Posted on November 2, 2008. Filed under: eBay | Tags: Buy.com, eBay, eBay coupons, future of eBay, level playing field, Pierre Omidyar |
According to the Omidyar.net website, Pierre Omidyar launched eBay on Labor Day 1995 as an experiment in how a
level playing field would affect the efficiency of a marketplace. (Click
HERE ). Even as late as April 2008, Pierre was speaking about the
level playing field on ebay. (Click
HERE )
Some people might argue that when eBay created the Powerseller program, the level playing field ended but I would disagree. The Powerseller program was designed to provide benefits to sellers based on their current selling activity on eBay, not based on any activity that was outside of eBay. Up until this year, there were little or no rewards offered to any seller who was recognized as an eBay Powerseller. It is only this year that some tangible benefits were offered to Powersellers in the form of greater PayPal protections and also protections from receiving negative feedback within the first seven days after a transaction, among other things. Powersellers also now have the potential to receive discounts on their selling fees based on their level of customer satisfaction as determined by Detailed Seller Ratings (DSRs). But, again, these rewards and benefits accrue to sellers based on their current eBay activity.
This year, for the first time that we are aware, eBay began rewarding sellers on eBay for their activity outside of eBay and this, I believe, was the end to Pierre’s level playing field experiment. eBay had not intended for the information to become public that they were offering fee discounts to entice large non-eBay sellers to begin doing business on the eBay platform but the information did get out to the public nonetheless.
The first question that comes to my mind is – Why was there not any current businesses on eBay that deserved the kind of fee discounts that eBay offered to non-eBay businesses? I think there are a few reasons. First is that eBay would be likely to resist offering discounts to anyone already selling on the eBay platform because they already had those sellers “on the hook.” Look at this way – if a business were paying rent in a mall, the mall owners are not going to offer the current store owner a discount on their rent whereas they might offer a new tennant a reduced rate for 6 months or the first month free rent, for example, as an inducement to get them to move in. Once the “new” tennant has moved in, the mall owner knows they are likely to stay for awhile. Also, non-eBay businesses who are well-established in the online market would not consider doing business on eBay without any kind of inducement because the eBay selling fees are very expensive and because it is very costly for any business to service the eBay customer who is the most demanding internet customer.
The next question that comes to my mind is – Why would eBay try to hide the fact that they were offering inducements to bring large online retailers to the site and what does that say about the company’s ethics? Of course, eBay knew that the millions of small sellers who had helped build the eBay community would not be happy to hear that the level playing field experiment had come to an end so eBay made the choice not to tell them. And when news unexpectedly got out about the first “special deal” with Buy.com, eBay hastily announced the creation of a new Diamond Seller Powerseller program after the fact as a way to try and defuse the situation. But, as of today, there is no Diamond Level Powerseller status mentionned in all the Powerseller information on the eBay site (see below all the current Powerseller levels and notice that Diamond does not appear on the list).
The last question that comes to my mind is – Will the new “Diamond” Powersellers eBay is bringing on board be able to manage their eBay business successfully and will bringing these large online sellers to eBay be worth the loss of the thousands of sellers who will willingly or unwillingly leave the platform as a result?
To answer the last question, one would need to look at those specific businesses eBay has courted thus far:
It is interesting that all three of these businesses are 100% online retailers, no brick and mortar outlets. Several points about the sellers being online retailers exclusively:
1. As a successful online retailer, these companies are experienced shippers who know how to handle a mail-order business in contrast to some of the other large brick-and-mortar retailers who tried selling on eBay and failed miserably.
2. As a successful online retailer, these sellers will not experience the same kind of “manufacturer” issues that other eBay sellers typically experience. Many manufacturers do not want their items sold on eBay and will often times refuse to sell their items to businesses who plan on selling on eBay. But these three well-established businesses, with their good reputations and buying power, will likely not have the same manufacturer restrictions as many other sellers might.
3. Because these new Diamond sellers are successful online sellers in other venues (their own websites and Amazon), they have something to which they can compare their “eBay selling experience”. And these online businesses will discover that the real cost of doing business on eBay is incredibly high. eBay customers ask a great many questions before purchasing, have lots of “special requests”, and have many strange complaints after the fact. A seller who has only sold on eBay might not realize how demanding eBay customers are but those who have experience selling elsewhere will realize the difference right away.
