Trade Me muscles in on crowded social shopping scene

March 23, 2011 § Leave a comment

The latest platform in New Zealand for social shopping recently launched and it is backed by one of the country’s biggest brands in online shopping. But how can it succeed in “this saturated already crazy deals market”? (to quote SMNZ’s John Lai)

Treat Me is an offshoot of Trade Me and it went live with offers of $1 burgers and $1 bagels. It joins an increasingly crowded market place already occupied by GroupyNZSaleGrab One andDeal a Day.

All offer discounted deals by working with businesses with the objective of getting increased traffic for a particular business through the door or website using vouchers or coupons. All are modeled on the successful US internet start-up Groupon and depend on a minimum number of consumers rushing in on a particular offer to activate it.

Groupon unleashed the power of ‘deal of the day’ online social media marketing in 2008 and has since established itself throughout North America as well as in parts of Asia, Europe and South America. In so doing, it has set the benchmark that has become the role model for other social shopping platforms around the world.

There are two key features of this kind of marketing – setting a bottom line threshold that triggers the deal and using social media to create a buzz about a deal.

By setting a threshold, the website minimizes the risk to any business that is offering a bargain through the platform because unless the minimum pre-set number of customers occurs, the deal will not take place and the business is spared from a costly failure.

Sharing the deal is the other essential ingredient to the social shopping experience. But wait, isn’t that what you do in the real world when you go shopping with a group of family members or friends? Well, not exactly. Social shopping has instead become the current phrase for online and mobile sharing of deals offered through a marketing platform that has social media characteristics.

Treat Me’s head James MacAvoy considers social shopping in an online context to be any form of commerce whereby social networks or platforms drive transactions to the site. “For the buyers, they understand they need to leverage their social connections to ensure the deal becomes active.”

“Social media is very important to us. It allows more Kiwis to see our great deals every day, and it drives the mechanics of why they’re able to get such amazing deals,” MacAvoy told SMNZ in an email.

In other words, consumers have an incentive to share the deal because they want it, they want their friends to have it and they also want to trip the threshold that makes the deal go ‘live’.

Speed is also essential because the deals usually have short shelf lives, sometimes as short as one day, and an upper most take-up limit. Feedback from consumers is also important and recommendations are vital to the platform’s credibility which is why users can leave comments about their experience. Negative comments generally prompt a quick reply from the website’s staff.

But what’s in it for Treat Me? MacAvoy says they charge businesses that advertise with them a commission on each voucher sold. “This is typically somewhere between 30-50 percent of the voucher selling price.”

GrabOne founder Shane Bradley says Grab One currently has 80 percent of the New Zealand market, selling 36,000 coupons a week. “It is a crowded market, but people will fall over this year, consolidation is already happening around the world and we keep growing 10 percent month on month,” Bradley told SMNZ.

He says GrabOne leads in terms of social media usage with over 96,000 likes on its Facebook page []. GrabOne is also established in six regions in Australia as well as throughout New Zealand.

Treat Me’s MacAvoy wouldn’t comment on whether their model would be extended to Australia if the New Zealand business proved successful. At present, Treat Me is only available to consumers and businesses in Auckland and Wellington but there are plans to expand across other regions in the months ahead.

So hang on to your seats. The crowded social shopping mall has become a jungle where survival of the biggest and the fittest rules and it’s a scrap to see who gets to be the Alpha male (or female) of the pack. But in the meantime, there’s never been a better time to be a social shopper.


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