Divide and Conquer

One of the major effects of John Donohoe's disruptive innovation on eBay has been a polarization of eBay sellers. He used the divide and conquer tactic and for a while it worked. I wrote about it in early April as the first cycle of 'decreased and adjusted' billing completed.

In the days when eBay was a community, experienced sellers, many of them very high volume volunteered in the Answer Center and helped beginning sellers become good sellers. I know this because I was once one of those beginning sellers who was trained to do it right. I have always believed "What goes around comes around" that thought can also be found in the beautiful language of the King James Testament, Galatians 6:7 "..whatsoever a man soweth, that shall he also reap". Years later when I actually knew what I was doing most of the time I too volunteered in the Answer Center.

That ended when eBay 'fixed a system that wasn't broke' with what, with 20/20 hindsight was a precursor of the Detailed Seller Rating system. The search function was 'weighted' to return threads that had been voted on as being helpful or not helpful. How do you think a slightly crooked seller would vote after being roundly told that his listing was in violation and business practices unacceptable?

Soon responders were registering 'posting IDs' to protect their eBay business from malicious buying just to give negative feedback. Both the good guys and the bad guys gamed the votes and eventually 'finding' was corrupted beyond redemption. If you are volunteering and the job is no longer rewarding the incentive is soon gone. Many of the good guys went away and eBay's customer service suffered.

Fast forward to October, six months after PowerSellers started eligibility for discounted Final Value Fees. Many smaller sellers left in May, they were the 'disgruntled noise'. Since then a trickle of sellers, business people who analyzed eBay and found it an increasingly unsustainable venue have quietly (for the most part) formulated an exit strategy, implemented it and gone.

The Brews News wrote twice this week on the subject, Thursday about the effects of lowered fees on their business and today about eBay's seller shrinkage and what the prognosis is for Q1-09. Insightful commentary and I recommend reading it.

What lessons can we learn from this experience? Please add your comments so we may all have food for thought.

Y'all come back!







Links & Related Articles

These Boots Are Made For Stompin

Often at the moment when things are happening we are so busy reacting, doing damage control or simply trying to understand, that it becomes very difficult to look up and see what is ahead so we can be pro-active.

We know we need a plan. Success does not come to those who do not plan. Most of you reading this had a plan which involved eBay. eBay, which likes to keep plans secret, has announced so many major changes recently; implemented with their normal lack of forethought (or maybe not, who knows?) that any pre-existing plans we had are worthless. Sometimes I feel as if management is busy fiddling while eBay burns, Donohoe as Nero.

My plan was to 'duck and cover'. I certainly suffered from 'unease and paranoia' for a while there! I pulled my listings and joined the boycott. I have come out of this with my reputation intact which was my goal. Now it is time to look forward and make new plans; so let us take a step back together in order to try & see more clearly what lies ahead.

I just finished re-reading John Lawson's (President of 3rdPowerOutlet) funny and very informative three guest blogs on Scott Pooler's Trading Assistant Journal. Please go read John's takes 1, 2 and 3 on the Pesa/ECMTA Summit in New Orleans April 23rd 2008, be sure to read the comments on Part 3, and then come back.

For me, a very small ex-eBay seller it is interesting to read what the 'big boys' worry about. To summarize, in order, Detailed Seller Ratings (DSRs) and feedback, eBay's desire to see free shipping, and DSRs. In the comments he mentions being unsettled about the secrecy surrounding the Buy.com deal. SNAP! Exact match. These are what would prevent me from returning to eBay in the forseeable future.

In many ways I agree with John on the question of feedback. I would agree totally if the whole feedback/DSR scheme weren't so loaded and so tied to finding. If I had more belief that eBay would step up to their responsibilities, which they never have, I might be able to swallow it. eBay's whole historical modus operandi has been to strap on the bovver boots and start stomping first, then look at the dead seller on the floor and go 'Ooopsie, a glitch'.

Just about a month after implementation of feedback changes there are a lot of damage reports on the boards both in the UK and Australia. I admit I don't check the US boards, it is a disassociation thing and I will not apologize.

To summarize, we have sellers being suspended or restricted. Sellers who have not been TOLD WHY they are suspended or restricted, or how long they are suspended for; because eBay does not know, it is an automated process with no appeal. Sellers who have no access to their dashboards so they can complete their contractual obligations to buyers of listings ended prior to suspension. A venue which obliterates those listings in the suspension process so sellers loose all the data, and that my friends, is pure spiteful pettiness.

