search engine when shopping online—why bother with the extra step of going to Google if you’re a regular Amazon customer signed up to Prime?
Taking into account developments like Amazon’s ultra fast, two hour delivery service, Prime Now, Swift asks: “Why is a customer who is bought into that membership going to look anywhere else for a given product?” As with Amazon in the US, UK and other countries, Trade Me enjoys that brand trust and ubiquity in New Zealand without currently being able to offer as many advanced ecommerce services as the giant American market leader.
“Offer free shipping if at all possible.
“Free shipping within a very short period of time is the standard in the UK—that’s what the consumer expects. Kiwis have an expectation that goods are going to take a while to get to them. Domestic deliveries typically take somewhere between 48-96 hours around the country. We find that a lot of our UK retailers can actually get goods into New Zealand within a 7-10 day period which is great—that’s a sweet spot for the New Zealand consumer.
“Offering them free shipping will be a point of difference because a lot of domestic retailers are still charging for delivery.”
Asked whether Trade Me has recently launched, or is planning to launch, a big new innovation in the way its platform works, Swift redirects his answer: “Like any marketplace, we’re developing and deploying [new features or sections of the platform] on a fairly regular basis,” having recently moved to a “fully agile workshop so that each vertical [property, automotive etc.] has its own dedicated technical staff.
“Whether it’s basic things we need to do to improve the purchase pathway or things that are really innovative that will improve the consumer experience, it’s constantly evolving. The ecommerce relationship with the consumer is fragile. If you make sudden, big changes, consumers don’t react well so you’ve got to steadily integrate. It’s important they feel involved in the journey and see any change as a benefit.”
A hugely important factor weighing down on Trade Me’s user experience design staff is due to the service’s mainstream appeal: “In a country of 4.7 million, we have 4 million account holders. Trade Me’s user base demographically mirrors New Zealand’s population, give or take a few percent. The search behaviour is really varied, people are searching various keywords, they are category browsing, they are list browsing, they save favourite stores—they do all of those things.
“So when we’re developing [a new feature or part of the platform], we need to make sure that we’re developing all of those purchase pathways to make sure that we’re not inadvertently cutting out, for instance, Millennials—or pensioners. Whatever the demographic may be, we’ve got to make sure any new development covers everyone.” An example of this is Trade Me’s new buyer protection scheme where members are covered if they purchase an item that is faulty or not as described.
“Put details into your listings—don’t just make them really short.
“There are a lot of options out there for retailers to list goods on multiple marketplaces through one portal. It saves time and makes it much more efficient, however, in doing that, they tend to only manage a basic listing.” This is a mistake because consumers are “looking to do research before committing to purchase.
“Consumers want information and they want it before they commit to buy. If you’re just selling a t-shirt and your copy says it’s a UK men’s large, what does that mean to a New Zealand consumer? Give them some relevant size info. Spend a bit of time and effort on it and you will be rewarded for it.”
Part of building brand equity is customer feedback, which Swift says is particularly important: “Consumers can see that other Kiwis have bought from you, that you met your shipping timeframe and that your customer service is good—they’re acting as advocates for your business.
“One of the reasons we give retailers a dedicated online store when they’re selling internationally is so that they can inform the consumer about who they are, give background on the organisation, why they chose NZ and why they’ve been in business as long as they have.”
Examples of UK retailers FreestyleXtreme and Jadlam Racing selling on Trade Me:
Trade Me introduced a proprietary card payment system in 2007, called Pay Now—similar to PayPal, which the site doesn’t accept. It allows consumers to use debit cards, credit cards and a number of other finance options that are available in New Zealand.
All international sellers are set up with a Pay Now account which “reduces resistance to selling overseas because you know that Trade Me is going to guarantee that payment. It also means the consumer can purchase with confidence and protection.”
“Kiwis are a fairly relaxed bunch. If something goes wrong, as long as you communicate, it’s generally not a problem.
“Let people know what the situation is, how they can keep up to date with what is happening and what you expect the resolution to be.” Taking this approach can, in some cases, avoid a retailer receiving any negative feedback even if there’s a long delivery delay. “It’s universal across any marketplace: clear communication is key.”
One issue with selling through ecommerce marketplaces is the disintermediation between the retailer and the customer: it could be argued that psychologically, Amazon customers are Amazon’s customer regardless of who is fulfilling the order. It’s something that Trade Me thinks carefully about, admits Swift.
Retailers through Trade Me are given the contact details once there has been a transaction, so that they can communicate with the consumer. Logically, retailers aren’t then allowed to remarket to those customers and take them off-site, although “it’s not something that is a problem for us—we actually get complaints from consumers [in such cases] because they want to purchase on Trade Me as that’s where they feel most secure.”
Overall, he agrees, the goal is to establish a warm and fuzzy feeling between retailer and customer. “We’re not looking to get involved in the purchase pathway—Trade Me is UK retailers’ doorway to accessing New Zealand. We want retailers to build brand awareness so that they can build a loyal, returning customer base, provided they’re adhering to the rules of the platform.”
David Swift is Global Development Manager at Trade Me – www.TradeMe.co.nz