FairMarket MD cuts free of US parent

FairMarket MD cuts free of US parent

FairMarket's Australian managing director Belinda York is edging closer to completing a management buyout of the B2B developer's local operations, thus deflecting the company's decision, made earlier this year, to withdraw from the region.

Keen to show investors it was taking protective action in tough economic times, the US-based FairMarket announced it would quit the Asia-Pacific marketplace where its B2C auction-sites were floundering.

"I saw down the line that we were vulnerable to being cut out of the equation," said York. "It is a common affliction for Australian subsidiaries."

"These things have nothing to do with performance, they're perception. We represent three per cent of the global market. Whereas to pull out of the UK or Germany would be read by investors as a negative."

The decision from head office posed frustrations for York who, realising that the B2C model had not matured to a viable scale in Australia, had focused on fostering B2B ventures.

"We'd lined up all these fabulous opportunities, such as our D-Auction car wholesale site with Macquarie Bank, but because revenue is reaped on a risk-reward (transactional) basis you can't forecast for it," explained York.

"The US is still B2C-centric. They're used to monthly hosting fees and signed clients. Even though we went in with bare bones conservative figures, they just couldn't see it."

York is confident B2B trading sites will perform better than B2C, so long as it adds value to the existing processes. In addition, it has the advantage of being low volume, high value business.

"A lot of B2B is trying to invent new processes and then get people to fit. If it's taking people out of their natural course of business they won't go for it. The value has to be really obvious," York said.

Photograph: FairMarket's Belinda York

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