eBay's Disruptive Innovations Come Full Circle

Sellers warned him. Don't open Pandora's Box! But did eBay's (EBAY) John Donahoe listen? No, he ignored the combined voices of thousands of sellers. Now one of his disruptive innovations has come full circle and sellers are fighting back – in the courtroom.

Yes it's true. Another buyer reported being sued by a seller over feedback this week.

You won't believe this, but I just got sued for $1,500 + court costs for leaving a negative . . . I called eBay, but they said it's his [the seller's] right and they're not willing to do anything about this.

But what the buyer didn't say is that he received exactly what he purchased, the item arrived in a timely manner, and shipping costs were stated and not unreasonable.

This buyer is representative of many buyers being sued by sellers for leaving negative feedback (often due to shipping) because John left sellers no other option when he removed the check & balance system that made eBay work – two way feedback.

I wonder if buyers expect Scotty to beam up their purchases for them. I think they must but even Scotty has beaming costs and so do sellers. Shipping rates have skyrocketed in the last 2 years and many buyers have no idea how much it costs to ship an item.

But I'm not convinced that buyers are entirely to blame. eBay has nothing conspicuously posted to let buyers know that 1) they can be sued over negative feedback 2) their payment may be held by Paypal for 21 to 180 days for no reason and 3) sellers will not ship until Paypal releases their funds.

It's too bad John removed two way feedback. That's why so many sellers' are suing - it's easier to get a court order to remove negative feedback (and DSRs) then deal with eBay's feedback removal system because judges look at facts – not buyer satisfaction.

The following text messages began appearing in sellers' listings directly underneath the item cost a few weeks ago. This is sure to create more negative feedback.

"Deal alert: Less than $10 per item, including shipping."

"Deal alert: Less than $20 per item, including shipping."

"Shopping hint: Make an offer and get it for less."

Do two of these messages indicate free shipping? eBay says "no" but a buyer of mine thought they did and told me that she was calling the BBB because she thinks the deal alerts are deceptive. I agree.

What do I want for Xmas? An EASY button so I can delete disruptive innovations.

Happy Holidays

Disclosure: Dinah Balk is a long time eBay seller. No stock position.

Comments

[User 153301:]

Its called Karma.

2008 Dec 12 06:24 AM

[leapingcat:]

Please don't call Ebay's changes disruptive innovation, they are nothing of the sort although I will admit they are disruptive! Disruptive innovation occurs when either a new technology supercedes an older one, such as digital cameras replacing film ones, or when advances in technology make features formerly available only to the top end of the market available to cheaper products, an example is air conditioning in cars, especially in Europe.
The only disruptive innovation to the online auction auction industry has come from sites such as Ebid.net. By abolishing listing fees and greatly reducing final fees they have made it possible for small sellers to adopt strategies that would be non-viable with Ebay's fee structure, and grow steadily and organically. It is possible that as they grow Ebay will be forced to follow suit; now there's an interesting prospect.

2008 Dec 12 08:33 AM

[NYM Arts:]

Hi Dinah,
Wrap you up in Christmas paper and put a Bow on you 'cause you're the BEST Gift Santa could Ever Bring :o)
And a Happy and Prosperous New Year to All ! ! ! ! !

2008 Dec 12 09:55 AM

[NYM Arts:]

Hi Dinah,
Wrap you up in Christmas paper and put a Bow on you 'cause you're the BEST Gift Santa could Ever Bring :o)
And a Happy and Prosperous New Year to All ! ! ! ! !

2008 Dec 12 09:56 AM

[Patricia013:]

Right on Dinah. Its amazing how much of Ebay has been destroyed this year. I just have to wonder if Donahoe is an Amazon plant! An easy way to kill off your competition! One sappy stupid amaturish "innovation" after another - its as though the whole site was being run by Keystone Kops. It would be funny if it weren't such a sad and unbusiness-like situation. Well, upstart sites are profitting from Donahoe's "innovations" and growing because of them and whether we like it or not we will get alternatives just like we have been wishing for in the last few years. What we sellers have to learn though is to get our BUYERS to join us on those other venues and I again say every seller needs to go over their list of past customers and write them and invite them to buy from them on other sites. We now need to focus our attention on the other venues and build them the way we built ebay. This time it will be different - there will be no monopoly to pull us around by the nose.

