Trademe have finally gone live with their new travel site offering accommodation in New Zealand. The site is called travelbug and has a typical trademe feel about it.
Having been responsible for the online strategy of a medium-large size tourism company in New Zealand recently, I am quite interested in this venture and how it develops. The travel industry in New Zealand is quite well developed (relatively) from an online perspective so its not going to be a walk in the park for the TM team as they work on gaining a dominant market share in yet another NZ vertical.
The bottom line, however, is that trademe have demonstrated their ability to launch successful and profitable websites locally in New Zealand. They know online strategy. Heres a few ideas I have come up with that, in my opinion, justify my prediction that travelbug is going to be a hit. The insights from travelbug are a great demonstration of how to launch an online business for the New Zealand market:
The right niche
Once again, Sam Morgan and his team have picked the right niche. My matter of fact tone in regards to this idea is based on experience. Whilst I was in the online travel industry I was constantly looking for accommodation sites for our rental car site to partner (affiliate) with. I invested in & used Hitwise to determine which sites had local market share in the accommodation category. Boy was I surprised when I got the results.
There were a number of sites pitching themselves as New Zealand accommodation providers, however, none were obviously focused on a business model that revolved around providing such a service. Most were sites built to leverage the traffic volume in this category for affiliate marketing purposes.
So the bottom line here is that there was a gap for someone to launch a New Zealand focused website structuring their business model on providing accommodation, not using affiliate ads offered by existing sites to make a lazy dollar.
Buy the software - develop the sales & marketing
This is absolutely crucial in the world of e-commerce. Trademe, even with their depth of experience, have not tried to re-invent the wheel of online travel booking software for the travelbug launch. Instead the have partnered with a provider who has expertise in the development of specialised travel software.
What this clearly demonstrates is a strategy built on an understanding that it is sales & marketing that will make this online venture a success. Trademe want a profitable transactional website for travel, not a profitable business that builds travel software.
By focusing on smart marketing and depth of site inventory and leaving software development to the experts, trademe are avoiding the mistake that is made by too many NZ businesses in their attempts at e-commerce. For some reason unbeknown to me, most kiwi business people want their own proprietary shopping cart or booking engine software......it's crazy!
Websites are sales and marketing channels people, not software development projects.
One empire at a time
It is interesting to note that trademe have chosen a domain name that is already occupied on the .com prefix. What this demonstrates is a clear focus on the New Zealand market.
Too many New Zealand web start-ups are worried about the world before the even have local market domination. They get all excited because the own every potential prefix (.co.nz - .com.au - .com etc...) for their new domain name. They talk about global strategies bla bla bla....
News flash people! Whilst its great that you can indeed launch a global business online based in New Zealand, its unlikely that you will be a roaring success if you don't know how to conquer your local market.
Trademe are not interested in world domination, however, they are interested in outright Kiwi domination. New Zealand may be a relatively small market, but with the right strategy there is still a lot of potential in e-commerce here.
What the hell is web 2.0 ?
Most New Zealanders would not have a clue about web 2.0 or the consumer benefits of this online revolution. Trademe know that they don't need an immediate solution for web 2.0 functionality on their new travel site. They already own over 60% of all online shopping traffic in NZ, they have the best insights into what functionality the mass online market here demand.
Why spend money developing software that will only enthuse 1% of the market? Web 2.0 focused sites will be massive in New Zealand soon by which stage trademe will have market domination.
In the online world, its a much better strategy to have the market sewn up and require a new website than to have a new website and no ability to get market share cost effectively.
Strikingly simple- KISS
Travelbug wants you to make an accommodation booking, period. With this in mind the sites information architecture is based on making this desired action extremely simple. As with the auction process on trademe itself, I am sure that once travelbug builds a loyal customer base there will be additional functionality introduced.
Focus on one fundamental desired action to start with- stick to the knitting.
Keep it simple, stupid!
Great post James. I had read about this development elsewhere but it was not explained or backgrounded like you have. Thanks
Posted by: knil | September 10, 2007 at 07:47 AM
Thanks Knil,
I have been a little critical of trademe's recent strategy with their main auction site, however, travelbug is looking good in my opinion.....
Posted by: james | September 10, 2007 at 08:00 AM