27 Sep 2012

Trade Me facing new rival

1:27 pm on 27 September 2012

A new online buy and sell site will be launched in October to capture some of the lucrative market from Trade Me.

Wheedle, which has investment from Mainfreight founder Neil Graham, says New Zealand's online market which it estimates to be worth $1 billion is dominated by Trade Me and it needs a competitor.

The company intends to focus on attracting established online businesses by initially offering free sign-ups and advertising for free.

It will launch a nationwide television, radio and online advertising campaign to promote the site on Sunday.

Wheedle says it will make pricing more affordable to consumers by charging $1 only when items are sold for over $20, otherwise there will be no charge.

Managing director Carl Rees says the site has been designed to be much cheaper for consumers.

Mr Rees says he believes they are offering a similar service, but with better benefits and features and at significantly lower costs.

He says unlike Trade Me, Wheedle will not charge success fees and it can maintain its low cost because it does not have corporates or large shareholders to satisfy.

But telecommunications consultant Lance Wigg believes Wheedle is highly unlikely to be successful.

Mr Wigg, who was involved in the initial sale of Trade Me to Fairfax and was also a co-founder of the the ill-fated Pacific Fibre, says it is going to be very hard for Wheedle to attract sellers.

"It's a great way for the principals to lose a lot of money very quickly. Trade Me are extraordinarily good at what they do and much better than eBay are in their market.

"We're all buyers and sellers on Trade Me, so they've pretty much got to chase all of us off Trade Me and onto their site, and there's no real compelling reason to do so.

"There are opportunities with Trade Me within certain niche categories, but the way to attack that is from the ground up in small bursts, rather than going all-out with the TV ads and online campaign."