How Does the Boycott Impact eBay?

In response to the big question, "Will a week long boycott have an impact on eBay (EBAY)?" I have decided to respond with this article.

I am very curious where eBay ranks when it comes to the number of times they have been boycotted, compared to other companies. It seems every year eBay is being boycotted. Unfortunately, these boycotts have never worked. Analysts have debated this and have determined the reason is because it's a week-long strike.

I have considered the reasons, and have determined that while an open-ended strike would have longer term effects, the main reason is that boycotts have been word of mouth, and without planning, strategy and a united front.

In an interview last week, I was asked "How can you tell if the boycott is working?" Thanks to sites such as Powersellersunite.com we can see hourly updates as to how many auctions are live. For the most part, eBay was hovering in the 15-16 million listing range the weekend prior to the boycott. As word spread of the boycott, people began an early boycott, and listings fell below 13 million.

On a conservative determination, we will call it 2 million auctions. eBay's lowest insertion fee is 20 cents. Based on that fee, eBay would have lost $400,000 just on listing fees alone. This does not include any extras that range in price for 15 cents for each addition photo, to double listing fees (which includes any extras used), bold lettering, borders around the listing, which adds $1 or $5 per listing (and again, if listed in two categories, that can be as much as $10) or any number of other extras. Just the minimal 20 cents and eBay is down $400,000.

But, let's take a more realistic look at the bottom line. Insertion fees are as high as $4.80 for the typical auction. Autos, and real-estate are different. So, let's take a more average $1.20 listing fee, which is for the $25-49.99 pricing. Based on that fee, we still have not hit the real numbers of eBay's losses. But, it is still quite astonishing! At $1.20 for a conservative estimate of 2 million auctions eBay is down, that translates to $2.4 MILLION dollars.

Again, these numbers do NOT reflect extras, that will certainly add an extra million or five. This number does not include the number of stores closed at $9.99 per month. Or those listing fees, Final Value Fees. Nor does this reflect the Final Value Fees of the auctions not listed. But, just the basics, what company is happy to lose a MINIMUM of 2.4 MILLION dollars a day?

Usher Lieberman, media spokesperson for eBay was quoted as saying that the boycott had little effect, because they jumped from about 12 million auctions to 16 million auctions by Wednesday.

True. But, what the spin does not show is at what cost? eBay had to do two promotions last week to get back to where they were before the word of mouth boycott efforts took effect. One of the promotions was to have a 20 cent listing day, which most items will end tomorrow. By doing this second promotion, eBay forfeits fees of up to $4.80 per listing. While most sellers take advantage of these promotions to list higher ticket items, not everyone is listing items over $500. Regardless, most items are definitely between $1.20 and $2.40 to list. My best guess is that eBay had to lose an average of $1.00-$2.20 to artificially inflate their numbers. By Usher's own words, that is about 4 million auctions, meaning it is realistic to conceive it cost eBay between 4.8 million dollars and $8.8 million dollars. Possibly more. But, a good number for ball-park figures.

eBay can spin all they want. These numbers are just fast and ugly rough estimates, and they are minimal. What happens when eBay sees the 20 cent listings (that helped sellers list items before the strike took effect) fall off the charts? eBay is already down to the 14 million mark. By today it is conceivable that eBay will be at or under 10 million listings. NOW we are talking real money lost. 1.2 times 6 million a day is painful.

Now, consider this. The boycott is simply because the community at large is opposed to the changes. Contrary to the spin, the majority of the eBay members are opposed to the announcements Donahoe is proposing. We DO agree things need to be shaken up. BUT, we do NOT agree that these changes are the answer. All Donahoe is doing is shifting the balance away from the sellers (leaving retaliatory feedback) to buyers who are already reportedly extorting sellers.

Consider that this boycott could be avoided if eBay would just listen to the community as a whole, and not just the top 200 US sellers.

eBay has been target of many boycotts before. But never has eBay been targeted BEFORE the incoming CEO has taken over.

What eBay, and Mr. Donahoe, have to realize is that while they look to the past, unorganized, unsuccessful scattered boycotters with no direction, no purpose, no unity, we are uniting, becoming stronger and are purpose driven. Thanks to the MySpace.com/boycottebay pages and the http://forums.delphiforums.com/boycottebay/start forum, we are able to organize ourselves, and grow stronger each day. According to stats within the control panels, that venue alone is showing message views in excess of 10,000 over the weekend. Numbers that exceed only the most popular and long term forums.

