New auction site Wheedle closed down yesterday – its second day of operation – after a slew of maintenance and security issues.
The site apparently buckled under pressure after launching on Monday, going down for many users (who promptly took to Twitter to complain about the intermittent offline messages, with some observers also pointing out the visual similarities between the Wheedle and TradeMe websites). It also experienced an outage on Tuesday morning.
According to an NBR story, users have been able to change the reserve prices on other people's auctions.
And while Wheedle has been touting its Kiwi-ness, questions have been raised about where its software development was done.
But Wheedle isn't completely throwing in the towel; managing director Carl Rees says the site will relaunch once they're "totally satisfied that the site will provide the high level of experience we want our customers to enjoy".
In a statement, he says Wheedle is closing for a "thorough update" of its systems and processes.
“We have received an extraordinary level of interest from the New Zealand public, demonstrating the real demand for competition in this space.
“However, operating issues were identified and our determination to ensure we can provide a level of service we are satisfied with means that we have elected to close the site until we can complete a comprehensive audit of our systems and make the necessary improvements.”
Wheedle launched with a nationwide TV, radio and online advertising campaign on Sunday and was dangling the carrot of free listings until November 29.
Rees had said Wheedle would be different from the established model in that it wouldn’t charge commissions, setup or success fees.
“Everything else is designed to be much, much cheaper on Wheedle – something the market will really appreciate.”
'Wheedling' would also take advantage of smartphones – "we’ve taken good advantage of that to make ‘wheedling’ a mobile optimised activity".
And Wheedle has support from investor Neil Graham, founding managing director of Mainfreight, who's on the Wheedle management team.
But Zillion co-founder Dylan Bland reckons Wheedle faces two insurmountable problems: the lack of an established and a below-average website.
"The reason that incumbent auction players like Trade Me and eBay have remained dominant for over a decade is because buyers prefer to shop on the site with the greatest number of items for sale, and sellers prefer to sell their items on the website with the greatest number of buyers," he wrote on his blog.
"This chicken and egg problem has, to my knowledge, never been cracked in any market. To put it another way, if you were looking to sell your iPhone 4 quickly, and at a fair market price, would you list it for sale on wheedle (a handful of members) or Trade Me (basically every New Zealanders in the country)? And don't bother trying to lure sellers away with cheaper fees, because the success fee matters for nothing if your iPhone doesn't fetch a good selling price, or worse yet, doesn't sell at all."
University of Canterbury senior lecturer Ekant Veer said it would be tough going taking on TradeMe, which has strong brand presence and a loyal customer base and wasn't just successful because it came first.
“TradeMe’s brand knowledge in New Zealand is so strong that people use it as a verb," he says.
“No amount of marketing can overcome a personal experience with a service provider. People may be enticed to try Wheedle, but this is not to say that it will become a powerful player against existing platforms."
Unless users saw a tangible and substantive improvement in their online shopping experience they would be unlikely to change over.
TradeMe has a solid rating system that builds trust into the relationship people have with anonymous buyers and sellers.
“How Wheedle overcomes this without a buy and sell history will be difficult. What online customers want are good prices, good availability of products and the assurance that their products will arrive in a timely manner. As a seller, you want the assurance you’ll get paid in a timely fashion. How Wheedle achieves these things is yet to be seen."