April 23, 2010

Boycott Ebay?

Maybe it's me?
On the heels of a terrible economy, and my age being a real factor in the job hunting world - I decided to open an Ebay store several months ago. Offering several lines of home textiles and decor, as well as Le Creuset cookware - I quickly jumped to become a Power Seller and a Top-Rated Seller. For a new and fledgling business, things were going fairly well and I had hopes for using this as a launching point to open a brick-and-mortar location which might actually create a few jobs here in New Jersey where so many suffer from unemployment.

In February of this year Ebay announced sweeping and site-wide changes. On the surface, some of these changes seemed like they would be advantageous to sellers. For example, there would no longer be three categories of listings – Store, Fixed Price, and Auction. All store listings would become Fixed Priced listings with full search exposure. Sellers would no longer need to list the same item twice, once as a store listing and then again as a fixed price listing to get noticed. All fixed price listings would move to one price for insertion, based on the level of the store - basic, premium or anchor.

Sounded good, but turned out it is a disaster. Ebay looks more like a cheap dollar store and has created chaos for anyone who is not extremely specific in their keyword search. Example, search "jeans" and the buyer sees over 500,000 results - too overwhelming for most buyers to narrow down and wade through.

While Ebay's profits have risen for the first quarter, expectations for the second quarter are poor. The rise in the first quarter, in my suspicious opinion - is due to new store owners such as myself who received emails threatening much greater costs if they did not upgrade to premium stores (at twice the price of basic stores) and quickly upgraded - which brought, I am certain, a nice windfall into Ebay's coffers.

Many sellers with real experience on Ebay report no sales since these changes took place. I can certainly say my own sales are suffering. I have gone from an average of 10-12 sales a day to 1 or none.

Ebay's changes - put in place by CEO John Donahoe - truly "put the screws" to sellers. Changes in the feedback system have done great damage to sellers. For those not familiar with Ebay, feedback is the communication left from buyer to seller and seller to buyer on each sale and was designed to highlight good sellers to potential buyers - or to let the buyer beware when a seller turned out to be a scam artist.

Additionally, buyers can rate a sale (and the seller) with what is commonly known as the "DSR" system. A series of markers where the buyer can rate a sale from 1 to 5 stars. These markers include the accuracy of the item description, the fairness of the shipping charges, the speed of shipping, the sellers communications. Buyers are allowed to leave the DSR ratings anonomously and these DSR ratings can not be revised - even if the buyer wants to. Sellers are completely at the mercy of buyers in this rating system. Regardless of whether or not the information left in these DSR's are fair or even accurate - Ebay offers no protection at all to the seller.

Here is an example: Seller offers free shipping on all items sold. Buyer leaves less than 5 star rating for shipping charges. The 4-star rating counted as a negative against the seller. I defy someone to tell me how one can do better than free. Buyers often assume that prices are raised when a seller offers free shipping - and surely sometimes this is true. However, savvy sellers are careful with their pricing in order to stay competitive. Free shipping in one zone is hardly the same cost as free shipping from end of the continent to another - the seller always assumes the risk of shipping cross-country.

Buyers do not have to - nor does Ebay bother to - take any extenuating circumstance, such as the many snowstorms seen in the northeast this winter - into account on the DSR ratings. When factors outside of the sellers control, such as weather or shipping service errors affect the speed of moving goods sellers are "punished" with low DSR ratings. This often results in the loss of their Top Rated Seller status and over 20% higher fees. For those not aware - if you do not receive a perfect 5-star rating Ebay counts this is negative feedback - even if 100% of all feedback comments left for a seller are positive.

In the list of the many changes, Sellers are no longer allowed to leave anything except Positive Feedback for buyers - regardless of the time it takes for buyers to pay for their purchases or unreasonable expectations. Sometimes a buyer may just be having a bad day - and takes advantage of the abilty to anonymously take it out on someone else.

As a footnote to this, be aware that buyers pay no fees to have an Ebay account or to use the Ebay system. It is the seller, and in particular the Ebay store owner that drives Ebay's business. Seller's pay for their store accounts - and pay all listing and final value (sold) fees.

Those who buy on Ebay are often unaware of how the Ebay system works. They are not educated in the DSR system - and some would probably be shocked and dismayed to know that they are causing real harm to small business people simply trying to earn a living. People with bills to pay, people with families to feed.

Of course, it goes without saying, that there are those buyers on Ebay who make impossible demands - free shipping and get it there in one day - etc. Some buyers are simply guilty of not reading the information provided within a listing and then having unreal expectations as a result.

But I am a true believer that most people are essentially good at heart and simply don't understand the Ebay policies and systems.

There is a wave - growing louder by the moment - of Ebay sellers seeking to force reform and a policy that is fair for all - buyers and sellers. Yesterday, a discussion thread received over 1400 comments. Many sellers are looking to leave Ebay all-together. Those of us with small businesses can not afford the increase in final value fees - as much as 66% in some cases (this fee is the percentage Ebay takes from the seller and is based on total price the item is sold for) - the increase on what were formerly Store-based listings as approximately 12%. Nor can the sellers afford increases in fees veiled as a decrease for listing items, hidden fees charged to sellers for "beta testing" Ebay's new software, etc. Some will open their own e-commerce sites, some may move to Amazon - others are seeking advice from one another as to how to leave Ebay and where to take their businesses.

As someone who first came to Ebay as a buyer - and was thrilled to find savings that could help my own family - or to find that rare item you'd looked everywhere for and could not find - I think that this is a crying shame. The death of Ebay is being brought about by Ebay. Another great idea corrupted by greed and run by those who only take their own profit into account.

But maybe its me.