The Ebay Seller’s Limbo Game – How Low Can You Go?

Posted on November 14, 2008. Filed under: Uncategorized | Tags: , , , , , |

Thanks to ChannelAdvisor’s Scot Wingo, I learned about an eBay Webinar that was originally intended only for eBay’s Highest Level Powersellers (Click Here for Scot’s announcement).

I listened to the entire Webinar, including the Q&A session afterward.  My overall impression is that eBay was genuinely trying to be helpful but much of the information they provided was out-of-date or intended only for certain segments of sellers (ie those who use third-party checkout, for example).  My personal opinion is that the eBay presenters were not arrogant in the least, as they have appeared to be in the past during some of the more recent webinars, and none of the presenters realized that the webinar was available to “the general public” as many of the comments that were made were obviously intended only for the very top eBay Powersellers.  So, perhaps some of the awkward moments in the Q&A session were unexpected and I’ll try to give them the benefit of the doubt.

I appreciate eBay putting together this webinar and, this time, allowing “the masses” access to the same information that the very top eBay Powersellers have always had access to.  I think eBay should allow all sellers access to the information provided in webinars like the one I viewed yesterday.  Not every eBay sellers is an “information junkie” like I am, searching daily for the latest eBay news, and so yesterday’s webinar would have been informative for a large portion of the eBay seller community.  It is really too bad that eBay did not promote this webinar to all eBay sellers and that, more than anything else, actually troubles me the most.  Keeping the vast majority of eBay sellers “in the dark” by withholding information from them does not speak well of the relationship eBay does have (or doesn’t have) with its selling community.

I have several comments and thoughts about the content of the eBay webinar, too many for just one blog post.  In this article today, I want to focus on one point that was made repeatedly throughout the presentation and that was eBay’s emphasis on Price. 

Before the webinar, I could tell that eBay was busy trying to transform themselves into the low-price leader of the interent and I even wrote a blog post titled “The Lessons Learned From My Kids’ Lemonade Stand (click  HERE for that article) where I described what I thought about eBay’s attempt to become the Wal-mart of the interent. 

And, another blog post I wrote about 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 “innovations” designed to assist buyers who visit brick-and-mortar stores to find the item more cheaply on ebay. 

So, it was no surprise to me when, during the webinar, eBay focused repeatedly on the Price aspect of the transaction.  eBay mentionned during the webinar that they were working hard to be a more “efficient” marketplace and how this would improve the eBay buyer experience.  “Efficient” is eBay’s new buzzword for “cheap”.  Pricing was mentionned at least 4 different times during the webinar:

(1) eBay acknowledged that “Price” is one factor in the Best Match scoring so sellers who offer items at the highest price will be pushed further back in the Search standing.

 

tbnwebinarbestmatch

(2) eBay recommended to sellers that they “manage” (ie lower) their prices several times a week and they gave a specific example of one seller who was selling an item well but then was forced to lower their price repeatedly in order to sell their item against their competitors who were also lowering their price when they couldn’t sell their items.   The example shows that every week, the ASP decreased as sellers went back and forth slugging it out. 
 

 
tbnwebinarpricing

 


(3) eBay specifically told sellers that in order to be “successful” on the eBay site, items offered for sale must be priced “competitively” (ie cheaply).

 

 

tbnwebinarrecentsales


(4) Above, one “specific” example was given showing how the seller who was offering the item at the “cheapest” price was getting the sale and the other sellers were losing out on the sale.  Below, eBay shows site statistics that confirm that on the eBay site as a whole, sales are being transferred from the “high cost” sellers to the “low cost” sellers.  Notice that eBay didn’t say that overall sales were increasing because of the lower prices but rather eBay said that sales were being transferred (an increase in sales where the item was priced cheaply and a decrease in sales where the item was not priced cheaply)
 

 

tbnwebinarresults1

 

I want to say positive things about eBay, really I do.  eBay has been a part of my business for 10+ years and I would like to see them succeed if for no other reason than if eBay succeeds it makes it easier for me to succeed.  But I continue to be really amazed at eBay’s lack of vision but at least their new policies and strategies no longer make me as angry and frustrated, especially since I have found an alternative venue that is very compatible with my business philosphy and has allowed me to begin making up the profit that I once made on eBay.  And I can do so with considerably less effort.  On Amazon, I own the “Buy Box” on many items where I do not offer the lowest price and I get good sales from the truly “efficient” Amazon marketplace. 

