A Stockholder, and Merchant, Loses Confidence in eBay 27 comments
Stephen Frankola
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Just a few months ago, I defended eBay’s (EBAY) business as it was being attacked on all fronts. Fee hikes had disenfranchised big sellers, who were being lured by Amazon’s (AMZN) fulfillment program.
I proclaimed confidence in eBay’s marketplace, even as they began to squeeze too many pennies out of small sellers like myself (peddling my ski wax, Whacks Wax), right as Amazon.com was allowing sellers to list their items for free.
I also noted that PayPal was much of the reason to invest in eBay’s stock. PayPal still is a great brand, but Google (GOOG) is pushing hard to popularize its payment processing service, Google Checkout, by offering new buyers a free $10 discount on their first purchase.
My problem with eBay, the corporation, has grown from a personal problem, but I feel as though it also sheds light on many of the issues currently facing eBay, and it shows that they may be failing to address those issues properly.
I have been selling various goods on eBay for over five years through three different accounts. I began selling trinkets, mirroring eBay’s promoted image as a worldwide 24/7 garage sale. However, a few years ago, I invented and began selling my own ski wax, and eBay was a great market place to promote a brand in its infancy.
Over the years, I have sold approximately $10,000 of goods through eBay. My average selling price was no more than $10, so I logged about 1,000 transactions through the different accounts. Considering that eBay charges a listing fee, a final value fee, promotional fees (I often did choose featured listings to attract attention), and most of my payments were processed through PayPal (which charges a base fee
Now, in an effort to promote “marketplace security,” the account that I sold ski wax through (which generated the majority of personal revenue and eBay fees) has been permanently suspended. The account’s feedback rating (the metric that eBay uses to establish confidence in transactions) is excellent, with a 97+% positive rating, including about 400 total positive transactions. The other two household accounts also may be suspended – each of them was sporting a 99% positive rating.
However, the very last transaction I conducted resulted in a negative feedback, and because of some silly computer search eBay must conduct, my account was blacklisted and suspended. (An aside: The circumstance was unusual, and I refunded the customer’s money right after negative feedback was left, so the transaction was resolved. My integrity as a seller remains intact.) eBay suspended the account because of a “result of your violation of site policy on Seller Non-Performance” because I “generated unacceptable levels of buyer dissatisfaction in your transactions.” This is solely based on the one most recent feedback.
A reasonable person could see that I have established and re-established credibility as a merchant. A reasonable company would allow real customer service people to review and overturn suspensions such as mine when their computers clearly take transactions out of context. However, eBay seemingly will not let customer service employees breach official policy, even if the situation merits it.
eBay clearly has issues policing its increasingly dangerous marketplace, and this is an example of an overreaction that may have broader implications. As many larger sellers are already flocking to Amazon or other auction websites, fleeing the stranglehold of the new fees eBay has imposed, eBay should not be barring willing merchants from using the website. Yes, this may be an isolated, individual incident, but it is an example of policy and bureaucracy of an inefficiently large corporation destroying the very nuances that led to its success.
Whacks Wax will survive. I already began using Amazon.com’s fulfillment system last year, which streamlines my operations and makes selling my product immensely easier. An eBay presence was certainly beneficial to the company, but this past winter it accounted for the smallest percentage of sales yet. The nostalgia of eBay, where I had built my company from the ground up, may have been one factor that continued to attract me to the increasingly expensive marketplace.
Bigger niche sellers have no need for eBay anymore. Amazon is a worldwide marketplace that attracts deal-seekers just like eBay, except they charge no upfront fees. Merchants leaving eBay can spend the money that would have paid on fees (in my case, between 10-40% of final selling price) to invest in their business or advertise, and probably more than make up for lost sales.
eBay will always exist as a marketplace to promote knickknacks, but its heyday as a serious marketplace seems to have already passed. Now, through websites like pricegrabber.com and shopping.com (eBay owns the latter), consumers can quickly and easily find the cheapest price for a good, instead of having to devote hours to manual browsing as they would have to have done in the past (which led to bidding on eBay, a relatively-cheap marketplace). Power sellers with significant draw can simply promote their own websites, which requires a greater sunk cost but little (if any) incremental costs compared to eBay selling. As Amazon.com continues to expand into groceries, people may become accustomed to look there as a first place for anything they desire, not eBay, as may have been the case in the past.