2008 Dec 12 12:03 PM

[Malkiel:]

Ebay can put a stop to this by threatening to delist sellers who file lawsuits. Just because the legal system lets them do it doesn't mean Ebay has to accept it within their rules. We're not talking about lawsuits over legitimate matters such as failure to deliver, we're talking about what is essentially a free-speech matter. Declaring in the seller's agreement that disputes over feedback must be handled within Ebay's procedures would be essentially forcing sellers to agree to a form of binding arbitration (albeit at this point, knowing Ebay, probably not a well-managed or conscientious one) which weakens their ability to get into court.

2008 Dec 12 12:09 PM

[Tom Goodbar:]

Dinah,

I have sold about 10,000 so far this week, and guess what......none of it was on eBay

Look at all the fees they are losing out on.

I sell back to some companies, have been using ioffer which is great, and I have NOT used PAYPAL for any of this money as well!!!

Take that JOHNNY DONAHOE!

I think we should all have a bet when Donahoe is gone, will he resign or will the board throw him out.

He needs to learn from the better CEOs on how to manage a company.

2008 Dec 12 12:29 PM

[Philip Cohen:]

Regardless of who pays the fees, or who is now abusing the (broken) feedback system, or eBay’s latest “restraint on competition” attempt: the mandating of the offering of PayPal by sellers, or their failed attempt in Australia to mandate the exclusive use of PayPal, etc, etc, etc, the fact is neither eBay nor its sellers can survive without the confidence of buyers, and the recent application, generally, of “hidden bidders”, particularly in conjunction with the absolutely anonymous alias (“Bidder N”) suffered by users in Australia, UK, Ireland and the Philippines, which serves no other purpose that to hide from view the shill bidding that is undoubtedly now running rampant, is not going to improve that confidence anytime in the near future.

Having said that, I think that most of us appreciate that the people currently in control of eBay are a bunch of unprincipled, disingenuous, (and possibly stupid)corporate snakes; it’s very difficult to keep track of such snakes as they slither through the undergrowth; and that “spinning” forked tongue doesn’t help any either!

A detailed criticism of the eBay “snake” at www.auctionbytes.com/f...

2008 Dec 12 01:55 PM

[EventHorizo...:]

Although most MBA's are not technologically astute, we keep hearing the technological advantages of "Disruptive Innovation" from master MBA John Donahoe.

Perhaps an explanation of "Disruptive Technology" from the technology side would be helpful.

www.pcmag.com/article2...
The Myth of Disruptive Technology
PC Magazine
17 August 2004
by John C. Dvorak

"One current favorite is the concept of disruptive technology, a coinage and concept put forth by Harvard Business School professor Clayton Christensen and explained in his book The Innovator's Dilemma."
...
"The concept of disruptive technology goes to the top of my list as the biggest crock of the new millennium."
...
"In the Harvard Business School alumni bulletin highlighting this nonsense, there is a list of supposedly disruptive technologies. Not one is disruptive."
...
"James Burke's marvelous PBS TV series Connections offers a better explanation for disruption. When there is true disruption, it comes from inventions, regulatory and social change, complementary technologies, coincidence, and demand."
...
"There is no such thing as a disruptive technology. There are inventions and new ideas, many of which fail while others succeed. That's it. This concept only services venture capitalists who need a new term for the PowerPoint show to sucker investors."
...
"The concept of disruptive technology is not the only daft idea floating around to be lapped up obediently by the business community. There are others. But the way these dingbat bromides go unchallenged makes you wonder whether anyone can think independently anymore."

