eBay's Death by a Thousand Cuts

The impending death of eBay (EBAY) as the king of all marketplaces has been rumored for years. Every time management makes a change, raises fees or adds sponsored links, sellers say they will walk.

I've been following eBay since 1999 and I've seen and heard it all. Still eBay continues to be the 800 lb. gorilla of e-commerce. So it didn't surprise me when eBay sellers were once again on the warpath. Granted, this time the unrest seems less about fees and more about the changes to feedback; the perception is that eBay is taking away the ability for sellers to protect their business. In fact, during a conference call Tuesday between PeSA members and eBay management, I did not hear one question concerning fees; instead I heard about DSRs and Feedback.

Sellers are upset for many reasons, but in my view, many of them are concerned that they are losing control of their businesses. I believe if sales were great, they certainly wouldn't be complaining. (Amazon (AMZN) exerts much more control over their sellers, but they don’t complain as much because they are selling a lot of products.) Profitable sales are hard to come by on eBay and sellers are fighting very hard to maintain control of their business. The feedback issue is just a symptom of the feeling of helplessness. By not allowing a seller to leave a negative rating for a buyer, sellers believe the buyers will hold them hostage. This may not mean anything to those outside of the eBay ecosystem, but to eBay sellers, Feedback is their reputation and you don't mess with their reputation without a fight.

So, once again, sellers are upset and threatening to strike. I've never felt that a seller strike would be very beneficial; especially a one-week strike. The one difference I see with the seller unrest is that it's not just limited to one segment of sellers. In August of 2006, eBay raised fees on Store sellers but left Auction sellers alone. Earlier fee increases have affected one group more than another, but this time eBay has messed with Feedback, the most sacred aspect of eBay, and it affects every seller.

So what does all of this have to do with “Death by a Thousand Cuts?" February of 2008 is much different than August of 2006. In 2006 the options for eBay sellers were limited to Amazon and a few small upstarts. Amazon was just starting to expand their categories and open them up to 3P sellers, so there were not very many places to go. Today is much different; Amazon has expanded their 3P offerings, adding WebStore and FBA in addition to opening up more categories. Those upstart companies, that were around in 2006, have grown steadily and are much more viable this time around and paid search isn't so scary to sellers any more. Heck, they can even buy paid search ads on eBay that gives them more exposure than eBay store listings.

I came across a great article at Money.CNN.com entitled EBay rivals circle vulnerable auctions kingpin about the many options available to eBay sellers today. What was interesting were the numbers and trends these sites are seeing. Many of these sites saw an increase in registrations around the time of the eBay announcements. Sure, most of these sites are not seeing huge numbers in real terms, but the combination of the number of available sites and the measurable increases in registrations for each, begins to add up. Blood is in the water and each of these sites is stepping up their efforts to reach out to the unhappy eBay seller. “Death by a thousand cuts” just means that not any one cut is fatal. In fact it may take a thousand cuts to finish off the victim and all the while the victim doesn't feel they are in danger, until it is too late.

Lets start to counts the cuts: (Most data is from the article)