While Mr. Donahoe is not yet CEO, his leadership is angering many of the community, and far worse than outgoing Meg Whitman ever did. With a potential second boycott being planned, one has to wonder if Mr. Donahoe will slide by so easily, as being the reason eBay strikes twice within three to four months time. His already questioned incoming may lead investors to question his ability to turn things around.

Well, we see he is turning things around. But, I don't think that is the direction investors are hoping for.

Comments

[LBC]

When was it decided that eBay should be run as a charity? Whiny sellers: eBay has a fiduciary responsibility to its shareholders to squeeze you for as many dollars of profit as it possibly can. Populist "seller strike" uprisings may stir the souls of the weak and disenfranchised, but they almost alway result in zero actual change. If you decide to leave the site and sell elsewhere, someone will take your place. Good luck.

[Tony P.]

"...eBay has a fiduciary responsibility to its shareholders to squeeze you for as many dollars of profit as it possibly can."


Meg, is that you?

Seriously folks, such sentiment is precisely what sellers feel is ebay's Mission Statement. Seriously.

The 'whiny' sellers are not *pleading* for some superhero to come rescue them from the 'cold, callous monster named ebay'. No, it's not that, at all. Sellers understand Business and Profits.

With the combination of ebay's business ethics and the actual cost of doing business with them, that superhero already exists in many forms. Amazon is one.

Mainly, the sellers would like for the Financial World to understand: that ebay's ethics are deplorable; that sellers are capable of forming the most basic of intelligent thought; that said sellers have been aware of ebay's ethics for quite some time; that those same sellers have taken about as much as they can withstand, financially as well as the servile "squeeze" mentality.

The only reason that all of this Client Base (the seller) hostility has not forced ebay's hand, to date, is due to their 800-pound gorilla status. It shouldn't take a rocket scientist to figure that out. But, you can't count on that status to last forever, especially as other gorillas are being made daily. There's also another status-killer, but it doesn't make financial sense, so it may be difficult to understand.

A person will take only so much, before they scream, ENOUGH - IT just ain't worth IT! When a large enough segment does that, your Squeezing Gorilla will shed weight, quickly. Consider this a warning.

[bucketslogg]

Thank you for your well written, articulate commentary. One thing you missed the ball on though... Ebay is not listening to its power sellers either. In fact 58% of their top 200 sellers will now NOT qualify to be power sellers. As time goes by, the DSR ratings will pare those numbers down as well. The following is an transcript of an interview between Deutsche Securities and the Pres. & V.P. of the Internet Merchant Association that explains, in detail, all the changes, and how these changes are going impact the individual sellers, buyers, ebay and the marketplace as a whole.

imamerchant.org/blog/w...

Thank you.

[Amidwesternneighbor]

Sorry, but the author (and all these boycotting sellers) strikes me as just a stinkin' whiner! If you don't like eBay's fees, use another auction site...or another method entirely...to sell your stuff. It's *your* greed that is actually astonishing here. Listing fees aren't just some "tax for nothing" - there are incremental costs per additional listing, you know - storage capacity, additional processing power to search through a higher listing count. And so on. Why should only those whose transactions complete pay a fee? Those who list items that don't sell are also adding to costs. Make your listings compelling, you'll sell and do well. On the flip side...if you list poor-quality junk, don't do a good job with details and such on your listing, and don't serve potential customers well, it's your own fault you can't afford listing fees!! You're a whiner who wants to get rich selling junk!!

[bucketslogg]

Are people striking to increase their wealth... or just survive?

All I want to know is -What has happened to morality and social
responsibility? Are the rich so far removed from the average man that they feel an entitlement to lord over the "have-not's" and keep them in humble servitude? We have come a long way to go full circle.

Yes, there are Ebay millionaires, just as there are lotto winners...
few and far between. A more likely Ebayer is a single mother trying
to earn the school lunch money so she can afford some extra time with her kids, or the retiree with no or little pension, a young, hopeful couple trying to save for that ever elusive house, a disabled person, and many, many small business persons -the mom and pops... The people, the reasons, are as vast as America is diverse. One thing they will surely tell you is "It is not easy money."