2008 Dec 12 03:01 PM

[arlin:]

It would seem to me that the Powers That Be over at Ebay couldnt be happier.Just get rid of all these pesky sellers ASAP so we can deal with all the big business just aching to come our way;what could be better then our own systems to abuse sellers may actually help sellers abuse buyers,a dream come true.No?
As for the board of directors being upset with Donahue;I've heard nothing....remember ol'Meg is still enriched by this company and is on board with everything that has gone on,as far as I know.
I look foward to their next quarterly confrence dog and pony show.
It's a hoot.

2008 Dec 12 03:11 PM

[Long US stockS:]

Buyer bid,but withdrew admitting Mistake on buyer part- left a Nuetral rating on the seller with rating 100%. Ebay had refused /could not remove from their system- Saying- bla-bla-bla......

2008 Dec 12 03:20 PM

[DDUCK025:]

Well, Deals is working for me. I bought 4 different Deals of the Day and Sellers had sent to my door in less than 48 hours. i'm simply amazed again with eBay. Disruptive Change for Buying has worked. Sellers just need to suck it up that buyers control sellers. Customer is always right!

2008 Dec 12 03:34 PM

[Tom Goodbar:]

You are very much right. The customer is always right.

Wasn't the customer right when they trampled over the Wal-Mart employee during black Friday.

Or what about when a buyer shop lifts from a store....."nah, the customer is always right"

"Buyers control sellers"

Yeah, maybe in your dreams buddy boy.....

2008 Dec 12 05:09 PM

[Dan Buchanon:]

Dinah, What exactly is the disruptive innovation you reference? Opening Pandora's box? No where in your story do you name the disruptive innovation you claim has come full circle.

Please clarify. Or stop using mixed metaphors

2008 Dec 12 07:19 PM

[DDUCK025:]

So going off this Analogy, All your buyers you treat like thieves and vandals?

yes if I slip and fall in any store i can sue. So again buyers are right..... Cater to our needs!


On Dec 12 05:09 PM Tom Goodbar wrote:

> You are very much right. The customer is always right.
>
> Wasn't the customer right when they trampled over the Wal-Mart employee
> during black Friday.
>
> Or what about when a buyer shop lifts from a store....."nah, the
> customer is always right"
>
> "Buyers control sellers"
>
> Yeah, maybe in your dreams buddy boy.....

2008 Dec 12 07:54 PM

[rctman:]

I'm hearing several sellers that Paypal limited are bidding up the bread and butter of Ebay,,,,the Nintendo WII. I don't know if it is run it up, win and don't pay or if just run it up for the other buyers. Anyone else getting this information ? You should review bidding history !!!! Make sure you are not shilled.

2008 Dec 12 08:58 PM

[Et tu, Brute!:]

Dan Buchannon,

It helps to catch up. Read several months past commentaries and responding posts. If that's too much trouble -- doing your own research -- then maybe best not to display the lack thereof.

Explanations abound and are there for the sourcing!!! And not just Seeking Alpha. There's Auctionbytes, RAndy Smythe, PowerSellersUnite...

Go for it!!! Knock yourself out!!!

2008 Dec 12 11:00 PM

[NYM Arts:]

DDUCK025 wins a TRIP TO THE LABOR CAMP.
Where you will be Introduced to REAL WORK.
And worked until you drop.

2008 Dec 13 02:14 AM

[fairytrixy:]

Keep up this very important writing Dinah!
In hopes that it will help to bring change.
Maybe I am lazy but I do not want to start all over again somewhere else. I just paid over 500.00 in fees for the last two months. I am pulling in around 1300-2100 every month. and it is growing slowly. i just want ebay to treat me like I am a customer paying them, and to stay out of the transactions, since I have had 1 neg feedback in th 4 years I am doing this.
There must be a way to get that CEO out and away from what sellers have struggled to build. It will never be perfect.
Now if the big big digital camera selling, type sellers will please step aside, maybe we need ebay new- and the an ebay vintage to be fair.
let us organize!
Revolutions can work!

