science

Trade Me

Trade Me is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Trade Me rather than just read about it. In short: Trade Me is New Zealand's largest online auction and classifieds website. Managed by Trade Me Ltd., the site was founded in 1999 by New Zealand entrepreneur Sam Morgan, who sold it to Fairfax in 2006 for NZ$700 million.

Key takeaways

Trade Me belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Trade Me to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Trade Me from memory before moving on to harder problems.

Reference excerpt

Trade Me is New Zealand's largest online auction and classifieds website. Managed by Trade Me Ltd., the site was founded in 1999 by New Zealand entrepreneur Sam Morgan, who sold it to Fairfax in 2006 for NZ$700 million. Trade Me was publicly listed as a separate entity on 13 December 2011 under the ticker "TME". In May 2019, Trade Me was acquired by private equity firm Apax Partners for NZ$2.56 billion. Trade Me Ltd also operates several sister websites including FindSomeone and Holiday Houses. As of 20 March 2019, Trade Me's website was the fifth most visited in New Zealand and was ranked 2,711th globally according to Alexa Internet. In a country with a population of 5.3 million, the Trade Me site has, as of April 2021, 5 million active members. As of April 2021, an average of 690,000 people visit the site each day. Participating traders primarily use New Zealand's banking system to settle payments, although Trade Me offers sellers the ability to accept credit card payments via Trade Me's own instant payment service, Ping (formerly Pay Now). Australian sellers must have a New Zealand bank account, while sellers from other countries are not allowed on the site without special approval. Trade Me shares many features with other online auction websites, such as eBay. Some of these features include "Buy Now" and "Auto bidding". Sellers may choose to block the large proportion of members not "authenticated" from bidding. Only "authenticated" members can ask sellers questions. Members can become "authenticated" by using a credit/debit card on-site or depositing some money in their Trade Me account. Only one membership per private person is allowed. Membership is for life, is never deleted and will be only partially deactivated if a member "closes" their membership by giving three days notice in writing to Trade Me. Member profile, bidding history and "feedback received" pages are then hidden and can be reactivated by ex-members at a later date on request. All ex-members empty member "items for sale" pages and all the "feedback sent" posted on other members pages is not hidden.

History

Origins and early development

Sam Morgan founded Trade Me in 1999, constructing the site while working full-time for Deloitte as a technology consultant. Within Deloitte, Morgan worked on Internet projects and supply-chain issues. During this time he witnessed the successes of online businesses like eBay and Yahoo, as well as the disasters of the dot-com bubble.

According to Trade Me legend, Morgan, then 23 years old, decided to found the Trade Me site when, despite searching online, he could not find a secondhand heater for his flat in Wellington. The Trade & Exchange site had a heater for sale, but held back listings for a week before publishing them online, and by the time Morgan made contact with the heater's owner, the item in question had already sold. Morgan describes the initial designing and building of Trade Me thus:

"Some time later we were in a backpackers in Sydney and got evicted because it was overbooked. We went up to some backwater because it was the only accommodation we could find. Anyway, there was nothing to do, so that night I started drawing a data model. So it sort of started there really. Then when I came back to Wellington I literally sat on the couch and built the site on a laptop over a five- or six-week period."

The site went online in March 1999 after Morgan pulled together as much funding as he could. It gained 155 members in its first week on the Internet. In its early stages Morgan humorously listed Trade Me for sale on eBay with a $1 million buy-now price. Though eBay withdrew Morgan's auction, the prank sparked some interest among New Zealanders who realised the potential of online trading. Trade Me developed slowly initially, because its founder had little funding to pay for the costs of hosting and of expanding the site. In addition, Trade Me initially offered a completely free service for both buyers and sellers, a strategy for expanding its member base at the cost of short-term revenue. With little money and time available to work on the site, Morgan made the critical decision to sell almost half of his new company to his former Deloitte colleagues, bringing him around $75,000. By August 1999 membership had risen to 3,500, and Morgan could dedicate most of his time and funding to the site. The early strategy for Trade Me involved simply increasing its user base and encouraging members to refer their friends to the site. Trade Me launched the Safe Trader escrow service about this time.

Growth and expansion In its early years Trade Me continued to struggle, slowly increasing its user base, but facing financial challenges. The site initially used web banners, but falling prices for advertising made web-banner revenue insufficient to cover expenses. Trade Me then introduced fees for auction services: first for features such as bold titles; then in September 2000 it introduced "success fees". This action proved the turning point for Trade Me, saving the site from potential financial disaster. Much of the success to come was based around the 'Trade Me Manifesto', a series of ten values for keeping the site fast and the company technology focused. eBay tried to enter the New Zealand market in 2001, but had little success. Trade Me has remained the major Internet-auction site in New Zealand, with both international and smaller national competitors gaining relatively little market penetration. Morgan commented on eBay's attempt to penetrate the New Zealand market in an interview:

"...I think there are big cultural issues there that are just not well understood. For example the Americans think that everyone has a zip code [...] they were a little late in and then they launched in US dollars." Morgan took time off from the stress of running the booming Trade Me site in September 2001, and went to the United Kingdom to manage an IT team in London. When he returned to his role at Trade Me the site had become profitable, with a membership of 100,000 and growing. By April 2005, this number reached one million. In August 2003, Trade Me went live with Trade Me Motors and Trade Me Property followed in 2005 along with Trade Me Jobs in 2006. New Zealand's Deloitte/Unlimited Fast 50 rated Trade Me the fastest-growing NZ technology company in 2005.

Fairfax subsidiary, 2006–2012

… excerpt ends here. Continue reading the full article.

Illustrations

Old Friends logo

Trade Me Property logo 2010.

Worked examples

Example 1 — a first encounter with Trade Me

Start with the simplest possible case. Write down what Trade Me claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Trade Me before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Trade Me ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Trade Me

In research: Trade Me appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Trade Me in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Trade Me is common in secondary-school and first-year university syllabi. It links to neighbouring topics 2006 mergers and acquisitions, 2011 initial public offerings, 2019 mergers and acquisitions, so understanding it makes those chapters shorter.
In everyday life: Look for Trade Me outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Trade Me in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Trade Me means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Trade Me out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Trade Me in simple terms?

Why does Trade Me matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Trade Me?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Trade Me.