Loser Mentality: eBay’s Great Vision of Being the Cheapest

Posted on October 25, 2008. Filed under: eBay, eBayInkBlog | Tags: , , , , , , |

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On the eBay Owned Blog, eBayInk Blog, there is a new article titled eBay Innovation Demo Expo – (you can click HERE to read the article). 

I have copied a portion that article below that I want to focus on: 

“Essentially, it is a native iPhone application which would allow users to take a picture of a barcode of an item in a store, upload it and see the prices and deals for that same product on eBay. Basically, you could be in a shopping mall looking at a digital camera you’re interested in buying, take a picture of the barcode of that camera, and do a quick check to see if the camera is available cheaper on eBay all from your iPhone. “

In its quest to the be the “cheapest” ecommerce site on the internet, eBay seems to have forgotten that they must consider several stakeholders who are involved, directly and indirectly:

1. The manufacturer of the widget to be sold (we will use a digital camera for the sake of this example since that is what eBayInk Blog mentionned)

2. The potential buyer of the digital camera

3. The brick and mortar store in the shopping mall (I will use Best Buy for illustration purposes since that is where I like to shop locally for electronics).

4. The eBay seller of the digital camera

 

This iPhone application is a perfect example of why the retail industry of brick and mortar stores are raging a battle against eBay.  The National Retail Federation NRF is already speaking out against online sites, specifically eBay.  Imagine …. eBay is actually recommending to buyers that they should go to a brick and  mortar store in their local area so that they can drool over and fondle all the items they are considering purchasing while asking the knowledgeable sales staff to answer their questions about product functionality.  Then, when the buyer, with the assistance of the helpful Best Buy staff, have decided on the particular digital camera they want to purchase, eBay recommends to the buyer that they pull out their iPhone to locate it “cheaper” on eBay.   That almost sounds as great as their recent advice to eBay sellers to source product from places that will take the product back as a return if the item does not sell on eBay as expected.  Who at  eBay is thinking of these great ideas and then actually saying them out loud?  

And, do you think the manufacturer wants their items sold cheaper on eBay?  Manufacturers who plan on staying in business are not going to support wholesalers who sell on eBay to specifically undercut the retail stores on the same item.   I have first hand knowledge of SEVERAL manufacturers who require wholesalers to sign agreements stating that they will not offer items for sale on eBay or that all items offered for sale anywhere must meet MAP (manufacturer’s advertised pricing) or else the wholesaler will be prevented from purchasing additional items for sale from the manufacturer. 

And large retail stores like Best Buy are making deals directly with manufacturers for exclusive items.  Digital camera makers, and other electronic manufacturers, will create a product with its own unique barcode for a retail store like Best Buy so that customers cannot locate the same exact item elsewhere.  There can be no price comparisons because that particular barcode will not be available outside of Best Buy stores. 

I see a completely different, and unintended, consequence of the eBay iPhone application.  Imagine someone who has purchased a digital camera and wants to take it back to the store but they know that the store will not accept the return because the seal on the box has been cut.  No problem.  The buyer can use his iPhone to locate an eBay seller with a brand new item, order the item, and then when the new digital camera arrives with the seal intact the buyer can take it back to the retail store for a full refund.  And, because of the great buyer protections on eBay, the buyer can now return the opened digital camera back to the eBay seller for a full refund.  It does cost the buyer only the cost of postage one-way.    What happens if the digital camera stops working two months after the buyer purchases it from Best Buy?  Well, Best Buy would tell the buyer that they need to contact the manufacturer to deal with warranty provided directly by the manufacturer but, hey, why go through all that trouble when you can easily locate a new digital camera on eBay with your iPhone and switch it out with the defective one?  Let the eBay seller deal with the hassle.  What a great idea, eBay!

eBay will continue to make these kinds of mistakes as long as they continue to focus only on the buyer.  The eBay decision-makers and those employed at eBay who are advising the decision-makers do not have experience selling on eBay.  Thus, they would not have an understanding of seller-buyer relationship and the seller-manufacturer relationship.  eBay sellers have to source their product somewhere and manufacturers are certainly not going to risk angering their large brick and mortar retail customers by knowingly providing the same product to eBay sellers who make it a practice to undercut the brick and mortar retail stores.  

