Comparative advantage applies even to the biggest

I read this article and was convinced the concept of comparative advantage applies even on the biggest of companies. A classic example is this of Australia’s Telstra which is the country’s biggest telco, the equivalent of PLDT in the Philippines. Eight years ago, the company bought Trading Post, a classified ad newspaper hoping to make advantage of the ad revenue and leverage it with its telephone directory business hoping to find new businss to replace the loss of existing revenue from the onslaught of online competition. Alas, the business skills it had as a telco wasn’t good enough to make the transformation. Comparative advantage its a principle that applies even to the biggest.

Telstra hives off Trading Post to quicksales.com.au

Telstra has finally thrown in the towel on its $636m, 2004 acquisition of the Trading Post: Australian online auction site and marketplace, quicksales.com.au – a subsidiary of carsales.com (ASX: CRZ) – is to licence the TradingPost.com.au brand from Telstra and operate the TradingPost.com.au website.

Telstra said that, upon completion of the deal the quicksales and Trading Post sites would feature aggregated inventories. “quicksales.com.au will provide all transactional and publishing infrastructure along with carsales.com’s industry leading product capability and security measures.”

carsales.com CEO and managing director, Greg Roebuck, said: “TradingPost.com.au, powered by quicksales.com.au, will tap into quicksales.com.au’s commitment to ongoing innovation. It will offer consumers more choice, but what is also key is that it will enhance the Australian-owned alternative in ‘free to list’ classifieds. Recent years have seen large overseas players like the eBay-owned Gumtree enter the local classified space.”

According to Roebuck the deal “will re-invigorate TradingPost.com.au and also bolster the operation of quicksales.com.au.”

Telstra Media executive director, JB Rousselot, said: “Trading Post is an iconic classified brand held dear to the heart of Australians and in a very competitive market we needed to identify growth opportunities. Importantly, Trading Post will continue as a high-profile classified brand with the additional inventory and features from our partner, quicksales.com.au.”

Subject to ACCC approval, it is anticipated that the TradingPost.com.au powered by quicksales.com.au site will go live later this year

Quicksales.com.au started life in 2005 as OZtion.com.au and was rebranded quicksales in February 2011 following its acquisition by Carsales.com in September 2010. It claims to have 500,000 members and over a million items listed for sale.

The ‘iconic’ Trading Post was still largely the hard copy publication with an associated web site when Telstra paid $636m in cash for in March 2004 and bundling it into its directories subsidiary. It fought off Fairfax in the process with the latter baulking at the price.

The timing could not have been worse, with online classifieds on the cusp of really taking off and many of the Trading Post’s most loyal readers not part of the Internet savvy community.

Two years later Telstra undertook a $50m revamp of the Trading Post web site, with the AFR reporting that the Trading Post was Sensis’ worst performing division. Telstra killed off the print version in October 2009 and later moved the web site out of Sensis making it part of Telstra Digital Media.

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