Given eBay’s reputation for being a “cheap” venue, one where items are discounted more heavily than other venues, how will these new Diamond Powersellers be able to encourage buyers to purchase from them on eBay rather than on the other venues where they also sell, such as Amazon and on their own websites? Well, there is where eBay is going to help — the many coupons that eBay is issuing to buyers, such as 10% off purchase, actually helps to lower the price on eBay for the items that buyers want to purchase from these large online sellers. But, who really pays for these coupons? The small eBay seller, with the high fees they are assessed, are actually helping to subsidize the large sellers who are receiving selling fee discounts and who are able to sell their items on eBay because of the coupons issued by eBay.
I understand why eBay is issuing so many coupons at this time. The coupons are absolutely essential to support these large online retailers courted by eBay. Most buyers would choose to purchase an item on Amazon or on a seller’s website, rather than on eBay, if the price were the same. The “advertised” price on eBay may be the same but the eBay coupons make the price on eBay lower. My question is – How long will eBay be able to continue issuing these coupons which are subsidized by the higher selling fees charged to the small sellers? And what happens when the pool of small sellers is not sufficient enough to keep the cycle of coupons going? eBay is artificially lowering the price of items on eBay by offering coupons to buyers but offering coupons isn’t going to help improve eBay’s reputation. And once the coupons are gone, the buyers are gone as well. Once the price is the same again on eBay versus Amazon and independent retail websites, the buyers will choose to buy elsewhere.
I find it rather odd that eBay seems to think they need to focus so much on their supply problem – they are bringing on board several large online sellers with inducements and they have created their new “In Demand” program to entice large Powersellers to offer merchandise that eBay says is short on supply. It is clear, by their actions, that eBay thinks there is an oversupply of some items in the clothing, shoes, and accessories category and eBay is pretty much abandoning the collectibles categories, especially unique items, in favor of increasing their supply of mass market produced items. But, without the constant flow of coupons to create a lower priced item, buyers really have no incentive to purchase these type of items from eBay that are so readily available elsewhere. It will be interesting to take a look at eBay a few years down the road to see how many of these “Diamond” Powersellers are still selling on eBay and to see how eBay ultimately defines itself.
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Posted on September 11, 2008. Filed under: eBay | Tags: Buy.com, changes, eBay, Fees, Selling Price |
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Yesterday, I wrote about what I thought was a typo on the eBay website (see Small Typo Creates Big Problems for eBay) but after I published the post I received a voicemail message from an eBay Top Seller Account rep who informed me that the website was not in error. I phoned the Rep this morning and had a rather lengthy conversation with her. From that conversation I have several things to report but I’ll have to do so over time, in between working to pay the bills and making sure the family is taken care of.
Today, I want to make sure to correct what I wrote yesterday. The eBay website is NOT in error. The fixed price insertion fee of 35 cents is only good through the end of the year, or more likely good through the end of January 2009 as the Top Seller Account rep said. From my conversation, I learned several new pieces of information as well as got confirmation for some things I did already know.
1. It is eBay’s intent, with the new fixed price fee structure, to motivate sellers to take their store inventory and move it out to fixed price where the items will receive greater exposure.
2. eBay is not sure how sellers will react to the change in fees and, therefore, eBay will evaluate the results of this “test phase” and could possibly make changes to the fee structure again early 2009. That means that eBay could lower fixed price insertion fees or raise the final value fees of store items as examples of things that could be done to further motivate sellers to move inventory from stores listings to fixed price listings.
3. eBay could possibly make two different fee structure changes next year, as they did this year, as part of a comprehensive plan to motivate sellers to do what eBay needs or wants sellers to do. So, whatever we learn at the end of January 2009 may only be one part of the fee structure change for the 2009 year.
As part of the conversation with the Top Seller Account Manager, she pulled up one of my accounts and we discussed the impact of the fee change. In the beginning, she tried to convince me that the fee change was an improvement for my business. However, I convinced her otherwise after we talked. First, I let her know that the product mix and listing strategy I am employing now is not the same one I will be using for the future – that I am liquidating product and am changing my business structure and product mix to support more of a multi-channel approach.
