eBay waives fees after major outage

eBay's stock dropped again this morning following the auction site's nearly 22-hour service outage Friday, balky performance over the weekend, and refunds to sellers to compensate for the down time.

In an attempt to appease angry customers, eBay is waiving several million dollars in listing fees after it halted 2.3 million auctions. The company said last week's interruption of service will reduce revenues by $3 million to $5 million this quarter.

The stock traded around $150 a share this morning, off 15.875 from Friday's close. The stock had fallen 9.2 percent or 16.8125 on Friday.

To prevent more customers from defecting to rival sites, eBay is handing back listing fees for all auctions that were running last Thursday and Friday, when the outage struck.

The refund offer comes after service was partly restored on the site Friday, only to go down again over the weekend. On Sunday, users received no response from the site, marking at least the third unplanned outage in five days. The site is back up and running today.

A corrupted database was blamed for the outage, and eBay is pointing the finger at software from Sun Microsystems as the source of technical troubles.

The company, in a letter to its customers posted on the eBay Web site, said eBay will automatically send refunds to those impacted by the outage and that users will not be required to submit written requests. The refunds will appear on customers' June or July invoices, the letter said.

eBay also said it is implementing a new outage policy promising an automatic 24-hour extension of all auctions following any outage that lasts more than two hours. That policy applies to any auction that is scheduled to end during an outage. Also, eBay, effective as of this recent outage, is now refunding all listing fees following any outage that lasts more than two hours. The company charges 25 cents to $1.50 per listing, plus a percentage of the sale price.

While refunds are a "good faith measure," eBay's management team realizes that fewer outages and technical glitches will count more in the long term toward retaining customer loyalty, said Fiona Swerdlow, analyst with Jupiter Communications.

"People are pretty loyal to their auction site, but eventually they are going to get fatigued and turn to someone who doesn't have outages," she said.

In a further effort to make good with customers, eBay is planning a free listing event in July--on a date to be announced.

"We promise to redouble our efforts to make sure that another outage like this one will never happen again," eBay's chief executive Meg Whitman and founder Pierre Omidyar stated in the joint letter. "Our sincere apologies."

The apologies may not be enough for some customers, however.

"There are a lot of people who have suffered real losses here," said one eBay auction customer posting today on the site. "Until last week, I thought that of all the online businesses, eBay was the one [only one] that was essentially invincible. They had a lock on online auctions. But now, I figure it's time to look for someone else who has at least a clue about taking care of the customer, and not just covering their own butts when something like this happens," the customer wrote.