There has been speculation about manufacturers and/or large retail stores bursting onto the eBay scene this month as part of the new eBay Diamond seller program.  I have previously stated that this just isn’t going to happen (See the blog post titled “Operation Catalog: Can Sellers Handle the Truth” by clicking HERE)  Manufacturers do not want their product sold on eBay for many reasons.  Specifically, manufacturers do not want the price of their items “devalued” as is perceived to happen whenever items are sold on eBay.  I have had manufacturers tell me that even if the item is sold for MAP or above on eBay that they are unhappy to have their items appear on eBay because consumers then perceive their product as being “cheap”.  

Let me share a little secret that most successful online sellers already know — Sellers who offer “cheap” items are losers whereas winners are the ones who sell items that have a “good value”.   And almost everyone wants to be associated with a winner rather than a loser. 

One of eBay’s recent marketing campaigns is evidence of their “loser” mentality.  I received an email from eBay with the subject line of “Zero Bids!” where they were pointing me to auctions that had received zero bids:

 

I have never bought any of those type items on eBay, or anything remotely close to them, so it is rather odd that eBay would try to market those items to me in the first place.  But, then, to think they could entice me to purchase one of these items that have “zero bids” on them definitely is not what I would be interested in.  I am a winner, not a loser.  If an item has zero bids and it is getting ready to end then I am certainly not interested in purchasing something that other people do not want either.  If I could win an item “cheap” (ie has zero bids) yet no one else perceives the cheap price as having “value” enough to bid then what makes eBay think I would want the cheap item?

eBay has this great vision of being the cheapest place to shop on the internet and yet they wonder why they cannot seem to shake that “flea market” association that they so dislike.  Perhaps eBay doesn’t understand what the word “value” really means.  Maybe that would explain why eBay thinks it is acceptable to lose thousands of sellers who, for years, have brought value to the eBay community and why eBay thinks it is acceptable to further alienate manufacturers who need the sales they receive from brick and mortar stores to exist.    

eBay really is only a venue.  They manufacturer no product, they do not source product, they sell no product, they ship nothing, and they receive no money directly from buyers.  Until eBay stops trying to operate in a vacuum where only eBay and the buyer exist, and instead begins to consider all the stakeholders and each of their interests, eBay will continue to make decisions that lead them further down a loser’s path.  

When you are the only participant in a race, it is easy to be crowned as the winner year after year.  But when other entrants show up who have trained harder and who have sacrificed more then the true competition begins.  eBay is no longer in the lead when it comes to the ecommerce race for the gold and those of us who have faithfully stood by cheering, and now booing, from the sidelines for years can clearly understand the reasons why there has been such a change in the race.    

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5 Responses to “Loser Mentality: eBay’s Great Vision of Being the Cheapest”

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See!

Come on over to Bonanzle.com which is great value for buyers and sellers alike. Download all your eBay listings automatically then edit out all the tons of defensive TOS which you will not need there. Learn how to submit your listings to Google Base and at what intervals you want to submit. YOU decide which forms of payment you want to accept and how much you want to charge for shipping.

The grown-up buyers there make their decisions based on the information given.

Great post, brews. This is one reason I’m not selling on eBay any more and you’ve summed it up perfectly.

In Australia eBay is running an advertising campaign that ‘We’re 25% cheaper’. The items I sold on eBay were actually more expensive than the same items I sell on my own site.

I love a bargain as much as the next person, but I’d much rather think I was getting ‘good value’ than ‘cheap’. As the sayings go – you get what you pay for, and if it seems to good to be true, it probably is.

Whoever is making decisions at eBay seems to have totally lost the plot. They are driving good sellers and good buyers away and soon all that will be left will be dishonest sellers and buyers who know how to work the very flawed Paypal Buyer Protection system.

Brews-
I think Ebay is going to have to hit rock bottom. John Donahoe is a loser for Ebay, and I say that not to demoralize him, but as a truth. In another area of business, he might be a genuis, but he’s obviously out of tune with the beat of Ebay.

eBay and it’s current management slate ARE loosers, and will continue to be until some massive change occurs in judgment or direction.

[…] titled “Loser Mentality: eBay’s Great Vision of Being the Cheapest” (click  HERE) is one where I wrote a not-so-flattering opinion piece about one of eBay’s latest […]


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