One of the issues I discussed with the eBay Rep is my current listing strategy and how it minimizes my eBay fees and why the new fee structure is actually a fee increase for me. I pointed out that I use auctions to drive traffic to my eBay store and I choose items to list in the auction format based on certain criteria. For example, product that I know is highly desirable or product that I am ready to liquidate will go on auction. Product that is slow moving I put in my eBay store, especially items that are lower priced slow-moving items. And items that I believe I can sell in a 7-day period, based on past history or based on the fact that my competitors no longer have that particular item and thus I have little or no competition, go out on fixed price. The eBay Top Seller Account rep admitted that if I continued with the very same listing strategy that my overall eBay fees would increase.
The Top Seller Rep then asked if I had considered listing multiple quantities in a single fixed price listing and I said that I had. But then I pointed out to the Top Seller rep that if I employed that strategy, in an effort to lower overall eBay fees, that my sales would suffer. Some of the items I sell are limited in nature – 1500 units or 5,000 units for example. So if I list a quantity of one, I often get a sale quickly. If I were to list a quantity of 48 and the item is limited to only 1,500 units worldwide, then how “rare” would the buyer think the item is and how likely would they be to purchase 1 of the 48 that I have to offer? That listing strategy might work for someone selling ink toner cartridges because, hey, when you need a toner cartridge you need one and you don’t care whether the seller has 1 or 1,000 units available. But a buyer who sees a seller offer 48 units of a rare item in one listing, to save on insertion fees, will delay purchasing. Unfortunately, eBay doesn’t understand the “psychology” of the purchasing decision especially when it comes to certain types of items. If eBay had any understanding of the buyer psychology aspect in the purchasing decision, they would give up their dream of having every seller offer free shipping because in many cases free shipping, where the price of the shipping is built into the cost of the item, is counterproductive in trying to convince a buyer to purchase multiple items in one order. But I digress.
The main issue I have at the moment, with the new fixed price fee structure, is that the 35 cent insertion fee is good only for a short time and then we have no idea what price changes will occur again in the next few months. Now, if you are Buy.com and get free insertion fees, you can develop a strategy that is good year-round. However, for everyone else, trying to develop a business strategy for selling on eBay has become darn near impossible. I have to order product from manufacturers, and sometimes directly from China, months in advance. When a business cannot get a ballpark figure of what the selling costs would be on eBay more than 2 or 3 months out, how in the world can that business develop long-term strategies which would include selling on eBay? Perhaps eBay is finding that the “fly-by-the-seat-of-our-pants” strategy is working well for them but, personally, I need a little more stability in things in order to plan 4 or 6 or 12 months out.
Disclosure: this blog post and the information contained herein would not have been possible had it not been for the initial email I received from Mechelle. I want to thank everyone who sends me information and I always do my best to get to the bottom of things with the limited time that I have available to devote to the issues.
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Posted on September 10, 2008. Filed under: eBay, eBayInkBlog | Tags: Auctionbytes, Buy.com, eBay, eBayInkBlog, MyBlogUtopia, Operation Catalog |
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On September 6th, Ina Steiner of Auctionbytes posted a controversial article titled eBay’s Operation Catalog Flies Under the Radar in which she wrote the following:
“I’m hearing that eBay is introducing a pilot program next month in which a number of manufacturer and big-box retailer catalogs will be launched to eBay. Third-party vendors will work with these sellers to get them onto the eBay platform – no small feat given the quantity of product SKUs in their catalogs.
These Diamond PowerSellers will be given special privileges. Commission (FVF) fees will be negotiated individually, and it’s my understanding that participants in this pilot will not be charged listing fees, nor will they have to meet eBay’s seller standards during the 90-day pilot program, which I’ve dubbed Operation Catalog.”
As you would imagine, the internet has been on fire since the Auctionbytes article. In a Damage Control Spin Effort, Griff posted on the eBay owned Blog, eBayInkBlog, with a post titled Some Needed Clarification which generated another round of howls from eBay sellers.
I have some information I would like to share concerning Operation Catalog. But, first, I want to point something out to folks and that is that several manufacturers and large retail stores have already tried selling on eBay and they have failed.
