JOHN REID VINTAGE MOVIE MEMORABILIA Newsletter February 2008
eBay and the "seller experience"
eBay recently announced some major changes to its policies and fee structure which has lead many sellers to consider whether it is viable or not to continue to sell on the site. As a long standing seller with over 12,000 feedbacks and nearly 10 years on eBay I have some thoughts on the repercussions of the "innovations" that eBay is about to implement.
Despite the fact that eBay have been making huge profits and their site has seemingly gone from strength to strength they have had to increasingly deal with some underlying problems which have become a real threat to their business and which they have been unable to control effectively.
Fraudulent sellers, incompetent sellers, abusive sellers and an abundance of fake, misdescribed or non existent goods listed for sale have plagued eBay and damaged their overall reputation for some years.
Additionally sellers who "gouge" on shipping fees have been a major issue for eBay with many listings offering goods at a very low price but with an inflated shipping fee to attempt to make up the difference.
It has not been unusual in recent times to see various lawsuits against eBay from manufacturers who tire of seeing fake products listed in their name on eBay. Of course, eBay generally take the line that they are the "third party" in these transactions and only provide sellers with a place to list their goods.
It was inevitable that, sooner or later, eBay would have to deal with these issues that were having a real impact on their business. The problem with identifying and policing fraudulent or incompetent sellers is that it can be a very costly exercise. eBay would no doubt argue that they cannot possibly monitor each and every auction and they rely on their members to report listing violations. This system saves them some manpower but they still need to have a Trust and Safety Dept to act on these complaints.
I'm certain that eBay have always wanted a system that does the work for them as much as possible. In some respects, the feedback system has worked well for them in identifying problems but the system has had its share of complaints over the years with members complaining that the threat of retaliatory negative feedback prevents buyers from being honest.
With that in mind, they introduced DSR's or Detailed Seller Ratings which allow buyer to rate sellers on specific areas of the sale. The ratings are close enough to anonymous so they effectively mean that a buyer could leave a positive feedback comment but extremely low ratings in the DSR's. The plan was that the DSR's would give a better picture of the real profile of a seller and perhaps eventually replace the old system of positive, negative and neutral.
Whilst the DSR's worked reasonably well some eBay execs argued that they did not go far enough and that the "buyer's experience" was more important than anything. They thought that buyers did not like receiving negatives, irrespective of whether they were justified or not, and that they turned away from eBay whenever their buying experience was less than perfect. Forget about whether the buyers might have been people who sellers would be best to steer well clear of, buyers who don't pay or try to get discounts after the event or file false claims to get their money back when they have actually received the item. eBay seems only interested in making the buyers experience pleasurable.
They point out that other sites only allow feedback on the seller and never for the buyer. The suggestion is that feedback on the buyer is irrelevant but the other sites that operate in this way generally deal with immediate payment and are not plagued with non paying bidders.
So, the bottom line is that the CEO announced a new plan. To me, the plan is based on draconian management practices where you penalise all to weed out a percentage of bad sellers. The plan was to introduce a system which would eliminate the undesirable sellers and improve the "buyer experience".
One of the major changes is that sellers will no longer be able to leave negative feedback on buyers.
The thing that eBay appears to be missing is that they also need to make it worthwhile and productive for sellers to continue to operate on eBay. They also must effectively address the issue of the hundreds and thousands of "buyers" who never follow through with purchases and never make payments. When this happens, a seller needs to go through a painfully time consuming process of claiming their fees back. We hear that, despite the fact that these buyers have not paid and have no intention of paying, the non paying bidder claims also affect their "buying experience".
eBay has made some very minor changes to their non paying bidder policies but these will do little to assist sellers.
A non payer is now free to leave a negative feedback on a seller and I have no doubts that this will happen in the months ahead as a form of retaliation against sellers who report buyers who don't pay. The alternative for sellers is to absorb the fees and just accept the non payment. However, this is a real bonus for eBay because they will still collect the fees and commission despite the fact that no sale ever eventuated.
Additionally the DSR's will be used to determine whether sellers get a discount on fees. If this is not enough, they have also stated that they will WITHHOLD payments from buyers where the sellers do not perform to an acceptable level. I saw a recent article where the writer gave 10 ways to receive an item on eBay but never pay for it. Although the article was tongue in cheek it was, sadly, all too true.
I have an account manager with eBay and I have been told that I don't need to worry about the changes because my DSR's and feedback rating are very high. The fact is that I get 5% non payers and that will leave me very vulnerable to undeserved negative feedbacks. It doesn't seem logical that non payers will be able to leave negative feedback without fear of retaliation but this is one of the ways the new system will operate. This is despite the fact that eBay attempts to rationalise the situation by saying that they may remove negative feedback left by non payers under certain circumstances.
An eBay account manager told me that sellers will need to accept that they will receive more negatives under the new system and that many sellers actually deserved many more negatives than they are getting. This may or may not be true but it gets back again to the "seller experience" that eBay seems to ignore. Sellers are unlikely to accept more negatives happily.
I have had a look at the DSR's of some of the more high profile sellers and under the new system many will be affected. Some may:
1. Lose their PowerSeller Status
2. Pay higher fees than others.
3. Have a warning in red letters stating that their rating on shipping is less than acceptable. (I believe this is already being trialled).
4. Have a hold placed on payments until the buyer is satisfied with the goods.
Etc, etc etc
One thing to consider is the shipping rating. I sell most of my items to other countries. I try and keep shipping as low as possible and in many cases I lose money on shipping. A number of sellers charge more than I do for postage but this is often because they don't get volume discounts like I do.
We have actually reached the stage where sellers are charging less for postage than it actually costs them because they are so worried about receiving a low DSR.
You often see sellers who pack extremely well end up with bad DSR's for shipping costs when all they are doing is trying to provide good service to the customer. In other words, they are charging the actual cost of shipping the item on to the buyer. When things get to this point there is something seriously wrong with the system.
Bruce Hershenson, who has one of the best records on eBay including a huge "successful auction" rate, has announced that he will quit eBay soon as a result of the changes.
So, this is what I mean by saying that the changes are draconian. They don't really target the problem - they target everyone.
Who knows, the new feedback system may get rid of a lot of recalcitrant and fraudulent sellers but they will also lose some of the great sellers. I wonder if eBay feel that the loss of Bruce Hershenson will be acceptable.
There have also been fee changes and rather than go into great detail let me just say that, in my humble opinion, the end result will be auctions starting at higher prices. There will be far less bargains because, although the listing fees will be lower, the end commission will be higher. This will mean more listings in auction at higher prices - just like a free or cheap listing day. This cannot be good for eBay because they have been complaining for years that they are losing core (auction) listings as Sellers set up more stores. The fact is that sellers cannot continue to offer goods at below their market price whilst absorbing high fees and often not achieving even close to a realistic price.
I have come to the conclusion, from a great deal of experience, that anyone who lists a Store item at under 24.99 or starts an auction at under 9.99 is probably wasting their time and will ending up working for a very low hourly rate.
I think eBay are in trouble. There have been reports of a boycott this week and this may or may not have an effect on eBay. I feel sure that Sir Humphrey Appleby would be describing the change in policy as "brave" or "courageous" which are just about the most sinister adjectives in his vocabulary.
More and more sellers are now looking at other venues and they are having some success. Ultimately, there is a limit on how much sellers will put up with.
There is no doubt that the "buyer experience" on eBay is vital to the success of the site but there is no point in having buyers without also having satisfied sellers. eBay need to consider quickly how they treat sellers before it is all too late.
Regards to all
John