Shame on those who brag they will capitalize on lower listings to
increase their take. Shame on those who do so quietly. Shame on
those who clamor to invest in a company that will heartlessly stomp out the cries of the very people who brought it to greatness -like so much noise. Lies and deception only thinly veiled... as if not worth the bother, really - packaged as a gift... and you'll take what you get and like it. And then we'll give you some more.

As I write this, politicians talk "big-talk" about universal health
care while Congress is slowly defunding Medicare and US children have the worst quality of life in the developed world.

I leave you with a quote from Bill Moyers:

"The reality of the anonymous, disquieting daily struggle of ordinary
people... searching for dignity and fairness against long odds in a
cruel market world."

"Everywhere you turn you'll find people who believe they have been
written out of the story. Everywhere you turn there's a sense of
insecurity grounded in a gnawing fear that freedom in America has come to mean the freedom of the rich to get richer even as millions of Americans are dumped from the Dream."

[Jimmosk]

Sorry, Timothy Church, but you're giving out one piece of pretty misleading information.

Every once in a while eBay has a "listing sale", where they dramatically reduce the cost to list an item for a day, and millions of new listing are posted. They expire, most of them a week later, and the site returns to its previous average, more or less.

On the Wednesday before the boycott started, eBay chose to have one of those sales (whether it was in anticipation of the boycott or not I don't know). So the only reason volume was at 15 million the weekend before the boycott was that there had been a large spike midweek before - which as always was followed by a sharp drop seven days later. That's what accounts for the bulk of the drop, not the boycott.

You can see what's going on very clearly at the <A HREF="www.medved.net/cgi-bin...;>chart here</A>. The 13th was Listing Sale Day; most of those listings expired on the 20th. The boycott began on the 18th.

(Here's hoping this commentbox accepts html)

[greta_speaks]

positive changes to the greedbay feedback system should have focused on eliminating personal comments; expand the 1-5 rating system (since that is already in effect) which includes ratings of both the buyer and seller; and qualifying buyers as they have sellers. with all their billions they could monitor issues that arise, not create a one sided power. holding payments 21 days and expecting shipment of goods is just outrageous, isn’t it obvious they want to weed out everyone except mega sellers? an alternative with the same following may not be evident-----yet (google, are you listening?). more options are out there that are at least worth a try. the boycott is turning into an exodus and at some point will have an impact that ebay will never recover from.

[gottago]

"Now, we have an open forum. Use it. Make your complaints in the open. Better yet, give your praise in the open"


This message from Pierre Omidyar in 1996 is still on the eBay Feedback Forum page.

Not for long presumably.

People who refer to whiny sellers who have had their freedom of speech removed are the same sort of ordinary thoughtless people who allow concentration camps to spring into existence without a murmur.
"eBay has a fiduciary responsibility to its shareholders to squeeze you" is just plain wrong and very silly. The only fiduciary duty which applies to a director of a company is to suppress his own interests and serve only the beneficiary, in this case the company as a whole.
Now that it has been brought up, you have to wonder whether the deliberate action which may result in the partial destruction of the company's true customer base of sellers - the people who actually bring the money to the table in the form of objects - is in fact a breach of fiduciary duty in itself. If his bonus scheme is tied to a formula that will actually benefit from the damage he is doing, then he might end up facing a claim for compensatory damages from aggrieved shareholders, sellers, company employees laid off as part of the cost cutting, and maybe even from buyers.
There are plenty more fish in the sea used to be true until they were overexploited....then that industry imploded spectacularly.

[VA]

powersellersunite.com/... shows clearly that the 'strike' doesn't work. Moreover, despite the claim made on Deutche Bank forum mentioned above, the actual number of listings is growing. Of course, to say for 100% we need to wait till 02/25th, when the bulk of the 'pre-strike' items expire, but mu feeling is: the number of auctions will grow, and all this 'deja-vu' strikes/exoduses/prote... will fade away. Here's why:
- one seller's strike will likely be perceived as an opportunity for savvier sellers
- making the decision eBay most probably run many different models on what will happen, and my feeling is they have much bigger and more sophisticated arsenal in their disposal than the powersellersunite.com and alike; I trust their ultimate goal is to attract as much business as possible to the site...
- ...and that's why they decided to abandon the "plain field" notion for selling on the platform; not all sellers are equal, why treat them like ones?
- I've seen lots and lots of buyers who got burnt by "97% positive feedback" sellers and vowed to "buy on eBay" never again; this has to be addressed, and that's what happening now
Anyways, the above 'analysis' has pretty serious (if not disqualifying) holes in it - as mentioned by couple of commentators. Let's wait a couple of more days - things should get clearer.