• “OnlineAuction.com, based in Grants Pass, Ore., reports that roughly 7,500 new sellers have opened accounts since eBay announced its new policies last week. That's a 15% jump in the site's user base, within a matter of days.”
• “Another contender, eCrater, has registered 1,400 new sellers within the last few days. That's more than double the site's average weekly total.”
• “Another upstart attracting attention from fleeing eBayers, San Francisco's iOffer, is built around a focus on friendly engagement between buyers and sellers. Sellers can transfer their eBay feedback scores to iOffer. . . iOffer has accumulated 75,000 sellers and nearly 1 million total users since its 2002 launch.”
• Another auction site, Chicago-based uBid, targets bulk sellers liquidating excess inventory. Its 7,000 participants include Sony (SNE), Motorola (MOT) (Fortune 500) and Dell (DELL) (Fortune 500). All sellers submit to a 10-point financial exam to ensure they're qualified to do business on the site: "That's part of our stringent anti-fraud stance," said uBid CEO Jeff Hoffman.”
• “… the auction site Bidville, which uBid purchased in 2006, does focus on what Hoffman calls "consumer-to-consumer" sales - the market eBay now dominates. More than 350,000 sellers are registered on Bidville, but 25,000 active accounts provide most of the site's 1 million listings, Hoffman said. “
• “Following eBay's announcement last week, the Overstock (OSTK) team worked through the weekend to design a new strategy highlighting its lesser-known auctions space, said Overstock CEO Patrick Byrne. The result? Overstock, in Salt Lake City, will redesign the header on its homepage to direct more traffic to its auctions tab. It plans to accelerate a software rollout that will beef up its auctions community message boards - and it's laying plans to produce 15-second Internet commercials to get the word out. "We think the time is right to position ourselves in this category," Byrne said. “Even Amazon has noticed an uptick in new seller accounts in the last week. Best known in its early days as an online bookstore, Amazon (AMZN, Fortune 500) expanded into consumer electronics and other categories, and in 2000 began allowing third-party sellers to list their wares alongside Amazon's offerings. All products are offered at a fixed price.Today, 26% of all items sold on Amazon come from its 1.3 million third-party sellers, who range from mom-and-pop vendors to Target Corp (TGT) (Fortune 500).”
• And the cuts go on: Yahoo Stores, Independant WebStore platforms, eBid.net, Play.com, Etsy.com, Google (GOOG) Product Search, Google and Yahoo (YHOO) paid search and BuyBack sites are going after consumers who may become casual sellers.

Not one of these cuts will be fatal, but when you add them up they are beginning to drain the lifeblood of eBay, the seller.

I'm not predicting the imminent demise of eBay, but if they don't do something quickly to stop the bleeding, they may find themselves as just another marketplace and my guess is that this 800 lb. gorilla is going to weight a lot less.

Disclosure: none

Comments

[Burlcouch]

I sell on eBay & Amazon, Amazon's commission is quite high to go along with their free listing. Also. eBay's Kijiji Classified Site, I noticed recently paid ads are starting to appear at the bottom of thos classified ads. All we sellers want are sales, cost of selling is secondary. What hurt sales the most, the Priority Mail increase.

[Fruity]

That 800 pound gorilla is more like the Borg. They just want to give sellers something to chew on so they dont tear the place apart with Best Match. Best Match is nothing but ebays shopping list. You buy what I want when I tell you. Read between the lines of the announcement. Best Match will just not show you if ebay decides. They've already been doing it on Express & that's running Best Match and they're already doing it on the search playground. Pretty soon you wont have the regular old search to compare it to and then you'll never know. Put the good stuff off of ebay, load up with what ebay wants and what apparently sells; dollar store crap, ebooks and anything remotely associated with a freak show. Cuz that's what drives that traffic so effectively to ebay

[Corala]

Fruity
You hit the nail on the head. Its sad what is heppening to ebay. It once was a great place to sell anything and buy on.
Those days are long gone and its becoming impossible to believe anything ebay says anymore.

[look at the other aspects]

There are other reasons to use ebay. Ever had your account hijacked? I did. I got immediate online live help, they were able to take action, credit my account after fees had been charged for the bogus listings, and eliminate the problem. This hacker was good too: he accessed my personal email account as well and hijacked that too, so I could not change my ebay info on my own! Kudos to ebay's security and their live help. Do the other auction sites offer this level of live help, immediately? better check it out. Not a cut here, but a bit of armour that ebay has going for it.

[Tony P.]

What 'look at the other aspects' stated is, for the most part, true. Prolly 99% of the time when I've had a truly serious issue, and could actually email a real person *on this continent*, my problem was solved. If the solution was not immediate, I received regular emails. I'm NOT talking about Live Help or the regular CS email.