2008 Dec 13 06:52 AM

[User 318768:]

You all sound like such whiny children. Buyers were leaving eBay in droves before these changes were made. You have no idea how many buyers were leaving. Buyers are the lifeblood of the sellers. These changes were designed to retain buyers. Where else does a buyer go where they can receive a negative feedback? If you go to WalMart, do you receive a negative as you walk out the door because you messed up a display? The biggest reason buyers were leaving was because of negative feedback, even more than fraud or account security issues. Some changes HAD TO BE MADE or the buyers were all going to disappear. Quoting a few random incidents where the new system didn't work does not negate the entire system.

2008 Dec 13 09:18 AM

[Bob C:]

User 318768 asks:
"If you go to WalMart, do you receive a negative as you walk out the door because you messed up a display?"

The answer is no, but if you shoplift, there is a good chance you will be arrested!
Buyers on eBay can now, rather easily, 'cyber shoplift' from sellers, and these sellers, thanks to one way feedback, are unable to even warn others of the crooks.
eBay holds the gun AND the door for them!!

2008 Dec 13 10:16 AM

[Dinah Balk:]

Good morning everyone!

Sorry I haven't back to sooner. This morning I got all my work caught up so I'm spending the rest of the weekend working on dinahbalk.com. The site is in it's infancy, but a revolution has to start somewhere.

Give me ideas, suggestions, etc. etc. etc. because this is your site too! If you don't want to post your idea or suggestion here, use my contact form because it's private.

Have a great day & keep warm!

2008 Dec 13 10:45 AM

[NYM Arts:]

User 318768 Will sit next to DDUCK025 on the Way !

2008 Dec 13 02:16 PM

[rctman:]

Just finished reading Mehmet vs PayPal, for which a proposed scheduling order was entered 12/12. This lawsuit is very detailed and will win big. I wanted to pass on the most interesting part in case it helps someone.

Paypal's anti-fraud software generates false positives for fraud, It has filters in place that generates a false positive when funds are received, then transferred TOO QUICKLY to a third party bank. (#38) i.e. you get paid and immediately transfer the money to your account. This will generate the false positive, which in turn will probably limit your account.

This lawsuit is very credible and I have personal knowledge of most of the allegations. Case is 08-01961 ND of CA. You will need Pacer to pull up the docket. Anyone screwed by Paypal will love reading it as it is very detailed and precise on how we all know Paypal operates.

Anyway.....I knew of the false positives, but not the immediate transfer filter. This fits with the seizures I am aware of. Wait a while if you can!!!

2008 Dec 13 03:56 PM

[Dinah Balk:]

rctman -

THANK YOU THANK YOU THANK YOU

2008 Dec 13 05:12 PM

[Aheadsup:]

First, you can't fairly compare an online transaction with a physical transaction at a store. It is a faceless deal versus a face to face deal. There is unlikely any shipping involved and payment is made in front of your face. The only thing you could use the "customer is always right" slogan for is when they raise a stink. That is what the customer is alway right slogan was built around. It's certainly not based on allowing them to steal from you with no reprocussions...or to buy an item, but not pay. Compare things fairly...the two systems are very different. The reason for feedback that works both ways is simple; it gives the heads up to the next person who is going to deal with this faceless individual (buyer or seller). In a physical store there is little mystery as to what you are buying or receiving and who you will be dealing with. The payment process is also very straight forward and layed out to limit or eliminate fraud. So, if you want to compare ebay then you have to compare them to other on-line selling/buying markets....and they really don't fare that well. Higher rates, extremely poor customer service and protection, terrible onsided feedback system...a DSR system that is completely whacked out and could only make sense when you suspend common sense. Free shipping...hmm, can you tell me which shipper will give me that so I can pass the saving legitimately on to the customer? The highest fees in the industry...bar-none! You have list fees, upgrade fees, Final value fees, papal fees...and then for the non-US seller they burn you some more when you transfer your money from paypal to your bank. I could go on and on about e-bay's inadequacies...but then I'd just be a "whiner." I think the biggest whiners are the ones who continue to sell and buy on ebay and then take their frustration out on us people who sell happily elsewhere. We've made the sacrafice you're afraid to make. We've taken the step to bring competition into the picture. You will benefit from our work. So, though we don't expect any thank-you, we would at least ask that we are not belittled for our attempts to make the online experience a better one for all. Try out some of the new sites...they're working better every day. I miss the old ebay...the current one is not viable and likely will only go more in that direction. Choose now, on your own terms, to leave that Money Grubbing site.

