eBay 'Boycott' Shows Lack of Trust Between Buyers and Sellers

| About: eBay Inc. (EBAY)

Some eBay (NASDAQ:EBAY) sellers are planning to boycott the auction site in protest of changes in its fees, search system and feedback system. I don't know wheter the posts on CNN.com are representative or not, but they make several things clear. eBay has a major trust problem with buyers and sellers. The negative viral demarketing has been and will continue to be devastating for eBay's stock, which is down sharply from last fall.

Investors and speculators should pay a lot of attention to what eBay's customers are saying, because they're offering more market intelligence than any stock analyst ever could or would. The most important themes of the comments are that ratings of buyers and sellers can't be trusted, and there are a lot of dishonest sellers out there gaming the system. There also are dishonest buyers, but the sellers are frequent users and know much more about how to game the system and are more likely to than most buyers. That's why I've never bought nor sold on eBay. Another important theme is that eBay's customer service, which I've never experienced, is as bad as Paypal's, which I have. Here are some questions for businesses trading on eBay and for investors:

1. If you don't trust or like the eBay system, what are your alternatives?

2. How can you check out trading partners on eBay if you don't trust the rankings?

3. Is it better to setup an online store independent of eBay and use pay-per-click advertising on Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO) and Microsoft (NASDAQ:MSFT) search?

4. If you're an eBay seller, how do you reassure potential buyers and protect yourself from the deadbeats?

5. Under eBay's new search algorithm, high-volume sellers' will be ranked ahead of the low-volume sellers. How can the low-volume sellers beat this system, and is the system fair? (High-volume customers get preferred treatment where ever you go.)

6. Does it pay to shop the auction sites for so called bargains, or would your time be better spent buying new and getting on with business? I've always bought new rather than mess with eBay much even though I"ve been a member for a long time and sometimes search eBay to check out prices.

7. As an investor, do you want to own a company with so many vocally unhappy customers?

8. Microsoft has thrived despite millions of unhappy customers. Can eBay?

9. Will the boycott work, given that similar efforts never have?

10. Will eBay have to change its operations?

11. If so, how long will it take to make the changes, and what might they do to the company's bottom line?

12. On a scale of 1 to 10, with 10 being very important, how important is this news to eBay?

Disclosure: none