eBay’s Forced Free Shipping Model Has Unexpected Results

Posted on August 8, 2008. Filed under: eBay | Tags: , , |

 

Today, I called in and spoke with eBay Powerseller Support.  I called because my DSRs took a mathematically impossible nosedive and I had a few other issues to discuss. 

The Powerseller Rep confirmed that there is a “DSR glitch” as the announcement board states and that my 30-day DSRs are being reported in error.  So, I asked the question about DSRs being anonymous.  Why do they need to be anonymous when sellers can no longer retaliate with negative feedback?  And if I could see the DSRs then I would know when my buyers think that I am doing a poor job as a seller rather than simply an eBay glitch.  I would be able to calculate my DSR rating to know for sure when eBay is experiencing a DSR reporting glitch.  And imagine the great information I would learn about which sellers are leaving lower DSRs – is it international customers who have to pay customs fees and consider that part of the S&H cost or is it the buyers of a certain widget that is particularly heavy?  Or, are all buyers leaving me slightly lower DSRs?

The Powerseller Rep told me that the information I was looking for was simply not available and eBay had no plans to make the information available or to change the anonymous DSR system because eBay feels if DSRs are not anonymous then buyers would not feel comfortable leaving accurate ratings.  Huh?  What exactly are buyers afraid of?  At the time buyers leave feedback and grade sellers on accuracy, communication, and shipping, the buyers have their product and they cannot receive negative feedback from sellers so what is there to fear?  The Detailed Seller Rating information is available for the public to view and seller’s entire ability to sell on eBay is based on DSRs but yet sellers are not given any detailed information about what numbers are received.  For a seller who has two ratings with an average 3.0 score, there is a big difference between two people both leaving a 3.0 rating or one person leaving a 1.0 rating and another leaving a 5.0 rating which averages to 3.0.  Are most buyers generally unhappy with the shipping (all 3.0 ratings) or is there is one buyer who is at the extreme (a 1.0 rating) which causes the change in the rating.

I pointed out to the Powerseller Rep that I sell a wide variety of product and that if one group of buyers was particularly unhappy with the shipping then it would help me to know that so I could focus on better educating those customers, finding a way to offer cheaper shipping, or move that product to an alternate venue where buyers are not so sensitive about the shipping costs.  The Rep’s response was that eBay wants sellers to “work on” their shipping across the board, for all items, so they don’t want sellers to have any details.  I then made the argument that by not averaging DSRs, eBay was encouraging me to actually provide poorer service to eBay customers than to my Amazon / own website customers because shipping slower to eBay customers did not cause me to suffer any consequences because my Shipping Time DSR would never fall below my Shipping and Handling DSR. 

I expressed my opinion that eBay should average DSRs.  The Powerseller Rep’s response was that eBay purposely wanted to give a heavier weight to the S&H DSR because they wanted to push sellers toward Free Shipping since that was the industry standard and that is what online customers are looking for.  Huh?  I explained to the Rep that my eBay shipping charges are lower than what I charge on Amazon or my own website and I had no complaints from any customers other than eBay customers.  I further gave her an example of how eBay sellers incorrectly use the system so that anyone comparing shipping on eBay to alternate sites would incorrectly conclude that eBay shipping costs are higher overall (for example, sellers list 4 items without using the “1 lot of 4” quantity so on the surface it appears the shipping cost the seller advertises is for only 1 item rather than 4 items).  To that she responded that the people at eBay making the decisions are “smart, really smart” and that she was sure that they were “too smart” not to recognize that sellers incorrectly use the eBay system and they factored that in when they made the decision to push sellers to offer free shipping.  I reminded the Rep that those “smart eBay people” were basing their free shipping model on a report that was issued in 2007 that described retailers’ strategies for 2006.  I guess eBay is still running a few years behind on some things.  No surprise there.

In order to illustrate my point about free shipping and why free shipping won’t work for me, I am going to use a very simple example.  Assume the following:

 
 
My Current Shipping Model:
Widget Selling Price – $10 each
Shipping cost – $5 for first widget and $2 for each additional widget
 
eBay’s Proposed Free Shipping Model:
Widget Selling Price – $15 each
Shipping cost – $0 (free shipping)
 
 

Now assume that Buyer A wants to purchase one item from me.  Under either model, the buyer pays a total of $15 so there is no difference to the buyer.  But I have to pay more Final Value Selling fees to eBay under the second model so eBay is clearly the only winner.

Now assume that Buyer Z wants to purchase 5 items from me.  Under my current model, they would pay a total of $63 ($10 per item and $13 shipping).  Under eBay’s proposed model, the customer would pay $75.  So, under eBay’s Proposed Free Shipping Model, the buyer is expected to pay $12 more simply because I am offering them “free shipping”.  Of course, if the buyer actually purchased the 5 items under the eBay Free Shipping Model, eBay would get significantly more Final Value Fees.  The problem with this scenario, though, is that the buyer simply won’t buy from me if I offered free shipping.  Why would the buyer pay $12 more from me when they could purchase from somebody else did not offer free shipping but who offered combined shipping discounts?

