#3: Let the server run the business

About 450,000 people visit Trade Me every day. *

During a month they collectively view over 1.1 billion page views (that’s around 434 every second on average and many more than this at peak times!) *

This represents over 70% of all domestic web traffic in New Zealand. *

Despite these impressive numbers we don’t have many of the things normally associated with a big business.

We don’t have stores or warehouses full of stock.

We don’t have an expensive sales force.

We don’t have a big marketing budget (see #1: Create great websites and people will tell their friends).

We have chosen businesses that scale and grow like only internet businesses can.

We prefer to let people participate.

All of the content you see on Trade Me is created by our users.

This scale is only possible because 99%+ of our customers interact directly with our servers and not with us.

However, this is not to say we’re not available to help.

We reply to thousands of emails and hundreds of phone calls from customers every week. We’re proud of the quality of service we provide to these customers, but we’re also proud of the fact that most of our customers are able to do what they want to do on Trade Me without having to deal with us at all.

If only the same was true of other businesses: “your call is important to us …”.

* Traffic stats in this post from Neilsen NetRatings for August 2007.

Related posts:

Other posts from the Trade Me Manifesto series:

21 thoughts on “#3: Let the server run the business”

  1. Traffic stats in this post from Neilsen NetRatings for August 2007

    Rowan, I am just curious of why does Trade Me use NetRating’s service? Is it because it is convenient to use? There are other superior products on the market which are much much better than NetRating’s primitive descriptive statistical analysis service. Trade Me transaction data is ripe for large scale data-mining. Some of the top commercial data-mining tool of today are from Oracle, SPSS and SAS. There are also open source tools for data-mining as well. Their tools are far superior than NetRating, because they have functionality that are not available in NetRating.

  2. So if Trade Me’s staff works only to maintain the site providing a service where its customers (users) can come and buy and sell, then who holds the responsibility when there are things like fraud or a sale of dodgy goods?

    Just a thought.

  3. Trade me is lucky because all their competitors websites suck. e.g look at sellmefree their website is full of bugs and is un-functional. If you google search ‘New Zealand online auctions’ take a look and they are all really really crap websites. Not trying to be critical but Trade Me was just lucky being at the right place at the right time.

  4. Trademe has always been quite usable, this is not just luck.
    Timing in hind sight always seems to be just right. And there are plenty of products and services that can be executed and can scale better as a web service.

  5. Falafulu –

    I’m not familiar with the alternative products that you mention.

    NetRatings is firmly established as the industry standard, in NZ at least. All of the large consumer sites are included, and this provides a great resource to people who are interested in advertising online or comparing the relative usage for whatever reason.

    Trade Me mostly uses NetRatings as an independent measure of site traffic, as well as for technical stats (see my previous posts on this). In my opinion they do a pretty good job in this respect.

    Other tools are used for transactional data mining. As you say, there is a wealth of data available from the auction engine, and I’ll cover this in more detail in a future post in this series.


  6. Keith –

    The terms of use make it pretty clear that each individual is responsible for their own actions on the site. Trade Me is a venue and doesn’t act for either buyer or seller.

    This is not to say that Trade Me doesn’t care about fraud on the site. There is a team at Trade Me working on this full-time.

    Making sure people feel safe using the site is vital. Without that there is no business.

    I’ll talk more about this in a future post in this series.


  7. Sam –

    If you have a minute, check out the intro to this series of posts:

    You’re right. Trade Me *was* lucky to be the right idea at the right time. But, there is a third element, which is crucial to the success.

    As you’ve noted in your comment, there are many other competing auctions sites. I take your point about their usability.

    If it wasn’t for good execution (the theme of all of these posts) then we wouldn’t be talking about Trade Me today.


  8. “We have chosen businesses that scale and grow like only internet businesses can.

    We prefer to let people participate.

    All of the content you see on Trade Me is created by our users.”

    SCALE: the scale thing is fundamentally key, isn’t it? – you really can’t emphasise enough how some businesses – and TradeMe is a great example – are hugely successfully at least in part specfically because they are on the Internet

    PARTICIPATE: another great benefit, and this together with scale works so well – the actual “act” of scaling is driven by participation, and thereby sucks in more participation, pushing scale… again, that is so much more inherently possible by the simple fact that it’s online…

    CREATED BY USERS – hang on, no more epiphanies there, I’m afraid! – “why not”, you say? – because TM creates the ads, don’t they??? this claim was true at the start yeah? (I honestly can’t remember back that far myself) and its a great ideal – but you can’t claim its still true can you? perhaps a moot point, anyway – things like ‘hide sidebar’ gives the users “de-create”! nice…

  9. Tom –

    I’m confused? All of the content you see on Trade Me is created by users. All of the item descriptions are written and entered by the sellers. All of the photos are taken and uploaded by the sellers (in the very early days sellers could only post links to photos, so back then Trade Me didn’t even host the photos). All of the bid are placed directly by buyers. And at the end of the auction Trade Me provides contact details for buyers and sellers to deal directly with each other, rather than standing in the middle. This has always been the case.

    There are nearly 1 million items currently listed for sale. There is no way that Trade Me would be able to manage that level of content if every buyer and seller had to deal personally with Trade Me staff to get their listings and bids places.

    So, I don’t understand when you say “TM creates the ads”.

    Did I miss something?

  10. hiya robert, rowan…

    point was / is that the 3rd-party advertisements in the TM header and side-bars are placed by TradeMe, not auction participants.

    technically, i suppose those ads are actually created by graphic design people, and i’d imagine there is a fairly automated process for their placement on servers and display on pages.

    but – and pls correct me if i’m wrong – those ads aren’t created by TM users. looking back on my post, i guess the word “ad” can be confused with the auction listings.

    as a reasonably experienced online person (8 year career thus far), i’m a huge fan of the TM model, and have first hand knowledge in other industries of how achieving the scale and participation online that TM has achieved can drive business benefits.

    so, as an online purist, i don’t like the 3rd party ads on TM, and I know that they are there because they drive revenue to TM, not because participants place them. as a business person, the presence of the 3rd party ads makes absolute black and white sense.

    interesting to note that rowan’s epxlanation of how content is created by users further fleshes out the beauty of scale and participation at the core of the TM model – minimal-to-zero touch per auction, “let the server run the business.”

    i also note that today at least, most of the “3rd party ads” are for TM’s own services – PayNow and TravelBug…

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