This post is by James Storie-Pugh, Director at Pivot International.
New Zealand might not be an obvious choice for international sellers looking to expand – it’s an isolated island nation in the South Pacific, thousands of miles from its nearest neighbor Australia, with a population of less than five million.
But New Zealand is also a well developed English-speaking country with a healthy economy, high average incomes and excellent access to the internet. Online spending by New Zealanders (known as “Kiwis”) is expected to reach nearly NZ$6 billion in 2016 – an average of $1,200 for every man, woman and child.
Nearly 2 million Kiwis buy online, and 38% of their purchases go overseas to international sellers. Those international sales are estimated to be worth NZ$1.6 billion. Two-thirds of all online shoppers in New Zealand have made a purchase from an overseas business in the last three months.
Where do Kiwis go to make those international purchases? They go to homegrown online marketplace Trade Me. Responsible for nearly three-quarters of all domestic web traffic, Trade Me has been described as a basic human right for Kiwis.
Here’s what you need to know about selling there as an international business.
What is Trade Me?
Trade Me was founded in 1999 by New Zealand entrepreneur Sam Morgan. It grew steadily, seeing off competition from eBay in 2001 and reaching one million members in 2005. Australian media company Fairfax acquired Trade Me in 2006, but then sold their stake in 2012. It is now an independent company listed on the New Zealand stock exchange, with over 500 employees.
Trade Me has 3.9 million members, of 4.7 million Kiwis in total, and 848,000 people visit the site daily. 75% of Trade Me listings are new items, and in 2015 over 6.6 million items were sold. In a 2015 survey, Trade Me was ranked the most influential domestic brand in New Zealand.
Trade Me has a strong reputation for safe online trading, with 44% of shoppers in New Zealand making a purchase there within the last three months. That’s over double the penetration of other ecommerce sites used by Kiwis, such as The Warehouse (22% making a purchase in the last three months), Mighty Ape (21%), Amazon (20%), eBay (16%) and AliExpress (14%). Note that Amazon, eBay and AliExpress do not operate locally in New Zealand – those are direct international sales.
Trade Me is a listing-driven site in the style of eBay, as opposed to catalog-driven like Amazon. Products can be sold by auction or at a fixed-price, and all listings have a fixed duration.
A wide variety of items are sold, but the most popular categories are:
- Home and living
- Toys and games
- Auto parts and accessories
- Business, farming and industrial
- Clothing and fashion
The high ranking of sport, business and farming categories might be a surprise if you are not familiar with New Zealand. Kiwis are passionate about sport, particularly their national sport rugby, and the national team the All Blacks. Internationally the All Blacks have a formidable reputation and a great deal of success. Both rugby kit and supporters’ gear sell well online. The national summer game of cricket is enjoying a resurgence with the recent international success of the Black Caps. American sports are also hugely popular, especially the NBA following the success of Kiwi player Steven Adams.
Business, farming and industrial items sell well for a number of reasons. New Zealand has an agricultural economy with exports accounting for about 30% of GDP. Rural communities are located away from the three main urban centers (Auckland, Wellington and Christchurch) so they are heavily dependent on ecommerce to compare and purchase goods. Many Kiwis also enjoy an element of self-sufficiency, and buy farming equipment to enable that lifestyle.
Why sell on Trade Me?
In summary, here’s why New Zealand and Trade Me are attractive to international sellers:
- Ecommerce is strong and growing in New Zealand.
- Kiwis are happy to buy from overseas sellers.
- Trade Me is New Zealand’s biggest ecommerce website, and they are actively seeking international sellers.
- There are no language barriers to overcome (for US, UK and other English-speaking sellers).
As a result, international sales are growing rapidly on Trade Me, with an 88% year-on-year increase in overseas GMV in December 2015.
If you have looked into Trade Me in the past you may have found that only Australian and Kiwi sellers were allowed, but this policy changed in September 2013 when Trade Me officially opened up to international sellers.
New Zealand as a whole is very accessible to international businesses, and is ranked as the best country in the world to do business according to the World Bank.
What are the specific opportunities for international sellers?
As a country in the southern hemisphere, New Zealand experiences opposing seasons to the north. US and UK retailers with seasonal stock will find that their products are in season in New Zealand when they are out of season in their domestic market. This can allow international retailers to maintain margins by moving their focus overseas when their peak season ends, rather than discounting prices heavily for customers at home.
Large domestic supply gaps exist in numerous product categories in New Zealand. Simply put, Kiwis want to buy a wider selection of brands and goods than are available domestically either online or in stores. More than 60% of online shoppers who bought from overseas in the last three months said they just couldn’t find the items they wanted on a New Zealand retail site.
These supply gaps make New Zealand a very attractive ecommerce option for sellers who can fill the gaps.