However, the people at the top of the ebay food-chain are drastically removed from this sort of low-level interaction. Their focus is on the Aggregate. They basically represent the Opposite of that old adage:

They can't see the Trees, for the Forest. They are custodians of the forest and that is their only concern. The death of a tree, or two/three/thousands, is not their focus. Now, we can scream at them that the death of a tree is due to disease that will grow and consume us all, but their experience/education tells them different.

Therein lies the problem - the *disconnect* that they have with their true customers, the Sellers. The ebay-elite are not sellers; they are not business people in the sense of an ebay seller. In light of their past actions in regards to any form of commerce, they barely qualify as sensible Business People.

Take a week sometime and look at the acquisitions they have made. Butterfields & Butterfields, Kruse International, Billpoint - all bought in 1999 for (various reported figures) $260M to $325 combined. All were sold for *undisclosed* amounts or abandoned. The year they sold the two auction operations, ebay reported $49M is non-revenue income. I'll leave that to the detectives to figure-out if that is all they got.

Oh, and what about Billpoint? A massive success! umm... no, that was the abandoned project. It actually beat Paypal to the market by 6 months, but ebay Tinkered and Fiddled for another year before releasing it. Then they bought Paypal and threw Billpoint into the trash. That was $100M of the original $260M-$325M expense - thrown away. Their actions with Skype are nothing new; they simply have worked their way up to the $Billion dollar range.

[Yawn]

tony you are pathetic. here you go on rambling off past purchases when overall ebay has grown from a start up to a 38 billion market cap company.....You name me one company who hasn't made mistakes or bad purchases in the tech land and I will go kiss Randy's fat ass. Exactly 0. Now go back to selling or join another venue.

As for Randy's commentary like always same ole same ole

[progman63]

What most people are ignoring about these changes is the fact that sellers DO have recourse from abusive buyers.

Buyer feedback is public to promote confidence in the purchasing process which is critical for eBay and their sellers to survive.

But sellers will also be able to submit reports to eBay CS or T&S on abusive buyers.

These reports are non-public.

The key to whether this new system will work is how seriously eBay takes these reports to protect sellers.

Face it, everyone gets negative feedbacks. But the it's important to differentiate whether they were from ignorant buyers (where there's not really anything you can do) or abusive buyers (where you need to report them).

I think eBay sellers will firstly have to give up on the Holy Grail of a 100% rating since this has always been unrealistic to begin with, secondly make good use of feedback comments when needed, but also take a "tough love" approach towards buyers who do not pay attention to auction terms. This is their business, and the customer is NOT always right.

Once scores 're-level' after the changes go in, people will learn what a Good score is and what a Bad score is - whether this is 100% or not.

There are plenty of misconceptions about the changes that are going to take place, and most people do not really understand them - or even read them.

I have concerns that eBay may not handle their commitment to these changes and sellers properly.

But I do believe that these changes will be a good thing for ALL sellers if implemented properly.

[REBEL]

Ebay DOES NOT have it's seller's best interests at heart when they continuously "game" the auction process to lure more buyers in, (and damn the sellers). I found evidence of a syndicate driving up prices in a whole category, (motorcycles). 95% of bidders use the same format in creating User IDs, (e.g. "a***b- the only ID changes from bidder to bidder are the letters- e.g. "a***b). Winning bids use to be "real" for buyers wanting realistic deals. I told Ebay of the problem, but nothing was done One more paper cut.
Now a bidder has stiffed me after he won an auction because he knows no real harm will happen to his Ebay account status. So Ebay accumulates one more paper cut. THANK THE AUTHOR OF THIS ARTICLE VERY MUCH FOR PUBLISHING THE WEB ADDRESSES OF ALTERNATE AUCTION SITES!

[Tony P.]

Past 'Bad' purchases and true growth are two seperate issues. So far, only one purchase by ebay could be termed, Good - Paypal. That is actually a Stellar purchase, the only drawback is that ebay waited too long to do the purchase. Paypal could have been had for $100M or so, early in their life - even at their IPO, total control could have been had for $140M.

