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Hitwise Intelligence - Sandra Hanchard - Asia Pacific

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Trade Me - Where can it grow?

March 10, 2006

Fairfax's acquisition of New Zealand auction website, Trade Me for a hefty $NZ 700m, which I must admit made my jaw drop when I first heard the news, sends a strong message to advertisers and publishers about the value of the online industry in the New Zealand market. Despite commentary that Fairfax has paid too much for a web property in an offline population of 4 million, Hitwise data shows that there are several online verticals in which Trade Me can expand.

Trade Me held a whopping 87% market share of the Shopping and Classifieds - Auctions category for the week ending March 4, 2006. Trade Me's other web properties however have not dominated as convincingly in their respective industries. In the Lifestyle - Dating category, Find Someone, which is powered by Trade Me, ranked at second position with 19% market share for the week ending March 4, 2006. Competing website, NZDating held 44%, almost doubling the market share of Find Someone.

Similarly, Trade Me's community website, Old Friends, ranked at 7th position with 2.5% market share in the Hitwise Net Communities category. My Space which was bought for $US500m by News Interactive in 2005, is the top ranking website with 5.9%. Given that Net Community websites for the week ending March 6, 2006, accounted for 4.4% of all website visits (Auction websites comprised 4.8%) the consolidation of growth for Trade Me through its Old Friends website can potentially entice more advertising dollars online.

Fairfax also has the option now of entering the NZ online employment industry through an established brand name. The Business and Finance - Employment category grew by 26.8% week ending March 3, 2006 compared to the previous week last year, with Seek NZ continuing to dominate.

In defending the acquisition, Fairfax CEO, David Kirk (former NZ All Black captain) made a fair call by stating that Trade Me's leading position was not replicated anywhere else in the world. I compared Trade Me's success against the dominance of eBay in Australia in a previous blog post, where Trade Me held 10% more of the retail industry than eBay Australia in their respective markets. I look forward to watching where else Trade Me can make an online imprint unique in the world..