On Trade Me, the best selling categories for international sellers are broadly the same as the most popular categories overall, but the greatest impact is seen when international retailers bring new brands, better prices, or a wider range to the site in the following categories:
- Home and living
- Electronics, especially mobile phones
- Branded clothing and fashion
- Car, motorcycle and boating goods
One example is Lego. It’s hugely popular in New Zealand. UK retailer Jadlam Toys & Models has been able to enter the market and quickly establish themselves by offering sets that are not available locally, or that they are able to sell at a more competitive price.
Other brands that are difficult to find in New Zealand, but have become very popular to buy from international sellers, include:
- Fashion: Superdry, Karen Walker
- Electronics: Bose, Dyson, Kenwood
- Sports and outdoors: Shimano, Callaway, Coleman
- Tools: Snap-on, DeWalt
Which countries have the most sellers on Trade Me?
Trade Me’s most successful international retailers are from:
But businesses from all countries are eligible to sell on Trade Me. Having a variety of international sellers helps make Trade Me the ideal location for consumers to search for a wider range of goods, compare prices and commit to buy with confidence.
What’s the culture like in New Zealand?
New Zealand’s culture is derived from two main sources: Māori settlers who came from islands in the South Pacific in the 13th century, and British settlers arriving mostly since the 19th century. Increased immigration has broadened the culture in recent years, so that the main ethnic groups are now European at 74%, Māori at 14.9%, Asian at 11.8% and Pacific islanders at 7.4% (the last group arriving in modern times unlike the indigenous Māori). The official languages are English and Māori.
New Zealand became a British colony in 1840, then gained independence over the course of the 20th century. Elizabeth II remains the Queen of New Zealand, and the UK’s Union Jack features in New Zealand’s flag. While there are many similarities to the UK, USA and Australia regarding areas such as popular culture, in other respects the country is unique. New Zealand has a deeply diverse population, especially for such a small country, and its own culture.
Kiwis’ enthusiasm for rugby and other sports was mentioned above, and they also have a passion for sailing. New Zealand has nearly 16,000km (10,000 miles) of coastline, so nowhere is very far from the sea. The country has more than 120 affiliated yacht clubs with more than 300,000 members. Auckland is known as the “city of sails”, with more boats per capita than anywhere else in the world. The impact on ecommerce is that boating parts and accessories sell like hotcakes.
Having an appreciation for the local culture is important for cross-border traders. Despite obvious similarities, sellers shouldn’t assume Kiwis are “just like them” because they speak the same language.
What are Trade Me buyers like, and what do they look for?
Given the high percentage of New Zealanders who hold an account, Trade Me’s user base mirrors the nation with 76% of buyers between the ages of 25 and 55. Most use a desktop computer to make their purchases, but mobile buying is growing with 30% of internet users having bought through a smartphone or tablet.
Once a shopper has found the product they want, if it is competitive (i.e. has more than one seller) then their choice is typically influenced by three factors:
- Shipping cost and speed. The cost of delivery is important and free shipping is appreciated, but not yet the standard on Trade Me as it has become in other markets. Delivery times are important, but because many shoppers are experienced with buying internationally they won’t be put off by having to wait – if it’s an item they really want.
- Price. This is a huge driver, as you would expect, but it doesn’t outweigh the desire for goods and brands that are not available locally. Buyers won’t settle for a local brand or generic item if they feel an international brand offers a better product. If a specific item is offered by competing sellers they will of course go for the lower price, all else being equal.
- Feedback. Trade Me is a community-driven site and feedback is the cornerstone of that. A positive trading history provides a lot of reassurance to Kiwi consumers, especially those who are still new to buying from international sellers.
How do you start selling on Trade Me?
The process starts with a two-page checklist, covering a range of information about the business and current selling activities, so Trade Me’s Trust & Safety team can verify their identity and decide whether to accept them onto the marketplace.
The checklist covers:
- Business identity information such as company name, location, website, registration number, and directors’ names.
- Online activities such as Amazon and eBay store URLs and social media presence.
- Information about the products that will be sold such as brand names, image rights, location of stock and use of drop shipping.
- Shipping information such as the carrier used, delivery times and returns policy.
- The volume of listings the seller intends to put on Trade Me, and how they plan to integrate with the site.
The main steps to start selling are:
- Completing the International Seller Checklist.
- If accepted, the Trust & Safety team will advise the seller of any restrictions or recommendations that apply to them when selling to New Zealand.
- The Account Manager will run through login details, required store information and Trade Me’s card payment system Pay Now.
Trade Me provides either a Global Development Manager or an Account Manager to advise on the size of the opportunity, and assist sellers with registering and selling on the site.
The approval process looks at:
- The products and categories the seller will be supplying.
- Listings and sales volume.
Trade Me look for retailers who can improve supply to their buyer community – either price, brand diversity or range – without flooding the categories.