[egtyree]

I think that there are too many factors involved to be able to determine the exact impact the boycott will have on Ebay sales. One thing is for sure, though, and that is that Ebay has already lost quite a few sellers because of their changes and they will undoubtedly lose alot more in the future. To classify sellers as "whiners" as a previous poster did, is ridiculous. I understand that price increases in every business happen and in many cases are necessary. The free gallery, and lower insertion fees that Ebay has recently implemented will offset these to some degree, so I don't really have a problem with that change, as many do.

I do have a problem that my right to leave feedback will be removed and buyers will be able to leave negative feedbacks so much easier for the sellers. I have always tried to offer great customer service over the years, but there will always be customers who are impossible to please and although I offer full refunds, if not satisfied, a customer can still post a negative for me for any reason they choose and affect my fb score which I have worked my tail off over the years to keep at a high score. Does that make me a whiner? I don't think so. There are bad buyers out there just like bad sellers and there is going to be less protection for us once the feedback system changes. Am I whining? I don't think so, just extremely frustrated because I, like thousands of other sellers, know that it is unfair.

[gottago]

User 155167 says "...and that's why they decided to abandon the "plain field" notion for selling on the platform; not all sellers are equal, why treat them like ones?"

re concentration camps in my previous post, I rest my case.

[User 155229]

Impact of the boycott...
I am a "powerseller"... 100% feedback-
Ebay taking the feedback rights away from Sellers-ludicrous
Let's let the rate of ebay scams rise
Let's just give our items away
It's not the fees - it is the fairness and protection.
10 year member thousands of sales- it is over - sorry we're closed
Joined the boycott and went the step further!

[User 155240]

"eBay has a fiduciary responsibility to its shareholders to squeeze you for as many dollars of profit as it possibly can"

Ebay as any company does, has a fiduciary responsibility to conduct buesiness in a manner that hincreases profits. Since when did that translate into showing a total lack of regard or respect for your customers? How does that show 'fiduciary responsibility'?

When did increasing profits stop being acheived by increasing the number of customers you have or providing them with improved and/or additional product that helps them be more profitable in exchange for fair rate increases?


Wouldn't increasing your bottom line by helping your customers sell more and make more money be another way to go?

Wouldn't making your customers feel that they were valued and being treated fairly by the company they are spending their money with, create loyalty? Doesn't that translate into profits?

When did the methods to grow a company become sucking the life out of your customers, rather than actually growing and improving your business by serving your customers needs?

The words 'just business' is not a synonym for 'no scruples'.

[previse]

In the long run, the change is good for everybody. I’ve been shafted by so called PowerSellers more than once and felt helpless to ding the seller because of the certainty that I’d be dinged in return. As a result most of my buying has migrated to Amazon. EBay will be a busier, better place to do business if sellers feel compelled to describe merchandise accurately, and become more responsive to problems and buyers can count on ratings to mean something.

[User 155240]

Previse-I'm assuming you only buy and don't sell. I would guess that your opinion would be different if you were.

I've been 'dinged' as you call it by buyers that don't pay, that damage merchandise then return it, exchange parts of merchandise then say it's incomplete. You see-just paying isn't the only part of a buyers responsibility.

I am an honest seller. There are a helluva lot of honest sellers & buyers and there are dishonest of both, as well. But now sellers will not know who those 'other' buyers are-it's BUYER feedback that will mean nothing. Honest buyers and dishonest buyers are all lumped together now.

That's why I doubt that I will ever sell on ebay again-being and honest and fair seller won't be enough.

[gottago]

eBay will lose because they have something to lose...sellers. The age old idea of proximity to market is no longer an issue.

The sellers have nothing to lose....wherever the sellers go, the buyers will follow....because they have to if they want the item.

Since the opposition is actually cheaper, easier to deal with, and by comparison is actively making sellers welcome as opposed to reviled and discriminated against, sellers actually have something to gain.

The current growth spurt in the oppositions listings is of far more interest than eBay's 'special offer' manipulated defence against falling listings. It represents the beginning of a diaspora of migrating sellers that is unlikely to reverse.

As my name says......gottago........ is my 'fiduciary duty' to my children to escape repression....and it is turning out to be almost as much FUN as eBay used to be 10 years ago.

Remember fun?

