eBay: What a Difference a Decade Makes

Posted on August 7, 2008. Filed under: eBay | Tags: , , , , |

 

I am a 10-year eBay veteran seller and I remember the good ole days on eBay. In the beginning, I was a hobby seller ( See my article that defines eBay seller types – HERE ) as was most of the eBay community.  

eBay began as a P2P (Person-to-Person) ecommerce website and that is how the community expected transactions to be conducted.  There was personalized service every time someone bought from someone else on eBay.  And that personalized service included charging a unique shipping cost based on each individual transaction.

I distinctly remember how most eBay sellers did not list their shipping costs in their auctions.  Instead, buyers would email sellers to request a shipping quote after all the auctions ended.  The seller would then package up all the wins and send the buyer an invoice which included the cost of the shipping (based on whatever method the buyer stated was their preference) and also insurance if the buyer requested insurance.   I also remember how many buyers wanted various quotes of all kinds — “What about if I add one more item to the box, how much would that cost?” and “What would be the difference in shipping first class versus priority mail?”  As a general rule, most sellers recycled packing materials and did not charge any handling fee and definitely no more than $1 for materials for the entire package. 

eBay was the perfect marketplace for “trading” because every seller could offer their item on a world wide marketplace where someone several states away would be willing to pay significantly more than someone in the local area.  So it was not politically correct to overcharge on shipping because the buyer was already paying a premium for the item.  And because each seller generally had low volume sales and was not primarily selling to make a profit, it was standard practice that buyers could expect to get a unique shipping quote for every transaction.

Fast forward to the eBay of today and it is not difficult to understand why there is such heated discussions on the eBay community boards about shipping and handling charges.  First, the selling prices on eBay are significantly lower now and so there is no extra margin from sales to cover any shipping and handling charges.  Therefore, sellers have to recoup all of their actual shipping costs.  Sellers can no longer afford to be generous in giving away any time or materials for free because they are getting so much less for the item now.  Also, instead of all eBay transactions being P2P there are a good number of businesses operating on eBay.  

Businesses have actual shipping and handling costs that individual hobby sellers do not.  Businesses have to purchase large amounts of packing materials, pay for warehouse and/or commercial office space, various types insurance, property taxes on inventory, alarm fees, and employee wages just to name a few.   Also, there is no way to do any type of volume sales on eBay without creating some kind of standardized shipping cost where everybody pays one flat rate shipping cost for the item or where the shipping cost is calculated based on weight along with a predetermined handling fee added in.  And, then, there is the matter of stating in advance the combined shipping cost.  Business sellers state in advance how much it would cost for shipping if the buyer were to add additional items to the order.  A business cannot stop and uniquely calculate the shipping cost for each and every order that goes out the door.  Of course, all the major retail ecommerce sites publish their shipping charges so that buyers know in advance what to expect to pay for shipping.  The shipping costs are clearly stated.  There is no negotiation of the shipping charges after the order is placed.  There is no personalized shipping cost calculation for each and every order.

Yet, eBay is the only online marketplace where buyers feel that it is acceptable to negotiate shipping charges after the fact.  eBay buyers want to know in advance what the shipping will cost but then they will ask for a better shipping cost after items are purchased because they want a unique shipping cost quote based on their individual circumstances.  I think eBay buyers believe that eBay sellers are not operating a real business and thus they do not deserve the same respect and consideration as a “real” business.  If an eBay seller’s auction states that shipping is $4.95 for the first item and $1.50 for each additional item, the eBay buyer will still expect to get a better deal on shipping if they purchase four or five items because the buyer “knows that it can’t ACTUALLY cost THAT MUCH to ship four of those items”.  And eBay is encouraging buyers to pressure sellers to reduce the shipping costs and to “negotiate” lower shipping costs after the fact by virtue of giving such weight to the Shipping and Handling Detailed Seller Rating (DSR) in a seller’s feedback profile. 

While it may still be possible for individual hobby P2P eBay sellers to negotiate personalized shipping charges for each buyer, the low volume hobby sellers are vulnerable because each one buyer has such a large impact on the seller’s feedback rating.  And Business eBay sellers, who have more expenses and must charge more for shipping than hobby sellers, simply cannot withstand the low Detailed Seller Ratings that buyers give for the Shipping and Handling DSR.  B2P sellers on eBay are unable to offer personalized shipping and handling charge calculations that eBay buyers are increasingly demanding.  Buyers fully expect sellers to alter their terms of service afterward because buyers know that sellers must do anything and everything buyers demand or face the consequences.  The last few months eBay buyers are no longer politely requesting a change in the terms of service.  eBay buyers are now making demands of sellers with open threats of feedback extortion if sellers do not comply.  Business sellers who stand firm and expect to be paid the fair shipping and handling charge, as stated in the auction terms, are feeling intense pressure to find a more suitable marketplace.

We charge less shipping costs to our eBay buyers than the buyers who purchase from us on Amazon or our own ecommerce sites yet eBay buyers are the only customers we have who question the shipping charges and are openly hostile toward us about having to pay shipping at all.  While we always had a few potential eBay customers ask about shipping, it seems that Pandora’s Box was opened by eBay on May 19th and the last two months have been pure hell.  This is definitely a bad time to be an eBay “business” seller and I cannot imagine there will be any new “big” business sellers who would even consider opening an eBay store.   However, if eBay offered some really amazing incentives to a manufacturer or large retailer who was struggling to survive then, and only then, would I think we would see a new big business seller on eBay. 

As our company looks to the future, we are currently dumping our existing inventory on eBay with a passion as we make the transition to reputable online marketplaces that will support us operating as a business.  We are investing in a different product mix and we are going where there are better quality buyers who have reasonable expectations and where the marketplace does not condone buyers who extort concessions from sellers.  eBay expects business sellers to provide the personalized unique service that a low volume hobby seller could provide 10 years ago.  But it can’t be done.  eBay is asking the impossible from its sellers, even its best sellers.  And the more unreasonable things eBay asks or demands from its sellers, the faster the sellers are leaving.  

eBay is not an online marketplace that focuses on facilitating good relationships between buyers and sellers.  The hostility between eBay buyers and sellers is at an all-time high.  Instead of creating and nurturing a community where all members (including sellers AND buyers) are required and encouraged to trade fairly, eBay is just a platform that has extracted money from the system while providing very little in return.  Today, the great sucking sound is noisier than ever, though, as eBay has had to increase the pressure more and more just to extract the same amount of money from sellers’ pockets.  I predict that in one to two years’ time, eBay will be nothing more than a liquidation marketplace where business sellers go to dump their old inventory and they will do so under a different business name so as not to ruin their good reputation built up through reputable marketplaces. 

There has been a slow movement of reputable eBay sellers who have been leaving the last 3 years but after January 2008 there appears to be a mass exodus.  Sellers are leaving in such alarming numbers that it is more like a stampede out of the gates than a gradual movement.  The severity of the problem is not being shown in eBay’s statistics yet because there are many sellers just like us who are trying to liquidate their current eBay inventory at a rapid pace.  We are working hard to be set up in time to take advantage of our sales opportunities on Amazon and our websites for the 2008 holiday season.  And the comforting thought to us is that we will have eBay to liquidate our product in Q1 2009 that didn’t sell as expected for the holidays.   Our company will always have a need for eBay but the need is now different.  What a difference a decade makes.

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