eBay Analyst Day: Customer Service Cost Savings

Posted on March 13, 2009. Filed under: eBay | Tags: , , |


In 2008, eBay spent $700 million dollars on customer service and they project over the next three years they will reduce customer service costs by $300 million dollars (so approximately $100 million a year).  This is another statement from Analyst Day that I found rather odd. 


eBay claims that they will find out the “root” causes for customer contact and once they figure that out, they will “fix” problems so that eBay can reduce the contact they have with their customers.  Less contact means less customer service costs.  Okay, so far so good… except for one thing.  Who provides the bulk of “customer service” to buyers, especially new buyers?  It certainly is not eBay but rather it is the eBay seller.  And the amount and level of customer service buyers receive today is surely less than it was 5 or 10 years ago, despite what eBay says about DSR increases proving sellers have improved customer service (customer service was improved on eBay when eBay suspended the poorly performing sellers that should not have been allowed on the site in the first place).


When I first started selling on eBay, I was excited to sell to new eBay buyers because they often times bid higher on my auctions so I didn’t mind taking my time to assist new buyers “learn the ropes.”  And, let’s face it, new eBay buyers need some hand-holding because it is not easy to buy on eBay.  Buying on eBay is different than almost every other ecommerce transaction.


And, unlike 5 or 10 years ago when I liked newbie buyers and I went out of my way to assist them, today I absolutely detest zero feedback buyers.  My first thought when I see a zero feedback buyer is that they must either be a previously suspended ebay buyer who is starting over or if they truly are new to eBay then they are going to be trouble.  They will not understand the difficult eBay process and they definitely won’t understand the feedback rating system which means I will likely get lowered ratings unless I take great pains to “educate” the buyers about feedback which I am not willing to spend my time to do. 


This week, I had two new zero feedback eBay buyers and they were both problem buyers.  The first buyer “purchased” one item where I had a total quantity of five listed.  A few minutes later the buyer “purchased” the same item again and then almost instantly he “purchased” the same item a third time.  He paid for the third purchase because, after only three times, he finally figured out how to use the eBay system.   But, of course, I paid three final value fees to eBay and now it is incumbent upon me to obtain refunds for two of them.  The buyer has ignored my communications and thus I am not going to take the risk to file for a mutual cancellation but instead I’ll be reporting the buyer as a nonpaying bidder for two items which certainly won’t be a pleasant buying experience for him.  The second zero feedback bidder tried to make separate payments for multiple items despite my clear instructions that all items to be shipped together must be paid for together in one payment as PayPal requires.  I had to refund payments and re-invoice to a buyer who is not a registered PayPal user but is using her credit card to pay via PayPal. 


New eBay users who are TRULY new to eBay have to overcome the frustration of learning how to function on the eBay site which is a pretty daunting task to someone who doesn’t have a PayPal account and who has never used eBay.  And there is no one to help guide them through the process anymore.  eBay never provided customer service to the new eBay buyer and most sellers now won’t or don’t take the time to teach new eBayers how to use the site.  It’s no wonder that the number of active users hasn’t decreased faster.  Perhaps the real decline is actually masked by the number of suspended buyers or sellers who simply re-register and start over as new.


So, when eBay claimed on Analyst Day that they will find out the “root” causes for customer contact and “fix” problems so that customer contact can be reduced …. what that actually mean is that they plan on reducing the customer service they provide to eBay sellers (their “other” customer).  I’m guessing that many sellers (including me) will probably lose access to their TSAM.  And if you think you get a nonsensical cut/paste response a week later to your question now then just hang on because by 2011 you’ll be pleased to know that you won’t get any response whatsoever from eBay customer service.  I guess that is one way to define “improved customer service”.


Now, let me be clear (as eBay loves to say)….. I think many of the eBay customer service employees are absolutely positively outstanding people who care and who really try.  However, there is only so much that these hard-working customer service representatives can do within their power in such a huge corporation.  And, just as importantly, I can only imagine how burnt out many of these eBay customer service folks are and how frustrated they must be within the organization.  I do not envy them and I would much prefer my current job (eBay seller) over their job (eBay customer service).  And now these customer service employees are probably going to be squeezed even further by eBay Inc who is looking to reduce customer service costs by 1/7.  Of course, there is another way one could look at things.  All eBay has to do is to shed another 1/7 of their current sellers and their customer service cost problems are solved – 1/7 fewer sellers means 1/7 fewer contacts which means $100 million cost savings a year.   

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7 Responses to “eBay Analyst Day: Customer Service Cost Savings”

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Great points and…sadly, I believe you’re right. I am seeing the same types of buyers except a good chunk of my newbies wind up as NPB’s. That scares me but I still follow the program, file a NPBA and “hope” for the best.

It’s rather obvious from the hatred John Donahoe, Lorrie Norrington, Meg Whitman, Bill Cobb hold and held toward small sellers, that the customer service reductions will come from a reduced seller base.

What should be extrapolated from your observation of “1/7 few sellers” is eBay anticipates having 3/7 less “customers” to service in 2011.

eBay reported 405.3 million users as of 12/31/2008. Soooo 231.6 million users in 2011?

It’s no wonder that the number of active users hasn’t decreased faster. Perhaps the real decline is actually masked by the number of suspended buyers or sellers who simply re-register and start over as new.

I figure that the unique visitor per mo number won’t be affected by the userid nonsense, so that’s what I go by. It’s declining too.
You can get a good idea of the frustration of the Customer Service Reps at eBay by reading their reviews at glassdoor.com. As you read the reviews, it becomes clear that the CSRs work in a different, far harsher, more Big Brother-like environment than do the engineers or managers who work at HQ in San Jose, with no autonomy and almost no scope of action.

Cut customer service costs? What customer service?

The 10% layoffs that took place last fall on ebay were primarily in their customer service departments. The help customers could receive was poorly lagging [u]BEFORE[/u] those cuts. Now, I dare say, ebay has the worst customer service found anywhere on the internet.

To cut more customer service costs, ebay might as well fire the rest of the customer service staff, since those employees hands are tied from being effective, anyway. With Donahoe’s new policies, it is a “given” that the ONLY information the customer service employee needs to know is if you are a buyer or a seller. Buyers wins. Seller loses. That is ebay’s formula for “customer support” these days, thanks to Downthehole and his manipulating policies.


Once ebay officially has their shopping cart up and running, all fixed price items will be IMMEDIATE PAYMENT REQUIRED.

The same way it is now at Amazon and pretty much every other real retail site online.

For auctions, they are playing with a different scenario in which the bidder pre-registers their payment info, and are automatically billed upon winning the item.

This scenario is a done deal and no more unpaid items is how ebay is planning to quantify the reduced customer service resrouces. No more unpaid items, no more FVF credits, no more feedback issues, etc/all.

We may see this new system in place well before Q4, it depends on all the tech enamblement.

And how many years will it take to get a shopping cart actually working? That is half of ebay’s customer service problem. They have a horrible ongoing history of technical problems and bugs/glitches that members NEED customer service for.

There is a forum I found on the internet that is free, and helps with Ebay, PayPal, business and the law. Just post any question, the experts will answer it if it has not already been answered!

The forum has a lot of expert advice on it. http://www.modeeworld.com/forums I found advice there about how to avoid EBAY suspensions, get past PayPal limitations, also lots of detailed help on creating your own business, getting past trademark violations, VERO and lots more. Plus general advice on how best to sell on EBAY, what sells the best, how to get the best price for your product, really everything related to EBAY and internet business.

Also advice about how EBAY really works and how PayPal really works. The inside scoop.

Beautiful forum. I was made a moderator of the forum and I love it!

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