Insatiable Greed Pt 2

Before reading this you may want to read my 'Insatiable Greed' blog, which is one article before this one under opinion.

I got a reply to my email I wrote from Trade Me:

We appreciate you getting in touch to provide feedback on our new fees structure. I'm sorry you feel these are too high, Raymond. Our success fees for general items have not increased since February 2011 and before making this increase we did a lot of research to ensure we were being fair, good value, and responsible.

One of the primary things we took into consideration was the increase in visits to Trade Me (up 18% in the past year). We’ve been investing a lot to ensure Trade Me is represented strongly across the growing range of mobile platforms. We now have five mobile sites and applications for interacting with Trade Me, and mobile visits now make up over 25% of total visits to Trade Me.

We think we're providing a great service to our members and a fair price.

I have passed your feedback on to the site suggestions team too. We always appreciate our members' input, it's what helps keep Trade Me a great place for buying and selling!

My final response: 

I'm sure my comments won't be changing anything, however, your reason for the increase makes no sense.

Surely increase in traffic means increase in business, evidenced by increasing profits. Those extra profits would cover the cost of extra traffic. That is how business works. There are only two reasons to put your prices up. One, your profits are down (not true in this case). Or two, because you have a dominant market position and therefore know you can get away with it. It doesn't matter when you last put your prices up, clearly you don't need to - and that is what is so morally wrong here. 

You were charging a fair price when you had an 8.4% jump in its annual profit to $75.6 million. Now Trade Me has decided to cream some more profit off the hapless NZ public, like happens so often in 'God's Own".

The extra cost is not big per se but add up increases in so many areas of business in NZ and it bites. All I ask is that you include social responsibility in your business decisions. Something sadly lacking in modern
business.

The standard of living throughout history has always been low for the working man. In the late nineteenth century, businessmen in Britain started caring about the worker and giving them something back. That led to the uplifting of living standards of the working man that that spread around the world and we still enjoy today. Greed has got business in its teeth now, and business with morality has gone. The big crash in the financial world a few years back was a warning of what insatiable greed leads to. Did anyone learn the lesson?

Insatiable Greed

When you live in New Zealand, competition is limited. Companies that have monopoly or a dominant status in the market place can charge what they like. For those of you who love capitalism*, remember it is only nice to you when it needs be. When you need it and have little choice in the market place, you get ripped off.

A case in point is Trade Me, a NZ website where you offer goods on an auction basis, and they take a cut for a successful transaction. Trade Me have just announced a fee increase because as head of marketplace, Craig Jordon says the fee rise is necessary because of an 18% rise in visits to the site of the past year, and the cost of expanding the service to new mobile platforms.

I understand that expanding your business costs money, but then you make more money from the expanded business. That is why a company expands. There is no point in expanding, if you then have reduced profit and therefore have to increase your prices to cover it. No, this comment from Mr Jordan is so ridiculous, it beggars belief.

To prove my point, last month Trade Me reported an 8.4% jump in its annual profit to $75.6 million. Their transaction percentage increase is 5.33% on goods up to $200, and 8.9% on goods $200 to $1500. The hike on fees per item is not a lot, but collectively profits will soar. This is money for jam. It also sticks in the throat when it comes immediately after announcing good profit growth.

So while capitalism is hailed as a wonderful way to do business, remember that it is a system based on greed, not caring. They will take all they can and won't care a jot about you. Wonderful thing capitalism - but only when government watchdogs have teeth to control the greed.

I sent off an email with the gist of what is here. For the reply and my final email to them, go to 'Insatiable Greed Pt 2'.

*Capitalism is an economic system that is based on private ownership of the means of production and the creation of goods or services for profit. (Wiki)

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Meditating on where you are, who you are and where you are going.

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