The trials and tribulations of the Trade Me wannabes

Kiwi auction powerhouse Trade Me gained two new competitors this week, and both have stumbled at the first hurdle.
Written by Darren Greenwood, Contributor

It all seemed so good — the greedy, monopolistic company Trade Me was to have not one but two new competitors.

No longer would Sam Morgan's creation, now partly owned by Fairfax of Australia, be able to extort ever higher fees for its auction website.

New, nimble, Kiwi-developed operators were going to step in and keep the giant honest, thanks to their lower charges.

But it has all turned to custard.

As if it wasn't going to be tough enough for these little Davids to tackle Goliath, the Davids had feet of clay.

Wheedle, the first out of the block on Monday, barely lasted a day. Security holes were discovered, and people reported other problems. Within hours, the website became a national laughing stock.

Perhaps confirming my warnings about getting jobs done on the cheap, it turned out that much of the software development had been offshored to India.

Wheedle announced that it would suspend its operations indefinitely until it sorts out its problems. It also announced an independent review into its mass failure.

Then we had ListSellTrade, which was due to launch on Thursday.

Security holes were found in that website, too. Thus, the auction site has delayed its launch until today.

ListSellTrade did its development in-house, but it does make you wonder whether the marketing company behind it was big enough and skilled enough to do the job.

No wonder Trade Me founder Sam Morgan has enjoyed a good laugh.

Before Wheedle even wobbled before falling down, Morgan tweeted:"Being rich clearly does not give you skills transferable to areas outside your domain of competence."

Morgan should know all about that; he invested some of his millions in the failed Pacific Fibre project, and then lamely blamed the government for its failure.

These website failings confirm some of the characteristics that I, coming from the UK originally, have noted about New Zealanders over the years.

Kiwis are a very enterprising lot. That Trade Me was making so much money naturally led people to see an opportunity.

The trouble is, there is this awful tendency to do things on the cheap, as showed by the Wheedle fiasco, which will prove to be far more expensive in the long run. There is also a "she'll be right" attitude, and it does make you wonder if both auction sites were somewhat rushed before proper testing was done.

But New Zealand does have a talented and successful IT sector stacked with much entrepreneurial talent.

In the past week or so, I have written about some successful e-commerce sites, such as United Sweets, a rapidly growing company that import sweets from the US and the UK, and plans international expansion, including into Australia. There's also sports equipment supplier Toropedo7, another Hamilton-based company that's already doing well in Australia.

Of course, we mustn't forget Trade Me; its success led to these and other flattering imitators.

It was always going to be difficult enough for these fledgling newcomers to tackle Trade Me, with the site being so entrenched and dominant. Though both of the newbies still have much goodwill out there from the community, this week's failures have cost them so much credibility that it will make their tasks much harder.

Good luck to them both; the pair will need it now more than ever!

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