2008 Dec 13 06:37 PM

[TJ Schoenlein:]

Hey folks, lets keep in mind a key point here. Some sellers were blackmailing many buyers who had fair complaint issues.
As a long time buyer with zero negative feed backs, I think only once did I consider negative feed back for a seller. Checking the sellers feedback I saw a pattern of giving negatives to those buyers who use the system to tell others of poor service, etc.
Maybe this is the real issue here. High volume sellers can handle the percentage of negatives while the little buyer can get knocked dead.
Just my view point

2008 Dec 14 09:05 AM

[Aheadsup:]

Okay, TJ. You have further clarified my point. You say that you are a long-time buyer who has only had (or thought about) leaving negative feedback for one seller. So, in all those transactions it would be safe to say you received what you paid for and all was well. So, why the need take away the sellers right to his side of the transaction experience? Obviously most people are good. I like to give people credit enough for their intelliegence to interpret the feedback for any given transaction. It's usually very clear who is the problem (buyer or seller) in any particular case. The long-term history plays a big role in that decision. The frequency of negative feedback and the attitude displayed the words of that feedback all play a role in you knowing who was in the wrong...if anyone. The point is; there is an imbalance in e-bay's feedback system which is severly slanted towards the buyer. That, the DSR, Forced Paypal, and Best Match would be the reason for the large exodus of 100% sellers who don't want to deal with the B.S. Ebay has not made itself a better, or safer place to do business...nor do they care to....they just would like to portray that image to investors and media alike. Ebay is struggling (hiding it with spin-doctors) but the truth will come out and it may come as a surprise to some...but not to those in the know.

2008 Dec 14 03:17 PM

[Aheadsup:]

RE: TJ
So, instead of painting everyone with the same brush, ebay should deal with that particular seller. Also, TJ, buyers also blackmail sellers by threatening negative feedback if they don't give a better price or free shipping or some other benefit not advertised at the time of sale. This is because they know the seller cannot say anything in retaliation. Now, that is where the unfairness is.

There are even cases where the seller buys an item and has no intention of paying, they just want to remove the competition for a similar/same item they are selling.

There are numerous scams both ways. The feedback is your only way to determine who to buy or sell with. If a buyer is not rated properly (always must receive positive) then it certainly opens the door for abuse by certain unscrupulous buyers. It works both ways, so feedback should also be that way.

2008 Dec 14 03:27 PM

[Rawdeal:]

Ive been a seller on Ebay since June 99 - With the changes,Selling
has become very risky. It's all one sided now. There's no way to tell which buyers are trustworthy (you can get hurt very badly if you deal with the wrong person). Sellers are at risk of losing Merchandise, Payment , Reputation /DSR and their Ability to Sell on ebay. I look for a lot more lawsuits to happen over Feedback and DSR ratings- I wonder when we'll see the first court order to remove or reverse a bad DSR . I'm not quitting but Im keeping my listing dollars in my wallet till the playing field is fair and balanced again.

2008 Dec 14 04:42 PM

[50/50:]