Just take a look on eBay at
Compusa (NARU) or
Circuit City (not a Powerseller because of low DSRs) or
Sears (Shipping DSR of 4.3 will soon result in restrictions)
just to name a few.
Now, keep in mind that manufacturers and large retailers, even if they could actually manage to successfully sell on eBay given the unique buyer demands of the eBay marketplace, really don’t want the public at large to know that they are selling their wares on eBay. Selling on eBay could create problems in their distribution channels, among other things, and would not generally work well in an overall strategy to maximize profit for long-term survival.
And keep in mind one other key piece of information – manufacturers do not want their product “dumped” on eBay as this lessens their ability to sell more product through wholesale channels because of the lower values associated with their products. Brick-and-mortar stores complain loudly to manufacturers when product is consistently sold cheap on eBay so manufacturers are actually motivated to keep their product off eBay.
Solution: third party vendors who specialize in online sales and who will sell manufacturers’ and big box retailers’ items for them indirectly. And these authorized third party vendors are given the VERO rights by the manufacturers so that the third-party vendors can remove other eBay sellers’ (competitors) items. I have first hand experience of having items removed because a third-party vendor did not like the price at which I was selling an item (and I have it in writing). These third-party vendors seem to fear no one, including eBay.
To illustrate, CSN Stores eBay Store is an example of a third-party vendor who represents manufacturers on eBay. You can learn more Information about CSN Stores by visiting their website.
Small sellers have already been competing with “the big boys” on eBay for some time now even if the competition has been indirect through authorized third-party eBay vendors. And as the economy continues to stall, I would expect more manufacturers to consider allowing third-party vendors to sell their product on eBay. We don’t know how long we, as small sellers, have been subsidizing these third-party vendors. eBay would never have told us about the Buy.com sweetheart deal had it not been for the super sleuth reporting of Randy Smythe’s My Blog Utopia and so it is safe to assume there is much we don’t know about eBay’s secret dealings with third-party vendors, manufacturers, and others. The truth is that it’s every man (or woman) for himself on eBay and the sooner eBay sellers come to terms with this reality, the better prepared they will be for any future curveballs that eBay throws out.
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Posted on May 30, 2008. Filed under: eBay | Tags: Buy.com, eBay, eBay Express, eBay University, Education Specialist, Etsy, small seller, trained by eBay |
There was a time when eBay made the rounds throughout the country and held “eBay University” classes so that they could teach you how to make your fortune on eBay. eBay University was a good idea that was poorly implemented. There were several reasons why it failed to achieve its objectives and I have written previous articles about why eBay University failed. But even if eBay University were to take all of my previous suggestions and “fix” their university I am afraid that would still not be enough.
How to succeed on eBay 2008 cannot be taught step-by-step. You cannot teach someone to be flexible and you cannot educate someone on how to diagnose and solve problems in an ever-changing environment. eBay, like the rest of the online marketplace, changes on a daily basis and will continue to do so in the future. eBay sellers who can’t or won’t change as the marketplace changes are finding themselves out of business. The successful eBay seller is the one who knows how to adapt. Unfortunately for eBay, this breed of seller is adapting themselves right off of eBay. Entrepreneurial eBay sellers are seeking out other online marketplaces that offer more stability and more financial rewards.
The very large online retailers already have their own successful websites. The ever-adapting medium-size online sellers, whose primary sales come from their own ecommerce websites and from Amazon, have discovered that eBay is a great place to liquidate their items that do not sell as well as they had hoped in other venues. And the small online sellers, the very ones that eBay claims are their competitive advantage, are finding it difficult if not impossible to survive on eBay. Many small eBay sellers are determined and passionate and provide great customer service but the eBay marketplace has become so complex and there is absolutely no good eBay resources available to help educate the average eBay user.
For example, how many eBay sellers would know that if you are listing 4 mugs in one auction that you want to sell as a group that the correct way to list would be “1 lot of 4 items” on the Sell-You-Item form. I did a search on eBay and every listing on the first page that had multiple mugs was listed incorrectly. And how many eBay sellers properly use the combined shipping profiles? Sellers’ lack of knowledge about combined shipping availability is one of the main reasons eBay Express failed. Potential buyers would add items to their basket but when they saw the outrageous shipping charge (because the seller had not correctly used the combined shipping option) they would fail to complete the checkout process on eBay Express.
