Is eBay going to the dogs? Don't bet on it
Earlier today, one of my blogging brethren Don Reisinger laid into eBay, dismissing it as "no more than an outdated, bloated company that lost its way years ago."
Meg Whitman: Goodbye to the old boss
(Credit: Dan Farber/CNET News.com)Once a Internet company gets a rap for being "uncool" you know the corporate marketing team has taken its eye off the ball. But in this Web 2.0-to-Web 2.5 world of ours, the temptation is to shoot first--and then shoot again and again without asking whether you're even aiming at the right target.
So it is that the piece finishes with the suggestive admonishment that:
"eBay is poised to enter the junk heap of tech if it doesn't do something quickly. It may seem like a company that has longevity written all over it, but trust me, the chances of eBay staying around for too long while maintaining this strategy are slim. Sadly, it'll only take one competitor."
That's harsh but I'm not convinced it's a fair appreciation of what's happening on the ground. No denying eBay has had its issues and the company's also got to prove it didn't waste a ton of dough when it bought Skype. But give management some credit for understanding the risks and challenges it faces.
Meg Whitman's done most of the heavy lifting since she became CEO in 1998. Soon the reigns get handed to John Donahoe, who arrived at eBay three years ago after spending 20 years at Bain & Co., where he finished up as the company's CEO. Hardly a lightweight.
John Donahoe: Meet the new boss
(Credit: eBay)Skeptics have every right to reserve judgment about Donahoe. But I like what I've seen so far. He's presided over changes that reduce the cost to list items for sale and now sellers get to keep more than they previously retained after sales close.
And since the fee changes went into effect, U.S. listings are up between 10 percent and 15 percent. What's more, Best Match, which eBay launched in early March, is also showing improving conversion rates, probably due to the new relevancy-based search algorithm which recently got rolled out.
I suppose you could make the argument that eBay benefits from a dearth of serious competition. Yahoo Auctions never got traction and was shut down last spring. At this point, the only potentially serious competitor would be Amazon--but so far it remains a work in progress. If you're eBay, that's a pretty enviable position to be in while the company works out the kinks. But let's not confuse that with crisis.
Other tech companies have faced far bigger obstacles. The top three on my all-time list feature:
• At IBM, John Akers didn't have a clue how to deal with the challenge posed by PC clone makers. His idea? Break the company into Baby Bells. Lou Gerstner put a stop to that once he got the keys to the executive office.
• Hewlett-Packard found itself in absolute chaos after the Compaq acquisition. Mark Hurd's firm hand cleared up the mess and put an end to the internal corporate strife soon after replacing Carly Fiorina.
• Apple was seemingly on a death spiral under Gil Amelio in the mid-1990s. The product strategy wasn't working and customers were bailing. Then Steve Jobs engineered The Return and the rest was history.
Those were real crises. With eBay, what we're talking about is a nip and tuck job. So let's keep some perspective.
Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie. 
1- The "changes" the Ebay added caused substantial increases in cost for all sellers. Up to 67% over previous pricing structure. You just have to join Ebay's Seller Central forum to see the frustrations of the sellers.
2- I don't know where you pulled out the number in increases listings between 10%-15% since the change. But there were a major boycott in Feb and listings went down, or remains closely the same compare to the same period last year. There are a few well documented cases where Ebay artificially inject dummy listings to increase the listings counts. Which they attributed to "errrors" in their system.
3- Lots of major sellers have decided to quit Ebay and move to other sites or building their own, since Ebay is no longer a venue for them. You just have to look at the increases in the number of users alternates sites to see some mass exodus effects. Sellers are desperate and are willing to try some/many alternatives solutions, which didn't happened on this scale before.
4- Major changes including no negative feedback for buyers, best matches, Paypal's 21 days rules, etc have caused major uproars on the sellers side and Ebay has deliberately deleted many of those threads on their forum. They're well documented in many videos on YouTube.
5- Your comparison about Ebay's obstacles is irrelevant. How can you compare a minor change from Meg to someone who has already been there a few years to some of the most drastic and successful change in corporate history ?
1- The "changes" the Ebay added caused substantial increases in cost for all sellers. Up to 67% over previous pricing structure. You just have to join Ebay's Seller Central forum to see the frustrations of the sellers.
2- I don't know where you pulled out the number in increases listings between 10%-15% since the change. But there were a major boycott in Feb and listings went down, or remains closely the same compare to the same period last year. There are a few well documented cases where Ebay artificially inject dummy listings to increase the listings counts. Which they attributed to "errrors" in their system.
