Trade Me real estate ad deal likely

TOM PULLAR-STRECKER
Last updated 07:18 20/02/2014

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Trade Me has hinted it may offer large real estate agents bulk discounts on property listings to defuse a row over a fee-hike that threatens to stymie its already disappointing growth.

Trade Me shares slumped 5.4 per cent after it reported a modest 2 per cent rise in its interim net profit.

Chief executive Jon Macdonald said the company might also change some of the fees people paid to list and promote general items later this year.

Trade Me was not anticipating a drop in its profit margin on general items and it was too soon to get into specifics, Macdonald said.

But he would not rule out doing away with charges of up to 55 cents per listing for sellers to have photos of their items appear in Trade Me search results.

"We need to provide as good a buyer-experience as we can, especially in categories where we have strong overseas competition, such as fashion and clothing.

"Dedicated fashion sites overseas provide a very photo-rich experience. We acknowledge we need to move closer to that."

Investors alarm bells are ringing after a marketing splurge did little to persuade mums and dads to buy and sell more on Trade Me.

The total value of general items sold through Trade Me rose just 0.4 per cent in the six months to December, less than the rate of inflation.

Trade Me's classifieds revenues rose 19 per cent as more businesses and consumers turned to the site to advertise jobs, property and cars.

The company is switching from charging real estate offices a flat-rate fee for all their listings to charging $159 plus GST per property. The changes, which would increase Trade Me's margins, have prompted 18 real estate offices to withdraw their listings.

They and other agents have suggested they may divert more listings to rival property site real estate.co.nz. Macdonald acknowledged the changes had been "disruptive" but said more than half of property listings were now paid for under the new fee structure, while "sensitive negotiations" were continuing with other estate agents.

He appeared to confirm bulk discounts were in the frame, saying that while real estate agents that had already moved to the new fee structure would not be disadvantaged relative to their size, that did not necessarily mean they would pay no more per-listing than those that had yet to re-sign their contracts with the company.

"Having different commercial terms with different major customers is very common in all industries," he said.

Macdonald said earnings growth would remain subdued in Trade Me's second half and expenses would rise further. Trade Me expected to return to stronger profit growth in its 2015 financial year as it rolled out new services, improved margins in its classifieds businesses and increased activity in its general items marketplace, he said.

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More than half of visits to the site were now from mobile devices such as smartphones and tablet computers, he said. Staff numbers had risen by 50 to 350 over the six-month period.

- BusinessDay

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