Not surprisingly, eBay University no longer tours the country. Instead they have a program whereby eBay Education Specialists trained by eBay help to educate new sellers. Education Specialists are just regular eBay sellers who pay a fee, take an online course and pass a test afterward. So, why is this Education Specialist program not educating a whole group of new successful eBay sellers? I believe there are many reasons but the top three reasons are:
* Most eBay Education Specialists are low volume eBay sellers who would rather be teaching and, therefore, are not as knowledgeable about how to use the eBay system. Sellers who sell high volumes on eBay are busy selling and have little or no time to spend educating new sellers. Sellers with low volume have much more time but much less experience.
* There is no incentive from eBay for Sellers to train other Sellers.
* The eBay Education Specialist resource materials are poorly written and are always outdated. The manuals that are available for eBay Education Specialists are obviously authored by someone who is not an eBay seller.
For many years, eBay welcomed new sellers with its system that was easy to understand. Anyone could sell on eBay. That was the beauty of the eBay marketplace. When new features made the eBay system more difficult to use, eBay University toured the country as an eBay cheerleading squad when what was really needed was an educational unit to help new and existing users become informed. And now eBay Education has all but been abandoned. There is no real system in place to educate new users and the system to keep current users informed of new features and functions is completely broken. Heck, the eBay system itself is broken with more frequent and more severe technical problems than I have seen in my 10+ years as an eBay seller.
In terms of learning to sell online today, eBay has become a virtual training ground for those who are willing to learn on their own. The self-taught online entrepreneur learns to sell on eBay by himself or herself, navigating through the convoluted eBay system and all the obstacles therein. They learn lessons from the School of eBay Hard Knocks and when they have had enough education, they leave. Armed with knowledge and having learned from the mistakes they made on eBay, these entrepreneurs are able to teach themselves how to use other online marketplace systems to successfully sell on Amazon or their own ecommerce websites with comparative ease.
eBay no longer wants to spend the resources to inform or educate the average eBay user. They never truly did. What eBay fails to understand, however, is that if they devoted time and money to training good quality small sellers then those small sellers would have every incentive to stay, to perform, and to offer a wonderful selection of amazing products. Amazon is not small-seller friendly and most small sellers do not have the resources or breadth of inventory to create and manage their own ecommerce websites. But by failing to keep small sellers informed and educated about the eBay system, the competitive advantage eBay has had for years will continue to disappear. And once other sites that are small-seller friendly, like Etsy, welcome new online sellers and help them to learn their proprietary systems, eBay will find it difficult to bring the good quality small online seller back.
The eBay Education Program fails to educate and that seems to be okay with them. eBay must have plenty more Buy.com companies waiting in the wings to sign up for the good deals that they are handing out. That sure makes it easier for eBay than having to spend time and money keeping thousands of small sellers informed.
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Posted on May 16, 2008. Filed under: eBay | Tags: Buy, Buy.com, Doctor-Deals, eBay, eBay Entrepreneur of the Year, level playing field |
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This post was written by eBay’s Entrepreneur of the Year ( 2002 )
Posted here on TheBrewsNews with permission
*********************************************************************
Buy.com “BUY” now has over 424,000 active listings on eBay right now. Over the past 90 days or so they have listed over 110 MILLION items in over 1 MILLION individual listings. Almost all of which were 1 or 3 day Fixed Price Multi-Item CORE listings. Listings that would have cost every other seller on the marketplace between $3,000,000.00 to $4,000,000.00 to run in CORE. An amount far less than even Buy.com’s total sales in this period were.
So unless Buy.com is in the business of spending more money on eBay listings than it generates in total sales, Buy.com is listing TENS OF MILLIONS of items in eBay CORE each month for basically FREE. A “Special Deal” no other seller gets and a distinct marketing advantage over ALL other sellers. The facts and figures DO NOT LIE, at most, Buy.com is paying a penny or two per item listed while the rest of us pay dollars per item to list in CORE.