3- Lots of major sellers have decided to quit Ebay and move to other sites or building their own, since Ebay is no longer a venue for them. You just have to look at the increases in the number of users alternates sites to see some mass exodus effects. Sellers are desperate and are willing to try some/many alternatives solutions, which didn't happened on this scale before.
4- Major changes including no negative feedback for buyers, best matches, Paypal's 21 days rules, etc have caused major uproars on the sellers side and Ebay has deliberately deleted many of those threads on their forum. They're well documented in many videos on YouTube.
5- Your comparison about Ebay's obstacles is irrelevant. How can you compare a minor change from Meg to someone who has already been there a few years to some of the most drastic and successful change in corporate history ?
As far as I know, this is the first time a major company has managed to offend 99% of its customers all at once.
The sellers, the boycotters, the strikers ... the ones making all the noise are eBay customers. Not share-croppers as eBay seems to feel.
Just to set the record straight, All auction fees are paid by sellers to eBay. That makes the sellers eBay's customers. eBay seems to have lost sight of that.
Think about what would happen if your company offended 99% of your customers, all at once. Apply that thinking to eBay. Watch what happens.
Nothing personal, but you obviously did no research before preparing this article. If you would've taken the time to see through the marketing speak, and done the "Final Fee" calculations, you would've clearly seen eBay has lowered the fees on the front end, but increased them on the back end of each transaction. Sellers now pay more to eBay for each item that they sell. The fee structure is only better than the previous one if you do not sell an item, which sort of defeats the purpose of "selling". This is opinion, this is math, plain and simple.
Other changes include sellers not being able to leave negative feedback for buyers. While most of my buyers get positive feedback from me, there are always those that try to "work" the system and are simply deadbeats. As both a buyer and seller on eBay for over 11 years, these new rules do not help either. They simply put more money into eBay's pockets.
Finally, some sellers, faced with very low final value profits, or just plain greed, inflate shipping prices, since they are not subject to eBay fees. This is not fair to buyers, and I'll be first to complain about this practice. I charge a flat fee of 50 cents over actual costs to cover the cost of new boxes, packing materials and my time, which does have a value. In many cases, especially international shipping, if my estimates are off, I've refunded the extra money back to a buyer. But eBay has gone way to the extreme other side of this issue. Ebay basically wants ebay'ers to act like Amazon and give free shipping. Why not? It increases their traffic to the site and doesn't take any money out of their pockets, but it does take money away from the seller.
Ebay has put into place a "grading system" that allows buyers to determine what a "fair" shipping price should be, and they are penalized should they not meet this level. Well, when buyers are used to free shipping from other vendors, then any amount paid for shipping costs will be viewed as unacceptable. That's what sellers are having to deal with.
Ebay doesn't realize, for the most part, their sellers don't sell the same kind of goods that Amazon sells. Many sellers sell unique, one-of-a-kind, collectible items, similar to garage sales (a term Mr. Donahoe seems to despise) that buyers won't find at Amazon. Ebay has also forgotten their roots, which are small "mom and pop" sellers that made eBay into what it is today. Instead of promoting this unique marketplace, they now want to establish themselves as an Amazon, or something similar.
So please, before you sing the praises of eBay, please try to be objective enough to see all sides of the issue.
Thank you,
Ted Paxton
eBay is the worst site. It is only good for crooks and fraudsters. I lost $1000 - some dodgy Ed Gutierrez from Denver sold me a car and when i went to check the car - it was all misrepresented. So i refused to buy that car and seller never returned my deposit. My bank and eBay just washed their hands off to (just by dragging time while it was too late).
And I did buy expensive items in the past - but no more. Screw eBay...craigslist and expo.live.com are my choices now...
I can only assume that the new management is coming in to make a lot of cash for themselves, while "re-inventing" one of the greatest internet success stories of all time, and moving on.
ebay wants to cleanse themselves of their members and eliminate those who don?t fit managements desired profile. but, in that process they have included members who have made them the successful company they once were. i am not opposed to changes, often times changes are good, however, they have missed the mark on how far they are taking those changes while losing integrity along the way. an example (there are many): most recently, the conflicting stories were given for what has been named ?mystery auction listings? from the Shopping dot com site (sdc). Initial explanation: it was a glitch in the system, next: limited test that ran its course; then: it was an accident; finally they settled on the test excuse. they really think everyone outside their executive offices are stupid and can't see thru the veil. what kind of company operates in that kind of vacuum? nip tuck you say? no, it is a really, really bad face lift.
in essence what ebay has done is created opportunities for other companies to emerge who have welcomed buyers and sellers with appreciation and customer service (ebay never had that concept). esty, online auctions, ioffer, overstock to name a few. ebay has spun off their own company to others and will not survive to the level that will be demanded by stockholders and the marketplace.
in the meantime......