Six months later, after Paypal business and stock was soaring, ebay decided the time had come. Besides, they just couldn't get the ebay buyers to accept Billpoint and the sellers certainly didn't accept it (no pun intended... well, maybe). That's when ebay made their greatest move to date, paying $1.5B for Paypal. Only TEN TIMES as much, if they hadn't drug their feet.

Just one more thing about those companies, Butterfields & Butterfields, Kruse International and Billpoint. They were all viable companies before ebay purchased them. By the time they were sold-off or abandoned, countless people had lost their jobs and/or their economic well-being, not to mention that the reputation of the two sold companies were damaged. But, who cares about them, right? Certainly not any yawning, insensitive person that comes across as a member of the self-imagined gentry.

Now, let's talk about ebay's phenomenal Growth. It is truly something, isn't IT? Absolutely, no doubt about IT, ebay is one spectacular example of growth. And it is all owed to the brilliant minds that so expertly guided IT for these last ten years. Yes?

No. The people made IT. Some people offered goods and other people bought those goods. It is that simple. The business thrived *in spite of* all the blunders made by the powers-that-be. The original concept, just like A-1 Sauce, was That Good.

If I were to open a whore house on the docks at Norfolk, it would be a spectacular success. I could take some of the credit, but I certainly couldn't pretend like I had invented sex. Pierre didn't invent eCommerce, but he did invent a method for it; Meg and Bill manipulated that Method, every-which-way, but they added very little that advanced the actual commerce. They did raise the fees every year, but those sailors... er, sellers are eager to "ply their wares".

[Randy Smythe]

Yawn, my Ass isn't fat!

[Adam Moro]

I'm going out on a limb here but nobody in eBay's space comes even close to having the same trust they have from the BUYERS. I mean honestly, how many of you have even bought something from iOffer or some of the other ones mentioned in the post?

[MonaLS]

eBay's time as the king of on-line auctions is at an end. I have shifted a lot of my buying to Etsy and have been very pleased with both the products and the sellers. I've also found myself buying more from Ruby Lane and have done a lot of browsing on eCrater. iOffer is just scary, it seems totally unregulated, fakes and knock-offs are everywhere.

[Sylvestra]

Ebay's clear intention is to rid itself of "small sellers" so they can concentrate more on sellers who bring in larger revenues in terms of final value fees. For that, I don't fault them. However, I do fault the process they are using to get rid of those "smaller sellers" and the hypocracy they are spouting while implementing that process. I also find the new CEO's disparaging comments about being embarrassed about eBay's appearance as a "flea market" to be a slap in the face of eBay's seller's in general. eBay began in e-commerce as just that: a giant flea market, one to which buyers and sellers flocked to enjoy the atmosphere, the "fun" sales, and the bargains. No other single entity has done more to provide opportunities for buyers to obtain things that were particularly hard to find where they lived, or for small sellers to "hawk their wares" in a national, even international, marketplace. Ebay's popularity was NOT built on the attractiveness of cheap, knock-off copies or mass-produced goods. It was built on the back of the small sellers who offered hard-to-find and one-of-a-kind things that buyers were actively seeking. Granted, eBay didn't maintain that "homey" atmosphere for very long, but it did so for long enough for sellers to establish their reputations and and for eBay to "hook" buyers, who inevitably ended up doing their want-list shopping on their "favorite site." Now eBay seems to be looking to get rid of the element that built it into the giant it is, while all the time spouting how weeding out "bad sellers" will be good for the buyers and how lowering listing fees (or eliminating them in the case of their deal with GM) is going to be so great for sellers, etc. Unfortunately, the slow bleeding of eBay is actually (in my experience) not the "bad sellers," but many of eBay's prestigious "small sellers" who have "just had enough of eBay's bashing" and whose primary buyers will actually follow them away from eBay to other sites. This bleeding of eBay might take awhile, but it will happen. And soon enough, eBay will be just another corporate site for overstock, dollar store junk, cheap knockoffs, and re-sellers. And buyers WILL look elsewhere for just what eBay is losing: the fun, the creative, the one-of-a-kind, the hard-to-find, the bargains, and the flea market.

