Trade Me founder regrets blunt comments

22:56, Sep 26 2012

Trade Me founder Sam Morgan says he regrets "blunt" comments in which he labelled rival online marketplace Wheedle a "joke", but is continuing to point out the difficulties that challengers to Trade Me will face.

He said they were "brave souls" as he couldn't think of a harder space for a start-up to crack.

Trade Me faces a twin assault from Wheedle, backed by Mainfreight co-founder Neil Graham, and another Christchurch-based venture spun out of advertising firm, Treacy Advertising.

Both aim to provide cheaper, New Zealand-owned alternatives to NZX-listed Trade Me, which is controlled by Fairfax, publisher of the Stuff website.

Wheedle today denied it was behind the anonymous "Money is good/Money is bad" advertising campaign as debate continued to rage over its prospects and a Trade Me fee hike.

Speculation Wheedle might have been behind the anonymous campaign heightened after a Twitter account was set up that appeared to link Wheedle to the advertisements. But Wheedle's public relations consultant, Hayden Munro, said the account was a fake and the company was not involved in the promotion.

Graham's will launch on Monday, backed by a multimillion-dollar war chest and television and radio advertising campaign.

The other challenger, List Sell Trade, hurriedly brought forward its launch to 3pm today in response. Director Brenda Treacy said it would spend hundreds of thousands of dollars sending a tabloid mailout to every home in the country next Saturday to promote the venture.

Morgan said yesterday that he hoped Graham did not waste too much of his money. Graham's personal wealth was put at $65 million in NBR's 2011 Rich List.

Morgan, who still sits on Trade Me's board as a director, said his personal opinion was that there was little prospect of the online market he founded being unseated.

"When Trade Me was nowhere near as strong as we are now, we saw off eBay, Zillion, Sella and Trade & Exchange." Sella remains in business but is far smaller than Trade Me.

Trade Me marketplace head Craig Jordan has been more circumspect about the company's challengers, saying Trade Me was "very respectful" of its competitors and wished them luck, but also noted others had tried and failed.

Wheedle's launch will coincide with a fee hike by Trade Me that has some members disgruntled. Trade Me posted a $75.6m annual profit last month, enjoying a 75 per cent profit margin. Some members complained that the 5.3 per cent to 8.1 per cent fee increase, which will apply to most general items sold through the site from Monday, smacked of "greed".

Graham said Wheedle had the management experience and "firepower" to become a long-term success. Yesterday its website failed under the load of Stuff readers flocking to check out the service, in advance of its official launch.

Wheedle aims to undercut Trade Me, charging a flat-rate $1 fee on items that sell through the site for more than $20. The fees will be waived and the site will be free to use until November 29.

List Sell Trade will have a different model, offering members unlimited listings for a flat subscription fee of $10 a month.

Treacy said Trade Me's charges were now a "very significant monthly expense" for real estate agents, car dealers and other retailers and she believed private sellers and businesses had been looking for an alternative for some time.