Sandra Hanchard: Trade Me – where can it grow?

The hefty pricetag on Trade Me of $700m, sends a strong message to advertisers and publishers about the value of the online industry in the New Zealand market.

Despite some commentary that Fairfax has paid too much for a web property in an offline population of 4 million, Hitwise data show that there are several online verticals in which Trade Me can expand.

Trade Me held a whopping 87 per cent 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 (www.findsomeone.co.nz), which is powered by Trade Me, ranked at second position with 19 per cent market share for the week ending March 4, 2006. Competing website, NZDating (www.nzdating.com) held 44 per cent, almost double the market share of Find Someone.

Similarly, Trade Me's community website, Old Friends (www.oldfriends.co.nz), ranked at 7th position with 2.5 per cent market share in the Hitwise Net Communities category. My Space (www.myspace.com) which was bought for US$500m by News Interactive in 2005, is the top ranking website with 5.9 per cent.

Given that Net Community websites for the week ending March 4, 2006, accounted for 4.4 per cent of all website visits (Auction websites comprised 4.8 per cent) the consolidation of growth for Trade Me through its Old Friends website can potentially entice more advertising dollars online.

Fairfax now 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 per cent week ending March 4, 2006 compared to the same week last year, with Seek NZ (www.seek.co.nz) continuing to dominate.

In defending the acquisition, Fairfax CEO David Kirk made a fair call by stating that Trade Me's leading position was not replicated anywhere else in the world.

Hitwise analysis in October 2005 showed that Trade Me held 10 per cent more of the retail industry than eBay Australia (www.ebay.com.au) in their respective markets. It will be interesting to watch where else Trade Me can make an online imprint unique in the world.

* Sandra Hanchard is Analyst - Asia/Pacific for Hitwise, a website traffic monitoring service.