~ JOIN THE eBay BOYCOTT ~
Find your State or International Location folder and join us. Be informed!
A place to organize.
A place to unite.
A place to focus.
United we stand, Divided we fall.
http://forums.delphiforums.com/boycottebay
http://www.accknowl.com/
Boycott Victoriously ?..while making noise!
Evacuate by May 1, 2008!
I quoted Don Reisenger's blog (referred to in the article here: eBay Management do you want to be the next AOL? http://snurl.com/22abg )
While I do not think that eBay is quite as close to extinction as Mr. Reisenger would have us believe, I also do not agree with this post from Mr. Cooper because it does smack of a pay per post advertisement for eBay.
eBay is transitioning itself with new management and new policies. The biggest problem I see is that the company has given the impression to its customers (the sellers who pay ebay's fees and provide the Billions of dollars the company uses to acquire other companies) that they do not care about the customer.
Everyone agrees that the buyer experience is the key to increasing sales. But some would say that eBay catered to certain buyers who enjoyed the experience just as it was. eBay wants to be Amazon and provide a similar experience mainly because pundits have told them this must be so.
If one takes a step back and realizes that eBay is not the same business model as Amazon, that eBay can never provide the same amount of control over the buyer experience as Amazon if they do not also want to provide the customer communications and service that Amazon provides... Then we all might see the real differences in the equation.
If eBay does not want to become irrelevant like AOL did in the 1990's, they must start to consider each "customer" (buyer) as if they were the most important part of the company. Increasing fees without providing more traffic and disguising that fee increase as a fee decrease while believing your customer base is too ignorant to see the facts of the changes, is a big mistake.
Are you insane? eBay needs a management team transplant and FAST! The way it's going it'll be on life support by June.
Lower listing fee's yes but how does going from 5.25% to 8.75% for finial closing fee's decrease seller's fee's??
Here a place to start:
http://www.hammertapresource.com/forum/index.php?topic=73.0.%20%C2%A0
Well I don't know where you learned your math, but where I went to college, 8.75% is more that 5.25% not less, and 12% is more than 10%. 99% percent of my sales were from my ebay store - the price cuts saved me one PENNY in listing fees, while ebay increased their share of the finally selling price 2%. I AM NOT GETTING TO KEEP MORE!
As far as the best match search - go to ebay and see if the best match brings up pwoer sellers with less than perfect feedback or small sellers with perfect feedback - cuase the kool aid dispensers are saying the "best customer service" will be rewarded with best match - yet so far its the biggest ebay fee generators beneiftting - and that certainly does not always mean a great buyer expereince.
Either the search isn't working right (which given all the glitches with ebay lately, it seriously could be just that) - or ebay was lying about how it would work..
Sorry, but you lost all credibility with this article.
I have never read an article with so many of the "facts" wrong before.
With all due respect, where do you get this information? Everyone I know who has tried searching with Best Match has found that MANY irrelevant items show up. I've only heard horrible things about it--no one likes it!
And as others have already pointed out, sellers are paying MORE in fees now, not less as your article states.
Sellers and buyers alike are no longer willing to allow the ebay spin go unchallenged as you can tell from the comments here. This is fortunate for those that have never used ebay for buying and/or selling and for those that are unaware of the recent changes-some of which that have yet to be implemented as of the time of this writing.
Anyone with average intelligence can see there is something very wrong in ebay-land should they take the time to look.
When a company is no longer thought of as reputable by their user base they are in for a rocky ride and rightly so IMHO.
That ebay is bent on destroying any trust they might have had with it's community by ignoring the problems, treating its users as unimportant, ignorant, and spinning things so much that they don't pass the smell test is a mistake I have to wonder if ebay will ever recover from.
Word of mouth can often make or break a company even those as large as ebay. Their user base is creating some loud noise that is not being contained on the ebay boards and is spilling over into all parts of the real world.
Perhaps you also might want to listen closely before your next ebay blog is posted because that isn't a train rumbling in the distance, no it is much more than that. It is the noise of unsatisfied ebay customers and customers that feel lied to and abused don't tend to forget the experience.
