Get a mop and wipe it up!

Six Things TradeMe Could Do to Improve Business

, posted: 15-Jan-2008 22:44

I don't mean "to improve their own business" per se. Although, these things should have that effect.

I mean to improve business in New Zealand as it affects all of us. The standards of service and support we expect when we deal with retailers and service suppliers.

Let's see if I aimed too high...

1. Protect Buyers From Stolen Goods

TradeMe is a great place to dispose of illegally obtained merchandise, because it is very difficult for buyers to determine during an auction whether the goods are legitimate.

Here is a typical example. A trader is selling a near new video camera. (Actually, he is selling six video cameras, amongst his 51 current auctions.)

I don't want to buy something that might be stolen, so I asked about the model number, and any warranty or receipt. If I dare to ask about the serial number, that raises all manner of excuses, and "blacklisting" by the seller (meaning I cannot ask any other questions on any of his auctions). You'll see by his answers that he has not persuaded me of anything.

Actually, it's in the seller's interest to convince buyers that the goods are legitimate, because buyers are willing to pay more if they know there is no chance of their shiny new possessions being removed by a bailiff. (And a helpful side-effect: the stolen goods will sell cheaper, making crime less lucrative.)

How can buyers get more assurance the goods are not stolen?
  • encourage sellers to enter the serial number (for electronic goods and appliances) or VIN (for vehicles);
  • encourage sellers to include their receipt in the photograph of the goods (and pass it on to the buyer, to prove it was genuine);
  • encourage sellers to declare the source of all used goods;
  • require sellers to pay for SafeTrader for goods over $500.

2. Protect Buyers From Undeclared Foreign Imports

Many traders appear to buy goods overseas and bring them into NZ specifically to resell. With parallel-imported products there are sometimes issues regarding support, spare parts, quality, compatibility with NZ infrastructure (such as mains plug and cellphone frequencies), and compliance with NZ standards.

Buyers should be required to declare the country where they obtained the goods.

3. Penalise Sellers Who Withdraw Auctions Before Completion

$1 auctions attract great interest from bargain hunters.

At times, though, bidding is sluggish. Rather than risk losing hundreds of dollars, some sellers make a practice of withdrawing the auction, breaking their contract with the highest bidder.

This practice needs to be more heavily penalised, either via feedback, higher cost to the seller (perhaps with even a token retribution, eg $10 transferred from the seller's TradeMe account to the top bidder's TradeMe account), or even a separate Auction Completion percentage statistic.

4. Introduce and Enforce a Code of Ethics for Professional Auctioneers
(and encourage all sellers to abide by it, too)

Inland Revenue has defined what is a Professional Trader on auction sites, including meeting any one of the following criteria:
  •     they acquired the goods with the purpose of on-selling,
  •     the purpose of the activity is to make a profit, or
  •     their business involves dealing in these goods.
There are many people trading "professionally" (according to the IRD) on TradeMe. It is time that these people were held to a higher standard, including the Fair Trading Act (with which they are legally required to comply), and presumably the Sale of Goods Act.

I suggest that TradeMe require professional traders to lodge a bond (lodged by TradeMe in a trust fund), to pay to buyers who are defrauded by professional traders.

5. Identify Professional Traders' Auctions with an Icon

TradeMe can tell who is grossing more than $40,000 in one year. They are automatically "professional traders" (and should be handling GST as well).

Other high-volume traders should be identifying themselves to TradeMe as "professional".

All auctions from professional traders should be marked with an icon (eg "pro"), so that buyers can expect them to abide by the Code of Ethics.

6. Introduce an Auction Ombudsman

Many of these suggestions only make sense if there is some means for redress, for situations where the seller has not complied with the Terms and Conditions (or Code of Ethics). For example, entering a serial number which is fictitious. Or failing to declaring a product to be a parallel import.

One negative feedback is not sufficient penalty in these cases. (Of course, there is the Small Claims court.) But I think a buyer should be allowed to appeal to an ombudsman who can award money to the buyer from the bond account (see above), and require a higher bond to be paid by the seller. The ombudsman can impose "multiple negative feedbacks" for an infringement.

Buyers should also be able to appeal against being "blacklisted" by a seller, just for asking questions that a scrupulous seller should be happy and willing to answer.

Sellers should be able to appeal against negative feedback from traders who have poor feedback scores.

TradeMe has a crucial role to play in NZ ethics and business. By raising the bar of what is expected in TradeMe auctions, I am optimistic that the business standards we expect (and receive) in other parts of the NZ marketplace will also rise.


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David White
New Zealand

Goon fan, .NET developer, contrarian seeker of truth