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

Online marketplace Trade Me has been hit with a $138 million write-down of the value of its marketplace business unit.

This comes as revenue continues to drop for the online retailer.

Massey University marketing professor Bodo Lang says Trade Me still leads its current market, but its status is under threat.

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Episode Transcript

Speaker 1 (00:00):
Right back home. Bad news for the country's leading online
buy and sell website. Trade Me's written down the goodwill
value of its online marketplace from two hundred and seventy
five million dollars to one hundred and thirty seven million.
The reason for this has been given as a restrained
short term future growth for that part of trade Mean's business.
Bolang is a marketing professor at mass University and joins

(00:23):
me now Voda good.

Speaker 2 (00:23):
Evening, Good evening, Ryan, How are you very well?

Speaker 1 (00:27):
Thank you? So people basically aren't selling their stuff on
trade me? Is that what's going on here?

Speaker 2 (00:33):
Yeah? I think there's effectively that so that I think
the company had to adjust its growth expectations and they're
just they're still the market leader, but that market leadership
is I think increasingly coming under threat. And so what's
happened is we've got more competition and as a result,
I think their growth expectations are just much lower, and

(00:53):
so that's why they've produced their their goodwill is face.

Speaker 1 (00:57):
You know, there's Facebook marketplace that I know a lot
people are using, but are we buying less? You know?
Is it other secondhand outlets and online shops that we're
going to or is it actually that we're buying lots
of temos stuff, new stuff that's just as cheap.

Speaker 2 (01:14):
Yeah, I think it's a mixture of things. I think
it's so there's definitely more competition in the secondhand space,
and so the biggest one is obviously Facebook Marketplace, but
then there's other sites as well. So back in the
back when trade we started, there was no competition and
so that was the only place really we could sell things,
and in fact they did effectively a couple of other

(01:36):
businesses out of business. So I think maybe we're seeing
this now slowly occurring here. So there's other used goods
retailers or sites rather, and then there's also certainly brand new,
very cheap Chinese products that we can buy on huge
I mean massive platforms that provide an incredible amount of choice.

(01:59):
And the second factor, and I think the third factor,
to be honest, is also the arrival of really big
box retailers in New Zealand like Ikea. I mean, now
that we have Ikea in the country, it's pretty easy
for anybody anywhere in New Zealand to order fairly inexpensive,
really innovative, creative, modern goods that just weren't available previously,

(02:21):
and so if you're after a lampshade or I don't know,
whatever it might be, you know, there is now another
really big name Intel.

Speaker 1 (02:30):
Is trade me kind of at risk here? Like is
this potentially a terminal development for them? Or do they
just operate as a smaller business into the future and
is there anything they can do to turn that sort
of brand thing around.

Speaker 2 (02:44):
Yeah, that's a great question. I think it's certainly a
business model issue, and so the business model is a
a threat and that's because there's much more competition. I
think consumer sentiment has moved on. Why deal with you know,
other consumers buying something on line that is used that
may or may not be good when you can buy
something brand new and dirt cheap from a Chinese retailer.

(03:08):
So that's I think a big, big problem that that
sort of changed, or the threat to the business model,
and what can they do about it? I think, you know,
it's time for innovation and it's time to really listen
to customers and to think about, you know, what does
the research tell us. So I'm sure trade me, you know,
has focus groups and all sorts of other tracking studies,

(03:29):
and they would be listening very closely to what are
the you know, the barriers or what are the turnoffs.
So why do people stop selling things via tradeing marketplace
and why is that? And then turning those things around,
and it might be some of those things might be
very easy to fix. It might be that they feel
that the fees that are being charged to excessive or

(03:51):
that the process is to come withsome and so you know,
there's there's scope to improve these things, but it's certainly
big picture. It's a threat to the business model because
there are others in the market and then there are
other big brands that sell brand new products that are
not that expensive.

Speaker 1 (04:07):
Good point, buddy, Thank you for that, Body Lang, who's
a marketing professor at Massi University.

Speaker 2 (04:11):
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