- by HenriettaM March 23, 2008 1:03 PM PDT
- Did the author miss 1st through 3rd grade math? The years he should have learned about bigger numbers and smaller numbers and how to add ALL the fractions and percentages to find out if a number is bigger or smaller?
- Reply to this comment
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Showing 1 of 2 pages (25 Comments)The way retail works is quite simple. You need to have a seller and a buyer. A Seller buys something and then sells it for more than he paid for it. What he paid for it includes something called 'overhead'. Overhead is what it costs Seller to sell. I hope this is not getting too complicated for your level of math skills so I will try to keep it really simple.
If you sell on eBay you buy a place to make your advertisement. The seller pays eBay fees so eBay can cover their overhead and make a profit. Profit is allowed, it is a good thing. The seller is eBay's customer. eBay has something the seller wants, a place for Buyers to find what Seller wants to sell, so Seller pays for it. Seller wants to find a buyer so he can make a profit and everybody will be happy. eBay will be happy because they got lots of fees, Seller will be happy because he made a profit and Buyer will be happy because he found something he wanted to buy!
Seller pays an insertion fee (IF) to list the item. It doesn't matter if the item sells or not, if seller wants to list the item he pays the IF. He pays the fee so a Buyer can find his item and buy it. There are lots of sellers and they all want to get a buyer and make a profit. There are lots of buyers too and they all want to buy something for less than they would have to pay for it somewhere else.
When the seller lists an item for sale he or she prices it very carefully, because the seller wants to get a customer of his own. He wants to cover his expenses (which include eBay fees and Paypal fees) and make some profit. Remember? Profit is a good thing!
To make a profit Seller has to be very good at arithmetic. Seller has to be able to understand something called 'sell through rate'. If Seller lists 100 items for sale and 50 find Buyers, then sell through rate is 50%. A 50% sell through rate is a good thing. Seller has to pay IF for the 50 items that did NOT sell, this is overhead and it comes out of the profit seller made on the 50 items he did sell. This will make the profit smaller. Because Seller is good at arithmetic and understands the difference between big numbers and smaller numbers he thought about sell through rate and IF when he priced his item. But that is not all Seller thought about.
Seller thought about the fees he has to pay eBay when his item sells, this is called Final Value Fees (FVF) and the other fees he has to pay Paypal to collect his money. eBay will not allow Seller to use anybody but Paypal to collect money, even if they are lower priced because eBay owns Paypal and eBay wants ALL the fees.
Now lets talk about this the way grown-ups do!
Sell through is down overall on eBay to around 14%. Add to this the approximately 10% of sold items which Buyers never paid for but eBay has collected FVF on and things are bad. To this mess add a 'new and improved finding experience' which Buyers don't like because they can't find stuff, and Sellers don't like because buyers can't find their items.
Now because things are so swell, increase fees overall but tell your customers, the Sellers, that they are getting wonderful decreases in IF. Hope the Sellers don't notice that you are using your super secret algorhythm to make sure Buyers don't get to see what they are looking for but only the items you want them to see, so some items may never get a single view for that IF.
To make sure the nasty Sellers don't upset the poor buyers who think they don't have to pay for something after they won it, or the ones who paid for it and then made a chargeback on their credit cards eBay decided to take away Sellers ability to leave negative feedback and gave the buyers two chances to rate the sellers, the secret (NOT) DSR's AND regular feedback.
Fee increases are no big deal except to buyers, most sellers are in the same boat and will increase their prices to compensate.
Changing the rules on feedback and linking search or find-ability to DSR for sellers WITHOUT a corresponding requirement to ID verify buyers so the deadbeats and crooks can be weeded out is more risk than I am prepared to take.
As a nine year seller with a high repeat customer base I understand customer service. eBay has difficulty recognizing who their customers are and no customer service for customers who are not powersellers. I am good at math and I know it does me no good to list my stock over and over at ever increasing rates with less exposure, dropping sellthrough and increasing vulnerability to 'shrinkage'. It would be cheaper for me to give the stuff away and not be obligated for the fees.
This is not a 'passionate' decision, it is a reasoned analysis of all the factors which affect my business relationship with a service provider who is no longer performing to an acceptable standard. eBay is NOT my business partner and has no management role. I am the decider and I have decided to take both my retail business and my buying habit elsewhere.
As a venue eBay has a right to conduct their business how they choose and must accept responsibility for the effects their policies have on both their bottom line and the value of their shareholders investment.