Luckily, for shareholders, eBay’s non-core businesses are continuing to grow the company as the auction marketplace has stagnated. PayPal is still the only widely accepted online payment processer, and no matter how many $10 credits Google throws at consumers to encourage them to use their checkout, PayPal’s dominance should continue. PayPal is also now being used unconventionally, as family may send remittances cross-border through PayPal, and traditional merchants (airlines, etc.) are now accepting it.
Finally, Skype also seems be gaining some traction, and eBay has already written off most of the (ultra-inflated) value of the purchase it made a few years ago. Integration into the auction website has made Skype more relevant as corporations and consumers have simultaneously started to use it. Skype is now a positive contributor to the eBay brand, and if eBay chooses to get rid of it, they could probably sell it for more than the value they now have booked.
The Street continues to look at the auction website as the most important component of eBay’s businesses (which it is). That business is no longer growing. The exodus of power sellers and banning of lowly, innocent, above-average sellers will not help stop the bleeding. eBay needs to focus on re-attracting the big sellers, possibly creating a different way for them to list items (think eBay stores, but better) that can rival the appeal of Amazon.com. If the core business continues to decline, it will be hard to make up that gap with the growth of other the brands.
I am angry and disappointed enough by my ordeal to sell my stake in eBay.
Investments shouldn’t be an emotional decision, but I cannot have confidence in a brand that has treated shareholder, a merchant, and me so horribly.
With few exceptions, brands with poor customer service are eventually passed over in favor of competitors that treat them better - I had personal phone calls with an Amazon Fulfillment representative a handful of times before I even set up an account, but I can’t even get a non-automated response when I’ve made eBay thousands of dollars.
My decision was made for me, but it was time to move on anyway.
eBay, I don’t need you, and many other sellers don’t either.
Even if you don’t kick them out, they'll eventually leave.
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This article has 27 comments:
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Please provide a source showing ebay making more money. Sell through rate is down, stock is headed south and listings are puffed up will buy.com's auctions, many of which have no product.
AND, U.S. listings are now often padded with overseas listings in many (underlined) categories in order to flesh out (LOL) dwindling merchandise numbers. (Like we're too stupid to figure THAT out!)
I haven't bought anything off ebay in 6 months.
P.S. And then there's iOffer's listing count, which is about to hit 4.5 MILLION listings, and ebay (the giant's?) dwindling to 13.5 million. That's SERIOUS competition. Serious.
(We won't even factor in Amazon and all the new sellers coming on board there.)
And the growth of their other entities? ebay doesn't have a clue what ethics is about. Paypal is dishonost, and evidently now Skype is hitting with bogus charges...
Does this company even know what integrity means?
Is there a rabbit in eBays hat? Is this a marketing or business arrangement experiment, or is this a very disturbing and sinister version of company value manipulation? Is there going to be yet another secretary document shredding investigation?
It may appear suspicious that eBay would form a business arrangement with Buy.com at the same time as the implementation of the controversial reputation and revenue damaging feedback policies.
Whether or not management is "padding the numbers", (with questionable Buy listings and others), in a veiled attempt to keep up appearances, allowing time for new empowered buyers to gather is debatable. Whether or not there is a solid case against eBay for the Better Business Bureau, the FTC, the SEC, the Attorney General or a class action lawsuit, or even a criminal prosecution is a matter to be very seriously pondered. Whether or not John Donohoe will ever face justice, whether or not these policies constitute a criminal act, whether anyone is liable for irreparable harm is yet to be determined.
Seemingly beyond an attempt to "cook the books", these combined policy decisions may appear to be the opposite of a "pump and dump" investment scheme, - a "bear attack"- (an attempt to drive down the value of company stock,) and bears close scrutiny.
If this is not a clumsily masterminded conspiracy, or misleading and deceptive practices, or some attempt to monopolize certain category sales for under the table profit, then what is it?
Is leadership on the line with an attempt to defraud investors while the company poses to repurchase an announced 1.9 billion dollars worth of company stock, and is this going to become headline news?
If there comes an announcement at the Live! convention of the cancellation of the questionable Buy.com agreement, if there is a sudden rollback of the feedback policies all this will just be coincidence and management comes out smelling like a rose, right?
Wrong.
When the gavel drops, company reputation, member trust and potential revenue have been wasted. The rising global flood of competition grows, steadily eroding this pathetic sand castle.
Obviously at the very least, these decisions will be the focus of investigation and study by students of economics and law, by business law specialists and by media now and for many years to come.
Until proper member safeguards are adopted, from the perspective of countless users, eBay company reputation is no better than that of their worst member.