Sellers on eBay who keep lowering the price in an effort to “make a sale” will have to work harder and harder for the same amount amount of money.  Customer service issues will also increase with the increased sales volume and it will become even more expensive for sellers to provide good customer service with no corresponding increase in overall margin.  An increase in the cost to provide customer service to more buyers and an decrease in the profit margin per item, along with increased costs in shipping next year (and I can only assume eBay will be increasing their selling fees as they do every year, sometimes twice a year as in 2008) spells nothing but disaster for eBay sellers.  Sellers who fall behind in providing timely good customer service, in an effort to sell and ship ever more to keep the same level of profitability, will find themselves subject to the PayPal 21-day hold policy.  And without their critical eBay cashflow, these low-cost sellers will continue to suffer in a vicious cycle that, once started, will be almost impossible to recover from.  

“How Low Can You Go?” is the question eBay is asking of its sellers right now.  And, as everyone knows, the lower you have to go, the tougher it is.  At some point, you simply cannot achieve the physical requirement necessary to pass under the bar and you are forced to drop out of the game involuntarily. 

Unless you are an eBay seller who can put pressure on the manufacturer to lower the price only to you, there is not much of a chance that you will be the “last man standing” after all others have failed to pass under the bar.  The real solution for eBay sellers, then, is to drop out the Pricing War game voluntarily by finding another, more “fun” game to play before the price gets so low you simply cannot afford to sell on eBay. 

No one is actually forced to sell on eBay and to jump through unclear or unannounced policy hoops or to pass under the limbo low price bar and then be whacked over the head repeatedly and unexpectedly by eBay with the limbo bar.  All eBay sellers can take their items, their buyers, and their good business reputations to a new playground, a new venue that better suits them and their vision for the future. 

At this time, eBay still serves me well but not in the way they once used to.  I am (still) liquidating undesirable items on eBay at “efficient” prices.  And other desriable items I have priced on eBay much higher than my eBay competition and when I sell those “high priced” items, I direct those “desirable” customers (you know, the ones who realize you get what you pay for) to my own ecommerce website. 

Other eBay sellers with whom I compete can continue to play the Limbo Low Price game on eBay.  While my competitors are still answering the question “How Low Can You Go?” and are busy knocking themselves out at eBay Slugfest 2008,  I am busy answering the question “How FAST Can I Go?”.  I am moving at lightning speed to establish my business elsewhere, someplace where the venue owner is not focused only on price and someplace where the value and service I provide to the customer is both respected and rewarded. 

 

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7 Responses to “The Ebay Seller’s Limbo Game – How Low Can You Go?”

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I think a fair amount of buyers must have been watching…I’ve turned down three Best Offers in the 5-10% range already today 🙂

I said it elsewhere, I’ll say it again, the only worthwhile information I took from yesterday is Auction items make up 70% of Page 1 of Search. I’ve found out of all of their changes and suggestions, this one rings home best for me in the oft-ignored collectibles wing of eBay.

Thanks,Cliff

Our reaction to all the eBay changes was simply to raise our prices. Now our ASP is 50% higher than it was last year, sales are up and unit volume is down. All our efforts have been targeted to new selling channels for the last 3 months. eBay was 100% of our business, now they’re only 70% and dropping like a stone. Too bad I had always been a big eBay fan even if management didn’t give a crap about their customers.

Too bad eBay won’t drink their own Kool Aid and lower their own pricing.

Does anybody happen to know if ANYBODY in eBay’s current upper management has any retail experience? And no, Bain consulting jobs for retail clients don’t count.

Their entire psychology is just oblivious to the rather obvious idea that if they put all their sellers out of business, they will be out of business themselves.

If they keep this up, they will be left with those who have sourced really cheap goods – and their oft-insulted collectibles market.

@ nadine
Stephanie Tillenius is reputed to be a PS with 1000+ FB.

Looking at Griff it appears the definition of PS has some flexibility as it pertains to eBay employees.

Thank you for this post. I was informed of the webinar, but was unable to attend. As a seller of an extremely low profit margin product, it is discouraging to hear eBay’s new push to lower prices. Much lower and I’ll be giving my products to my customers at a loss.


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