[StBayou]

Yes - Ebay will, in time, dwindle into mediocrity and they deserve no less. Since going public they hired a bunch of young hot shots who had to come up with changes all the time in order to justify their jobs with little or no concern for the people who built Ebay - the sellers who actually pay Ebay salaries. Guess these young turks never heard the expression "if it ain't broke don't fix it." What a shame. They have ruined one of the greatest creations of my lifetime and I'm old.

[lilyjo]

ebay is already dead, it does not exist any longer... I do not even recognize the site any more...they still call it ebay but that's the biggest lie of all.

[feehike]

ebay stated in 2006 it wanted to get rid of the attic sellers go more upmarket to the Condo market. This was when they got rid of the Visibilty by default.
Then we had less visibility for the same fees.
With ebay refusing to let the buyers know they would have to search differently to find International items.

Over the last year there as been one change after another with numerous glitches.

Now we have ebay saying that the site looks like a fleamarket.

IMO it is ebays intention to rid itself of the small sellers.
They will then become a search engine directing buyers to Large Companies items. e.g General Motors, Sears, Walmart etc.

It was also remarked last year by ? that ebay would milk the small seller before getting shot of them.
The new fee hike disguised as a cut in fees will be guaranteed to milk the small sellers dry.

Then we had the DSR with ebay telling buyers 4 was a great score to leave a seller, then ebay tell the sellers 4.3 is not good enough, their items will be dumped at the bottom of searches. With all sellers paying the same fees, but some sellers having a lesser service. Add to this the best match with ebay telling the buyer what is best for them.

Power sellers will get a discount.

Only a small, very small percentage of the top power sellers may get a discount in fees.
The DSR will ensure that not to many sellers if any will recieve a discount.
IMO even the majority of Power Sellers will be classed as not big enough to compete / stay on the new ebay when the big companies are brought on board..

Then we have the better protection for power sellers. Power sellers will have paypal protection on all items buyers buy wether the buyer is verified or not.
Again the small seller is left out in the cold without the added protection.

Feedback not being able to leave a bad buyer a negative to warn other sellers of this bad buyer.
Small volume sellers will not be able to afford to take a hit from a scamming buyer unlike a big Company, small sellers will be be at the mercy of unscrupulous buyers if they wish to remain at the top of searches, get any chance of selling their items.
This feedback change will not affect Power Seller as they can have their solicitor issue a Stat Dec, or have their Account Manager intervene on their behalf.
Another little thing the small guys are not privy to.

After the Visibility change last year my sales took a nose dive, while checking my old sales to see why my sales had gone Poof I found I was experiencing Geographic sales. My sales were only going to certain parts of a Country at any given time. Throughout the year my sales have rotated to certain parts of the Country at given times on a regular monthly pattern.
Could this be down to some sellers items going onto very obscure servers?.

Will more and more sellers sales be affected. When the big companies come on board will there be room for the smaller sellers items on the servers?.

Sellers check your past and future sales for a Geographic location pattern.
There are a number of sellers I am aware of with a similar pattern.

Ebay state the changes have been made for a better buyer experience.
If that was the case why did they not rid the site of the bad sellers instead of taking their money pushing them to the bottom of searches.
Hypocritical to take money then do that to their listings IMO.

Get rid of the real Postage & Packaging gourgers £0.99 start price £60 postage. They could of dealt with them under the fee avoidance procedure.

Retalitory feedback ebay know who the sellers are that use that practice, what did they do tell buyer & seller to work towards a Mutual Withdrawn feedback.
Sellers ending up bribing buyers to remove Neg feedback???????