When I joined Ebay 10 years ago visiting their website was like going to a garage sale with many great deals to be found from sellers just cleaning out their closets or attics. Now it is mostly professional sellers and great deals are few and far between with most of the items being sold costing more, even before adding S&H, than you would pay at your local mall. The professional, fulltime sellers now so far outnumber the individual, 4 items per year sellers, that offer the really great bargins, that it has become extremely time consuming to find anyone except a professional, fulltime seller! I never shopped Ebay because I wanted to pay retail or higher and that is about all Ebay seems to have to offer anymore. They even seem to be trying to get rid of actual auctions and make everything "Buy It Now". In other words, just another retail outlet! Needless to say I buy there less and less.
As for feedback, human nature being what it is, it was doomed from the start and has never and will never work! Buyers and sellers are equally to blame as they are both human and therefore both abuse the system. I found it amazing how many sellers actually posted on their auction pages that if the buyer left negative feedback they would automatically receive negative feedback regardless of whether it was justified or not! This was strictly a way of keeping deserved negative feedback down making their numbers look better. I believe Ebay even mentioned this as one of the reasons for removing the sellers right to leave it but as I said, 1 way, 2 way, any way, feedback is not a system that will ever work! Sellers like to claim the numbers are a reliable indication of how safe it is to do business with a particular seller. Experience says otherwise. Over the years I have been ripped off of several thousand dollars and every one of them was by a seller with excellant feedback numbers. The numbers are just as worthless as the feedback system that creates them!
Ebay's new policies are apparently losing them a lot of professional sellers which is fine with me as there are way too many of them and they just muddy the water but some of their policies are making it harder for me to find value so they are slowly losing me as a customer and I doubt that I am the only one. Let's face it, about all Ebay seems to have accomplished with their new policies is to piss everybody off.

2008 Dec 14 05:59 PM

[User 320205:]

More novice crap from ebay. The ebay execs need bigger swimming pools in their backyards so they've become marketing b@stards. Soon they'll be spelling 'deals' as 'Dealz' etc. increasingly becoming mickey mouse and more corny then ever. Ebay used to be a sincere place. Now they're marketing b@stards annoying long-time users and everyone else. Ebay execs sit around smoking their bubble gum cigars thinking 'hmm, what can we re-invent next?" Idiots.

2008 Dec 15 06:29 PM

[Robert Corr...:]

The main reason ebay's stocks are going to waste is the collective abuse of ebay user's by ebay. There is a great study by Bilderberg freely available at the internet archive, which everyone should read:

www.archive.org/detail...

ebay has abused millions (of sellers) and, even if they wanted to, they could do nothing to make amends or get them back. ioffer.com is growing fast, and is the raison d'etre for many former ebay sellers. The key to their success is that they treat people like human beings, and stay out of the dealings between buyers and sellers.

Paypal is a waste of skin. They, too treat users like disposable diapers.
Paypal will go down, just as fast as ebay. The global launch of google checkout for sellers (currently available to UK & USA only) will fully replace Paypal.

Google checkout has not gone global yet, because google is studying Paypal, and all its shortcomings.

The day ebay and Paypal go belly-up, I will donate a thousand dollars to the red cross charity. When they attempt to thank me, I will say: "Don't thank me. Thank ebay and paypal, and I am thankful they are gone!"

Bob

2008 Dec 18 04:21 PM

[o.c.d.colle...:]

well well, ebay has now sent o.c.d.collectibles to sit with the duck and user on the sidelines. Looks like the gulag is still alive and kicking on SC! There's nothing like a little comment suppression to get your day going!

2008 Dec 23 10:29 PM

[o.c.d.colle...:]

Auction Wally spotted another auction site that looks quite nice! Take a look!
www.examiner.com/x-312...~y2008m12d23-Do-eBay-a...

2008 Dec 23 10:30 PM

[User 329153:]

I actually laughed. I feel bad anyone is getting sued, but odds are they deserved it. Good honest buyers I doubt will ever wind up sued. Ebay went and took away fair feedback and what do you get sellers taking even stronger course of action. I say GO SELLERS! Take back your business.

I barely list there any more I have sold more on the site that I moved onward and upward to then I had in a while on eBay anyway and don't have to pay just to simply list, can accept any form of payment I wish to, and seller and buyer both can leave whatever feedback is appropriate for the transaction.

eBa* got to where it stressed me out so bad I would get stomach aches and headaches, now I go there once in a blue moon and auction something and don't let the site get to me, instead sell elsewhere for 99% of my stuff and have fun doing it.

Oh well eB*y I think is just going to finish putting those nails in the coffin this year.

2008 Dec 31 10:51 PM