There is still too much negative press. Where there is smoke is the fire ever far behind?
Ebay's keeping mum on their future plans. I realize this company matured and the earnings leveled off. But they way their embarking on whatever new path they're heading is deceitful and unethical. Their actions are possibly even illegal. Time will tell on those counts being charged.
I sold my stock in Ebay over 8 weeks ago. Been patting myself on the shoulder ever since. I don't believe in this company anymore. I used to be their biggest cheerleader. It's clearly tanking due to poor management decisions, arbitrary rules that change daily or aren't followed or even mentioned, and most importantly poor to no communication.
Just wish I knew wish direction to move in. It would help if Ebay took the high road and just honestly announced what lays ahead.
They chose either through ignorance or with malicious intent to do otherwise. Neither of which illustrates to me any TRUE LEADERSHIP qualifications.
ACEOart.net
eBay did not care. And why should they care about crappy bidders screwing me, they made money each time I got screwed.
ebay has been turning a blind eye to these various frauds for years. Some of the sellers' feedbacks were a dead giveaway. When there is an average of 5 feedbacks to every feedback page going back to infinity claiming pirate/bootleg (and the individual's own feedback is unblemished), it's a duh moment!
And now they want to improve the buyer experience?
I am not surprised that in some venues the seller fraud is escalating as well.
(By the way, in my above comment, I never understood with such feedback history re pirate/bootleg, why people continued to buy from them!!!)
eBay, or somebody else, needs to be the garage sale, auction house, and estate sale of the Internet where interesting, even unique items star. If eBay wants to be the online WalMart, there's a big opportunity for somebody else.
Ebay have the impression that because Australia is Down Under , its down and out however, the hostile reaction from the Australian Public and the Government has shown Corporate America inthe Guise of Ebay , that Australians are no push over as their blatant scheme with paypal is being put to the sword
www.streetinsider.com/...
eBay is silent... and I'm not expecting that to change.
www.amazonsellercommun...
However, it was just the same automated email as before.
The service is laughable. And, from many comments posted here (and other places), this is no kind of isolated incident.
feedback.ebay.co.uk/ws...
First paypal customer service was (and is today) virtually non-existant - even after being assigned an account rep. Their seller protection policies are essentially a sham. Frequently we were not reimbursed for fraud or other issues that should have been covered under their policies and would have definitely been covered by any credit card processor. Their fees are outrageous given the level of seller protection, and their exchange rate conversion is simply extortion - priced at a MUCH higher spread than the inter-bank rates charged by credit card processors.
Ebay as a venue has gotten progressively worse. The amount of fraud / non-payers has been increasingly steadily. It is almost amusing (except for having to pay the re-listing fees) as there seems to be a tight correlation between the amount of fraud / non-payers and the fees ebay charges. Then there is the random removal of auctions. For example just yesterday ebay removed a product I was selling under their blanket "intellectual property infringement" even though the product is a legitimate product purchased from the trademark owner! Then of course there are the fees which have steadily increased to the point where it is simply not worth listing items less than $50 because after fees, paypal, shipping, and multiple relistings (from non-payers) one might as well sign up for an unpaid internship at ebay. Couple this with the market dynamics of ebay (aka the slightly 'shady' competition) pushing down prices - replica products sold as genuine, used products being sold as new, electronics being sold with pirated software (think game consoles), and outright stolen products I think one can begin to see why Ebay might potentially have a serious problem on their hands. And of course their solution to maintain their profit projections is to squeeze their sellers with higher and higher fees without telling the shareholders the real story. While the end result may not be certain, I for one have taken a large short position on the company's common.
feedback.ebay.com/ws/e...
MC008 SNPC NOTICE: Warning - gustavus1 the new feedback system sucks.
Paypal holding funds ( $111.00 ) item Not Received
While replying to this dispute a spelling error occurred, when I tried to correct to error - everything I had typed into the web form disappeared. On another note try and copy the tracking number to past into your shippers tracking - you can not copy from the dispute page.
My wife on the other hand did not receive some CD's purchased , filed a dispute with out the same hassles I experienced from the sellers side trying to make a reply to my buyers dispute.
What the hell is eBay's ( John Donahue ) up to here. Sellers loosing confidence, the stock going all the hell. The buyers having difficulty's navigating the new website eBay is pushing.
Since closing my account a great relief has come over me, I feel like a man who has just been freed from a very long prison term.
Gustavus1