What do you think? What direction does your new plan take you?

Y'all come back

A Little History

eBay is run by people who have never retailed for a living or been self employed. Selling on eBay is like living on George Orwell's Animal Farm. All sellers are equal only some are more equal than others.

We saw the writing on the wall in 06 when store fees rose nearly 70% but stores inventory became visible in search to compensate. Sales took off and life was good. Two months later we were taken out of search again because "eBay needs to re-balance the marketplace and return to its core values" Translated this means big time sellers of imported junk were seeing declining sell through rates in their auctions due to buyers being able to find fixed price items in stores, and they were complaining, loudly. Management had an epiphany, eBay needed to re-balance, more auctions, less fixed price. Did store fees decline to previous rate, given that what we were paying for in the increase had been withdrawn? Don't be silly! Bait and switch anyone?

Back in 06 it was clear that we had too many eggs in one basket and we began to explore other channels. We explored alternative auction venues, none had the traffic to make the effort worthwhile. We built a website, we promoted it. We learned that if you are not paying 40% of your gross sales to eBay you can survive with less sales. Like most small sellers we were frequent buyers too. As our listing volume declined so did our purchasing volume on eBay.

We remained as eBay sellers through price increase after price increase, cutting overhead to the bone in order to remain competitive in our pricing because there was no viable alternative. This is not true anymore. Venues such as eCRATER, Loudfrog, and Etsy for the hand-crafters and their suppliers are much more viable for sellers.

The three straws that broke this camels back are:

1. Detailed Seller Ratings; which are extremely important to the viability of the seller and framed deceptively to the buyer. For example Shipping Time, on a scale of 1 - 5, 4 is 'quickly' to the buyer who thinks this is a good score. eBay regards 4 as so poor that you are a risky seller, will loose your power seller status with the much hyped 'discounted fees', are restricted to Paypal for payment (who may hold the buyers funds for up to 21 days). eBay ignores the fact that to a buyer speed of shipping has everything to do with when they have their purchase in their hand and nothing to do with how fast the item was packed and taken to the Post Office. Sellers are being rated on UPS and USPS job performance.

Looking at the Shipping and Handling charges ratings raises even more questions. How can FREE SHIP rate less than 5?

2. Feedback. We agree that retaliatory feedback is a problem. Most retaliatory feedback is left by super high volume sellers who use automated like for like programs. When a buyer uses negative feedback to ask the seller a question "When are you going to ship my item?" you can see why the programs are popular. Fixing the problem by preventing use of these programs would make more sense than removing the only tool a seller has to evaluate the buyer.

3. Buyer fraud is increasing and eBay ignores it. They get their fees regardless. Non Paying Bidders are at an all time high, for now. It is going to get worse May 1st. Because verification of Buyer ID is not required any buyer who dirties his ID simply abandons it and gets a nice clean new one. NARU? Not a problem! It is almost pointless to block a bidder. I had one blocked bidder come back three times with a different ID each time to win auctions she had no intention of paying for. I lost money each time and she is still out there.

4. Disrespect for sellers or, as I prefer the word, CONTEMPT. eBay management & their PR department disparage sellers routinely. We are 'just noise', 'flea market sellers' and we must be stupid too. A nickel less up front and 3.5% increase up the rear is not a decrease and we are smart enough to figure that out.

As a seller of high quality new American made greeting cards which I sell from $2 and up, fixed price, eBay & Paypal together take a minimum of 35c IF + 17.5 FVF + 30c + 2.9% = 82.5c (actually higher because Paypal's cut includes 2.9% of S & H) This leaves me with three choices (a) selling below cost, (b) raising prices = declining sales, or, (c) leaving eBay.

So, here we are, two years down the road from "eBay needs to re-balance the marketplace and return to its core values, auction sales" and eBay seems to have turned around and be driving in the other direction. Now we want more fixed price, and will be getting away from auctions as soon as we can.

Hear me well eBay. I will not be bringing back the 3500 multiple quantity listings I had in my eBay store when you shafted me in 06, those listings I removed when you doubled my listing costs in 07, those fixed price listings you would like to charge me 12% final value fees on. I am a businesswoman. I can't run a viable business with my venue micromanaging it.