When I hung up the phone with Powerseller Support I was just shaking my head.  I hope the “smart” people at eBay making the decisions can find a better way to communicate their plan to the rest of us less smart folks.  If the eBay decision makers have a plan, now would be a good time to unveil it since eBay sellers are really in the dark.  eBay is attempting to force good sellers to change their business model.  But my eBay business model works just fine for me.  I have

 
* one account w/ 19,358 feedback and a 12-month rating of 99.7 (includes neutrals in the percentage)
 
* one account w/ 4,387 feedback and a 12-month rating of 99.8 (includes neutrals in the percentage)
 
* one account w/ 10,782 feedback with no negatives whatsoever as of today
 

What eBay doesn’t understand is that if they are going to force me to change my business model then I am going to change in a way that is beneficial to me and in a way that I feel is less risky than selling on the eBay volatile marketplace where I never know what the rules really are.  I am not going to change my business model to support the continuation of selling volume on eBay with free shipping but rather I will change my business model to sell more product elsewhere.  And that is where I am at today.  I am liquidating the current inventory that I had bought to sell on eBay and am procuring different inventory to sell on Amazon.  If eBay’s intent is to get rid of sellers like me then they really are smart because they are achieving that objective quite well.

 
 
 
 
 
 

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6 Responses to “eBay’s Forced Free Shipping Model Has Unexpected Results”

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I could have written the last paragraph myself! Those are my sentiments exactly. I don’t understand why eBay wants to force reputable, long-established sellers from the site. Where is the business sense in that for eBay’s sake?

I try to explain to friends and family what eBay is trying to do to sellers like us. In my explanations, it doesn’t translate well- to the severity of the situation we face.

Time will tell..

DSRs were created to cornhole good Sellers into a 21 day PP hold. The DSR glitch, which in some cases is reporting average scores above 5 points, is a red flag. Ebay is fiddling with the scores in order to boost their bottom line. That’s why DSRs were created, afterall… to boost their bottom line.

Sellers are rising to the challenge, and so they have no choice but to fiddle with the results. How else are they expected to fill their coffers during their transition? As more and more Sellers leave they will need to take more and more from those that remain.

Direct quoted you in my blog and my take is pretty soon all buyers will have to choose from is “leftovers ..and buy.com” who were up to 18% of total eBay listings.

RedINKdiary

Ebay has an addiction to abusing sellers and train their customer service reps to do so and oviously pay them bonuses for lying and being rude to sellers.. The free shipping model was born to raise the final value fees., the free shipping is ebays way of raising fees. It started with Bill Cobb and now John Donahoe is carrying out the orders. Ebay stands to make millions possibly another 30% in final values and that is a lot of money. They threaten and intimidate sellers and tell them your shipping is higher than others in the same category you could be suspended. Check its usually not. This company will lose in the long run unless itchanges its ways. They are on the edge and the fact that Paypal is in trouble in other countries, it will not belong for ebay and paypal are indicted for violation of the Rico Act and I am not the only person stating this, the fact that there is other auction sites available but not ready for prime time is giving ebay more time to get rid of you and I but they forgot something. Ebay forgot all the sellers who are buyers also. If all sellers would stop buying their business supplies and inventory on ebay this would make the difference it would be see ya, ebay. Online auctiions and Ioffer.com need to get it together and they could take over a market ripe for picking,. The DSR’s are being manipulated, buy.com had a rep for horrible customer service before appearing an ebay. buy carries no inventory, products are unavailable and look at their DSR’s it does not add up all those buyers unhappy and their DSR’s are that high yeah right ebay. Ebay is being run by Morons their greed for those big bonus checks and stock options are going to kill them.

It ALWAYS comes down to the Profit being made by Ebay. I genuinely believe that our DSR scores ARE manipulated by Ebay. I DON’T believe that all of these ‘ups and downs’ of scores and visibility in search, are the result of my customer’s scoring.

Being a Power Seller- I felt that my scores were mysteriouly ‘dropping’ right around ‘invoice time’. Screenshots’ are taken- of our scores- on one day of the month- usually 4 or 5 days before our invoice period ends. I would be having a great month of 4.8 and 4.9 scores- and then suddenly- they would drop to 4.7 and 4.6- Just enough to disqualify me for my 15% discount- and then… back UP the next day ?

Ok- so WHO is profiting here? EBAY
Who is losing here? The Power Seller

Yesterday- the 29th of Novemeber- I saw that my DSRs had taken a DRASTIC drop. For no reasonable reason- ALL feedbacks are great- many even saying they left 5 stars for me. But here they were- dropped to 4.6 and my visibility in search now lowered to Standard !!

It finally dawned on me, that I would probably get HIGHER scores (and more stable) if I WASN’T A POWER SELLER !! It’s the Power Seller’s DSR scores that hit Ebay in the POCKET !!

So- yesterday- the 29th of November- I ENDED my status as a Power Seller !! After many years of being a Power Seller.
The results were this- My DSR scores jumped back UP- my Search Visibility RETURNED to RAISED !! NEVER before have I seen my dashboard change TWICE on the SAME DAY !! But it did. What does THIS tell you?

I am no longer a Power Seller, and no longer figure into Ebay’s Profit and Loss, through final value fee discounts !!
Maybe now… I will get TRUE DSR scores ?

I also believe that ebay is manipulating dsr scores to inflate their bottom line…which is fraud. Fraudulent business practices are investigated by the US Attorney General and the Federal Trade Commission (FTC).

There is a reason that ratings from buyers are kept secret. A system that is full of admitted “glitches”, at best, should not be a basis for fee structure.
This is just getting started, but sign the petition and pass it on. Lets get enough support to make the federal government investigate.


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