Well after the Visibilty change, then cottoning on to the Geographic Sales where I had to throw more money at ebay for relist after relist after relist fees I decided to stop giving ebay £600 in month in fees. I started taking some of my eggs out of ebays basket and putting them elsewhere.

One auction site I have started selling on is

www.ebid.net /

Here you can get a lifetime free listing for a reasonable price, they have a half price promotion at the moment that should not be missed.
Great Customer Service.
They are open to suggestions. Will implement all good suggestions. New category etc just ask.
Scammers are thrown off permanently.

I also intend to have my own website.

[disillusioned ebayer]

i opened an ebay store thinking i could make some extra money to help pay off bills... then found myself in even more debt because of the fee's involed with ebay and paypal. so i opened up another ebay account thinking that maybe just listing items without a store might be cheaper, and i could use those funds to pay off my ebay store account... and lo and behold... i ended up in even MORE debt. it blows my mind! those fee's are killers, especially on smaller priced items. i've pretty much been working for free. the traffic on ebay is the clencher for sellers-- but what is the use of selling if you can't make any profits? other sellers have gotten fed up with it and moved to other sites. fortunately, they've been kind enough to share some of those sites (those listed in the above article) and i'll be moving off ebay now.

[disillusioned ebayer]

yawn
why are you so nasty?

[OzFleamarketsellers]

Hi from Oz down under,
We first registered with eBay.com as family sellers many moons ago, our biggest sales were to our US buyers selling antiques and collectibles (weren‘t these type of sales the grass roots for eBay). Those were the days when the US dollar was as little as 50cents AU in value and worldwide selling for us was both competitive and profitable. Now the market has turned around and for sellers in the US you would probably have great success selling to us Aussies.
Ebay started the downward spiral for what is termed as hobby selling here in Oz, IMO when they discouraged payments from WUM cash payments (these as far as we were concerned quite safe and had many payments worldwide made to us). This Followed by the beginnings of purchasing other forms of payment options such as in Bidpay, Payingfast along with many others also previously mentioned. We saw the writing on the wall from the day eBay/PayPal was introduced and started to promote it as the be all end it all. End it all it did for us as Mum and Dad sellers we are not interested in signing up for third party merchant fees.
Ebay is obviously wanting to move on and it can be understood that they are more interested in the bigger scheme of things after all it is a big business and their prerogative/choice.
Having said this, it is also our prerogative/choice, we can vote with our feet and take our flea market business elsewhere, what better way than to promote the US sites that have started up as has been shown already here (a list stating worldwide site options would also be good here and I am sure that the Aussies will do a list of Worldwide Oz sites and post them here for US sellers/buyers as well.
We found this link on the Ebay Round Table Forum in Oz check out what will be the next eBay business venture into the global market as many believe we in Oz are the guinea pigs for ebays global positioning. Please promote and support the alternatives, together we can make a difference and what better way than to unite globally again and bring back the good old days even if it is without ebay.
Best Regards Oz Mum & Dad Flea market sellers.

[Henrietta]

The writing is on the wall, it has been there for a long time for those willing to look. eBay is not a good business partner because it doesn't give a damn for anything but short term lever pulling around quarterly report time.

eBay management is failing customer relations 101 because they do not see sellers as customers, their customers are market analysts, most of whom are as short sighted as eBay (easy to hoodwink).

All the talk about removing 'bad sellers' is making buyers very uneasy. When the trolls gather, literally salivating about teaching sellers a lesson, it is time for any seller with a dwindling bottom line to rethink their business plan.

The days of bunging an item up and seeing it sell in a mad bidding frenzy are over. GONE. Buyers are much more savvy now they know that no item is truly unique, wait a while and another will come along.

Sellers who want to remain in e-retail will have to learn SEO, branding and marketing. Customer service alone will not do it.

Promote and support the alternatives, with your buying and your selling.