[F. J. Taylor]

I have to agree with the comments about corporate greed and eBay. I was both a buyer and seller for some time, and eBay went from being one of the best companies on the Net to one of the worst in terms of every criterion imaginable - privacy, customer service and responsiveness, ease of use, total lack of any real policing of their sellers and buyers (even after they were informed multiple times of violators), etc. They went to being corporate greed-heads (like some of the posters here).

I always vote with my wallet. After numerous attempts to get them to re-think their strategy, and getting no response or a contemptuous rebuff, I left. I told them why I was leaving, and why I would never be back. Since then, I have talked to everyone I know and told them not to use eBay. Quite a few more apparently are now doing the same.

I wasn't motivated by greed- I was motivated by a lack of customer service and responsiveness. I was quite pleased to see that their own lack of corporate responsibility to their CLIENTS (i.e.; the ones who keep them in business, for you tunnel-vision "bottom-liners&qu... posting here) is now starting at long last to take its toll.

If eBay goes the way of the dodo or dinosaur, good riddance to bad rubbish - I won't miss them a millisecond.

[wingnutheadboy]

eBay is over. They have had a veritable monopoly for years, and now, they have crossed the line. It is clearly an issue of a large publicly traded company with limited growth in its core business not knowing what to do other than testing price elasticity. The marketing spin that they keep putting out is actually some of the most unbelievable boulderdash I have seen in possibly my 25 years in the tech business, and any other business for that matter. This Usher dude should be fired, drawn and quartered.

What most folks have to understand (I am a silicon valley tech executive) is that what eBay has done is not that hard to replicate/duplicate. They have brand, but the mechanics of the system are simply to copy in software.

Meg gave the company an honorable and moral image for years, but as growth slowed, and as the company started promoting large firm's business through its sites, as opposed to the regular joes who created the company, it lost its way. Plus, the pressures of public ownership cause it to seek growth every quarter as we all know, and fees are the only way to do that. They add little value for these fees.

At this point, a regular person who want to sell on eBay will lose 10-20% of the sale price in zillions of fees that are stacked up both up front and final value, as well as funds transfer via Paypal. The average person selling small stuff loses way too much margin dollars to eBay now.

Take a look at listings in most areas. There is little left in the way of private people trading via the tried and true auction format. Its mostly high priced stuff with Buy it Now listings. Retail has become cheaper and in many cases, more accessible.

Whats even worse, is that eBay may in fact be committing fraud when it publishes its listing data. If a company artificially changes "business data" to create an impression of upside, they are in fact, committing securities fraud. Them saying that listings are up, which the layman has no way to verify, when they are most likely down, OR changing the method of counting in order to change public perception, is in fact no different than falsifying revenue.

It is well known that they have done a huge amount of "Test Listings" during this period. They could in fact be creating millions of false listings without anyone knowing.

Time to short eBay

[gottago]

Test Auctions, my my. I had a quick look and immediately found an 'eBayer' with 45 'Test Listings' in completed items, all between 20-23 February. All the listings are the same, and they all start at a staggering $3000. That is $135,000 of 'non business'.

eBay must be really desperate.

[gottago]

It is worse than I thought, there is another eBay ebayer with a total of 73 Test Auctions priced up to $1770, and they have all been BID on, and all by [e-mail]. Maybe $50,000 or more of 'completed' business, that is not real.

I asked eBay recently why they did not allow Google Checkout. They told me that they had deemed it not safe. Who would you trust more - eBay/Paypal or Google?

Dirty, dirty little Suits.

[THE MARINES]

I say it all in the Link Below -- and have included this most EXCELLENT article as well. Thank you, Timothy Church!!!

journals.aol.com/mhogu.../

[ssandee]

The problem facing eBay sellers is a collective problem, and therefore requires a collective solution.

Only the eBay users themselves can truly break the eBay Inc. monopoly, rescue our auction businesses from destruction at the hands of corporate greed, and save the original eBay person-to-person trading concept as an open marketplace of equals.

The eBay users—united, in our millions—can make a new fee-free home for ourselves on the Web and simply move there en masse, replicating the traffic of the eBay.com site.

Together, we can recreate the eBay Community, beyond the reach of eBay Group, Inc. The users made eBay the first time, and we can do it again—this time to suit our needs, rather than just line the pockets of FeeBay executives and shareholders.

Visit thepoint.com/campaigns...