Once accepted, the retailer’s Account Manager gets to know their business and offers advice and data insights on how to maximize their sales to Trade Me customers.
What level of branding and store customization is available?
Trade Me listings are branded as part of the overall design experience, with a large store banner and custom description, but they don’t allow custom HTML like eBay listings.
The listing needs to state where the seller is based, and Trade Me adds a link to a duty calculator so buyers can find out if any customs charges apply.
The Trade Me store page (example) includes:
- General information about the business
- Payment types accepted
- Shipping information
- Returns and cancellations policy
- Contact information
- Overall feedback rating and detailed feedback comments
What is the listing process?
Trade Me provides four ways to add listings to the site:
- Manual entry
- Third-party listing tools
- FTP upload
The best known third-party system with Trade Me support is ChannelAdvisor Marketplaces, but other tools and shopping cart extensions are available. The Web Retailer directory lists other multichannel management tools and mVentory provides a Trade Me integration via Magento.
Sellers who build their own integration with the Trade Me API or via FTP will need to generate inventory data and images in one of the accepted formats, such as CSV or XML.
Reflecting its origins as an auctions and classifieds site, Trade Me listings don’t currently offer these features:
- Perpetual duration or auto-renewal. All listings have a fixed timespan up to 14 days.
- Parent/child variations. Separate listings need to be created for different sizes and colors, for example.
Retailers will need to manage the creation of multiple listings for variations, and relist stock when an item is sold or the listing expires. Look for automation of those features in third-party tools with Trade Me support.
Once listings are live on the site, they can be found by browsing or searching. The Trade Me search algorithm is not complex, being based only on the best matches to the keywords that are searched for. Results are not weighted by price, feedback or location.
What fees are charged?
It is free to list items on Trade Me. A range of optional upgrades are available to raise visibility, but they are mostly used by local sellers selling unique or high-value items rather than international retailers.
There is a 7.9% commission rate on items that sell successfully. Discounted trade fees are available to very large sellers with over NZ$1.5 million of gross sales per year.
The Pay Now card payment system has a fee of 1.95% of the purchase price including shipping, on top of the sale commission. Payment by bank transfer is popular within New Zealand, but not normally possible for international sellers.
Other fees apply to domestic sellers listing items such as vehicles, services, property and jobs.
What is expected in terms of shipping, support and returns?
Buyers typically expect to receive their item within ten days, and to pay $10 or less for shipping. Free shipping is becoming more common.
Customer support is provided through a messaging system on the Trade Me website. There are no specific requirements for speed of response, although it is of course advised to reply as quickly as possible. Given the time difference between New Zealand and both Europe and the USA, delays in messaging are to be expected. If the same questions are being asked repeatedly, the seller’s Account Manager will work with them to provide the answer upfront in their listing and store information.
Sales need to comply with New Zealand’s Fair Trading Act and Consumer Guarantees Act. Unlike the EU, buyers do not have a right to return items for an exchange or refund just because they have changed their mind. However, shoppers are reassured when sellers do accept returns, particularly for clothing. Sellers are not required to pay for return postage or provide a local returns address, and they can charge a restocking fee if it is specified in their store and listing description. Sellers must comply with their own stated return policy, of course.
Trade Me has a number of broad requirements and recommendations for listings, and also asks sellers to follow Trade Me’s seven company values. The last, and in some ways the most important, is colorfully called “Don’t be a dick”. It means you should treat people with respect, be responsible, and keep a sense of humor. Hats off to the Kiwis for summing up good customer service so concisely!
Will buyers have to pay customs duty or taxes?
Reflecting the relatively narrow range of products available domestically, New Zealand has a fairly generous import allowance which works out as NZ$400 for most goods, and NZ$220 for clothing.
Trade Me puts the onus on the buyer to look into whether any duty will be payable, and includes a link to the New Zealand Customs Service duty calculator on all international listings. This is a sophisticated duty calculator with a shopping cart and multi-currency support, providing a reliable estimate of the fees that will be charged, if any.
New Zealand and Trade Me have a unique place in the world. New Zealand’s culture and strong economic growth sets it apart from most other developed countries, while the English language and free market principles make it easy for international businesses to sell there.
Trade Me is so prevalent in New Zealand that it has been described as a basic human right for Kiwis. Not only do they use it to trade used items person-to-person, they also use it to buy new products from businesses at home and abroad. Kiwis know what they want, and they value a range of international brands and products that they can’t buy domestically.
New Zealand and Trade Me are a great opportunity for online sellers around the world. You just have to tap into it.
This post was by James Storie-Pugh, Director at Pivot International. Pivot are an ecommerce agency specializing in global ecommerce marketplaces. Based in London, they act as the local representative office for marketplaces around the world including Newegg, MarkaVIP, JadoPado and Trade Me.
Credit: This post was written with Andy Geldman, with contributions from David Swift of Trade Me.