787 of Buy.com’s active listings compete directly with me in one single category, External Hard Drives. My hundred or so active listings in this category that I spend thousands of dollars a month to list up against 787 FREE or nearly FREE active listings from an internet retailer handpicked by eBay to drive me out of business. Buy.com gets to save over $30,000.00 a month in listing fees to keep just these 787 items running in the category. Because of FREE listings in the CORE search from Buy.com my sales in the category have dropped and Buy.com’s have increased. How am I supposed to compete with a $30,000.00 monthly listing subsidy from eBay to Buy.com?
Let Buy.com compete with me fairly head to head and pay for their listings as I have to. Or eBay, let me list in core for a penny or two per item. Either way works for me, but in a category like this where margins are razor thin, don’t give my competitor a $30,000 a month subsidy so they can run nearly FREE listings at any outrageous volume they want to smother my listings. In fact in the subcategory Buy.com lists in there are only 2179 active listings so their 787 listing represent about 36% of the offerings. It looks a lot like an overwhelmingly disproportionate share of the market for a single seller to have. What about the “Finding Experience” when buyers only have one major seller taking up so much of the category?
EBay, I implore you, make the terms of your “Secret Back Room Deal” with Buy.com public. Rebalance the playing field so Buy.com does not keep sucking business away from 99.9% FB sellers like myself because of their unfair advantage. This is not the type of “Reward” a long time Top Seller like myself deserves.
Thanks,
Doctor-Deals
http://stores.ebay.com/Doctor-Deals-USB-Hard-Drives-Plus
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Posted on May 9, 2008. Filed under: eBay, eBayInkBlog | Tags: Buy.com, eBay, eBayInkBlog, online auction, Usher Lieberman, value and selection, Walmart |
Quote from Usher Lieberman as posted on eBayInkBlog.com:
“eBay is aggressively using price as a lever to improve the value and selection on eBay.com. Consistent with our goals, we have entered into a partnership with Buy.com to bring their new-in-season merchandise onto eBay.com. We expect to learn a great deal from this partnership and we will build upon the results.”
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Interesting. eBay is aggressively using price as a lever? Okay, let’s put that to the test. I went to the Buy eBay store and looked around. I decided to do a price comparison on some items. In looking at Buy’s feedback, I noticed that there were several items that Buy was selling but then had to refund because they didn’t actually have the item in stock. So I decided to choose 3 items from the first feedback page where positive feedback was left for Buy. That way, I could safely assume that Buy was able to deliver these items and thus I could compare three items from Buy’s inventory to other competitors who state that the item is currently in stock. Okay, enough of how I chose the items to compare. Let’s see how great of a deal Buy eBay customers received:
First item:
eBay auction number 170214529031
Description: Sharp EL219RII Calculator w/ Tax Keys
Buy’s price on eBay – $47.99 + $0 shipping = $47.99
(Competitor) Keenzo.com – $37.97 + $8.95 shipping = $46.92
Second item:
eBay auction number 170215967523
Description: Navigon GPS Protective Hard Shell Case
Buy’s price on eBay – $19.24 + $4.49 shipping = $23.73
(Competitor) Amazon’s price – $19.99 + $0 shipping = $19.99
Third item:
eBay auction number 150242840961
Buy’s price on eBay – $21.99 + $4.40 shipping = $26.39
(Competitor) TigerDirect.com price $22.99 + $3.99 shipping = $26.98
I find the information rather interesting. Now, I am sure that I could have found these items significantly cheaper from other competitors but I wanted to stick with well-known internet mail-order companies who have a good reputation.
Value and Selection. Interesting choice of words by Lieberman. When I typed those words into my search engine, do you know what came up? What came up first for me was an article about Walmart dated April 2008 titled “Two Neighborhood Markets Bring Value and Selection to the Valley”. I guess Meg Whitman was correct when she said that the customers found in the aisles of Walmart are the typical eBay buyer; eBay stockholders and eBay management are not likely to be purchasing on eBay according to Meg. I have to wonder if she was right. But, unfortunately, I can’t validate her supposition because I really don’t know much about the Walmart customer; it has been more than 8 years since I have been through the front doors of a Walmart.
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