Saturday, April 12, 2008

Digital Downer


At lunchtime on March 24th 2008 the world lurched for Sellers of digital goods on eBay. Brian Burke, eBay’s Director of Global Feedback Policy announced that effective March 31st all goods that can be digitally downloaded or transferred electronically must be listed using the Classified Ads format.

We are not talking solely about purveyors of 1c eBooks on how to make your first million on eBay; although there are many of them. I was surprised to find this policy affects an enormous range of Sellers including designers of craft patterns, logos and templates, business consultants, accountants, photographers and artists, musicians etc. Anyone who sells a product on eBay.com (USA) which is delivered as a download or by email is effectively out of business with 7 days notice. Sellers on other international sites are required by law to be given 30 days notice and they will be gone by the end of April.

The stated reason for the policy is feedback manipulation by those dishonest and untrustworthy Sellers. Quotes are from Brian Burke on eBay Chatter

Most items that require digital delivery, once created, can be very easily replicated. This ease of replication creates the opportunity for sellers to list thousands of the same item in an attempt to manipulate the Feedback system. It also creates a perception that even legitimate sellers of Digital Goods are manipulating the Feedback system.


A little thought reveals the holes in the theory and why is it always the Sellers who are crooks?

Once upon a time to become a PowerSeller you needed to sell $1000 Gross Sales Value per month for three successive months. In November 2007 eBay changed that
to include both high volume "seasonal" sellers and sellers who move a high volume, but with a low average sales price.
That opened the door to hordes of new PowerSellers who qualified by selling as little as $100 GSV monthly. PowerSeller Status confers benefits and benefits cost money.

Sure enough here it is:

Today less scrupulous sellers have more to gain from manipulating their Feedback and Detailed Seller Ratings, which are also an important factor in a seller's performance in Best Match and their eligibility for benefits (like PowerSeller eligibility and discounts). This makes feedback manipulation an even greater concern for the marketplace. Not only is safety and integrity of the Feedback system an issue, so is the fair administration of seller standards and rewards.


Ease of replication Oh gimme a break! Anybody can buy or create a small object, shippable in a regular first class envelope for pennies per dozen and sell them singly at 1000% markup, providing a feedback enhancement service and making a profit. Not as much profit as through digital downloads, & with greater risk but the market opportunity exists.

Follow the money trail
Question: Couldn't eBay have established a minimum dollar amount for these listings that would eliminate potential feedback manipulation?

Answer: We considered that option, as well as a number of other alternatives -- for instance, we considered allowing only approved sellers to list these items. After investigating these and other alternatives, however, we determined that the Classified Ads format provides a more flexible and scalable solution for our sellers.


Classifieds

The cost of a Classified Ad is $9.95 per month. Sellers can take advantage of the special benefits of using this format. For instance, you can combine multiple similar items in the same Classified Ad. If you sell standard listing templates, for example, you can include all your listing templates in the same ad. If you also sell eBooks on how to list, you must use a separate ad


Finally, from the destroyers of the feedback system:
The integrity of the Feedback system has always been a critical part of trust on eBay. As the company focuses on improving the buying experience, we're working on a number of initiatives to improve the integrity of Feedback and ensure buyer Trust.



Ina Steiner of Auctionbytes did an interview with Brian Burke last year.

Next post . . . the Workshop featuring Uncle Griff's priceless pearls of Wisdom Y'all come back and be sure to click VICTORIOUSLY on any interesting links in the sidebar!


2 comments:

Kathleen Harper (ActiasLuna) said...

Henrietta,

This year's changes to eBay policy have affected my own little niche business (selling vintage machine tooling literature, hardware and tools). Particularly distressing is the DSR system, which as you know misleads buyers.

This is apparently by design. eBay's new "buyer experience improvement" strategy included a bell-curve, designed to "separate out bad sellers". This bell curve algorithm was designed with the recommendations of PeSA and the help of long-time "power seller advocate" (yes that was sarcasm) Scot Wingo, ceo of ChannelAdvisor, to do just that. eBay leaped on the chance--and the results?

Since the DSR's rollout, my own feedback, though it is perfect in the traditional feedback percentages, shows my shipping time as below average. 4.5 to be exact. Which (and this shows the arbitrary and adversarial nature of eBay's bell curve algorithm) puts my shipping time in the bottom 25 percent.

If one reads feedback left for me using the "traditional" feedback system, they can see that there are no complaints about shipping time. Indeed, there are many, many comments about "lightning-fast shipping". There are few "grudging positives"...So how does that translate to 4.5, bottom 25 percent? Beats me, but I would bet it has *something* to do with the fact that eBay's instructions to buyers leaving DSRs tell them that a 4.0 is GREAT!!! -- giving sellers an instant disadvantage. My listings (if they are visible at all) will show up at the bottom of searches. For my niche business, as long as the items are *visible* this is not too much of a problem, as there are not many sellers of my type of merchandise out there. However, for sellers of merchandise that is abundant on eBay, this is a HUGE issue... and one that caused me to consider eBay's treatment of sellers unethical, draconian, and generally... stupid.

This system is so very flawed that it broke much more than it fixed. I have no confidence at all that eBay's management is paying attention to the valid complaints from sellers (other than the small group of "elite" PeSA members) as the system is also apparently designed to allow eBay to deny power sellers the discounts that eBay built into the new system. Giving with one hand while taking away with the other is apparently standard eBay operating procedure.

The flawed DSR is only one (major) problem among many, and the one that forced me to do research and find out the facts behind eBay's business strategy. What I discovered was a trail of conflicting information, quite a bit of hysteria (understandable) by sellers (and buyers) who feel they have been betrayed by the company they helped get rich... and some good information straight from the source.

Alternatives to eBay exist and will thrive when we as sellers and buyers move our business to them. This is my plan and I am very glad to see intelligent and well thought-out discourse like Red Ink Diary.

Yes, eBay has been a leader in online auctions for a number of years. However, business plans change, and we as sellers have to change our strategies to what will serve us best. I believe that the era of eBay's market dominance in online auctions for the smaller (i.e. smaller than Sears or GM!) seller is over, and that the alternatives like eCrater, Loudfrog, Etsy, and many others are about to have their day (years, hopefully) in the spotlight.

Keep up the good work!

Anonymous said...

Aloha Henrietta

I agree with the majority of what you have said, however, as a newby to eBay and a recent Power Seller, I realized how easy it was to manipulate the system, increase feedback, and become a Power Seller; selling digital goods.

Power Sellers enjoy a wide variety of discounts and specials not offered to the ordinary seller on eBay. It, therefore, became necessary to re-install the prestige of reaching Power Seller status by making it more difficult as it had been in the past. Doing away with digital delivery (which had been used to increase feedback and DSR ratings...I know because I did it) made it harder to reach that status once again and numerous people lost that status once this new rule went into effect.

In so far as the DSR's are concerned; it is nothing more than an issue of educating the customer. In my emails to buyers when they purchase an item, I explain the discrepancy between what eBay messages and what is the reality for sellers when they receive these scores. I ask that they give me five stars since the four stars that eBay messages is actually tantamount to negative feedback. By educating my buyers, I have seen my scores RISE and not dip.

As you pointed out, feedback manipulation will still happen on eBay. Former sellers of digital goods are again selling them but with the caviat that they will ship a CD ROM free of charge; the manipulation continues. Will I go back to selling digital goods? Highly unlikely since I now have a comfortable score and Power Seller status. Also, with the new "No negative feedback for buyers" rule about to be implemented in May, there is a higher likelihood of getting negative feedback should a buyer not be happy with his digital goods.