Boaz Berkowitz

Microsoft and eBay Team Up: Desperate or Brilliant?

This deal is back in a way. Starting today, Microsoft is offering double cashback on all its partner stores, refunding up to 50% cashback! You can read this article here:

seekingalpha.com/artic...

The Amazon Tax on e-Commerce: Coming Soon to a State Near You

eBay is an interesting question since their has been a fight about charging income tax on ebay for a long time now, long before the sales tax issue came up. More and more people have quit their jobs and have become sellers on ebay full time - all tax free.

Technically, when Americans sell even their used goods at a garage sale, they are supposed to report the income to the IRS and pay their income taxes on these sales. No one really did. But with some individuals making six or even seven figures on ebay every year, the IRS has been paying more attention. They've been pressuring eBay to release information that would enable them to charge income tax on these sellers. Information which is readily accessible if eBay chose to cooperate (as opposed to a garage sale which the government would likely never know about). So far eBay has resisted for obvious reasons.


On May 02 01:16 PM Option Maestro wrote:

> Agreed 100%... Is the Ebay tax going to be on all goods or just "new"?
> If it is just on new items, I believe the secondhand market will
> thrive.

The Amazon Tax on e-Commerce: Coming Soon to a State Near You

Excellent article and a good explanation of a complex situation. I wrote about this topic myself here:

seekingalpha.com/artic...

I'm very happy to read your update on the situation. Can you please explain why Amazon would be supporting the federal legislation that would require them to collect sales tax? It would put an extra burden on the company and at the same time, I believe it would drastically lower their sales.

When only NY State imposed sales tax collections on Amazon, they went out of their way to sue, challenging the constitutionality of the new law. I fail to understand why they would support such a law on a national level. If that is accurate, it's a bad call. They'd be better off joining forces with eBay, Overstock and other powerhouse internet sellers to fight the legislation. Together they would be a formidable opponent.

Microsoft and eBay Team Up: Desperate or Brilliant?

AUTHOR'S UPDATE:

The amount of actual cashback has been fluctuating. After a steady few days at 30%, it fell to 25% last night and 20% this morning. Even more interesting is the questionable practices that a number of eBay sellers have been implementing to abuse the cashback program. For example, I've seen $500 gift cards selling at $600 "Buy It Now" or higher. After all, after a 30% cashback, the buyer would still only be paying $420 for a $500 gift card, but the Seller would be getting $600!

The forums have interesting stories as well. I read about one enterprising individual who buys items on ebay, gets his cashback and then immediately reposts them on ebay at the original price. He pockets the cashback profit. Sometimes he will even have the original seller ship directly to his buyer and no one is the wiser.

I also read about one unscrupulous pair of brothers who posted and sold items to eachother. No property actually changed hands but they would split the cashback. So one would post a non-existent item for $500, the other would purchase it immediately and they would split the $150 profit (less any minor ebay/paypal fees).

This is a complete abuse of the cashback program and may end up hurting ebay much more than it realized!

Microsoft and eBay Team Up: Desperate or Brilliant?

To Mr Jackdee
I enjoyed your comment very much as it gave me a chuckle, I like your sense of humor. But just to clarify, as I said in the article, this promotion isn't new in itself nor did I ever claim that a 10% promo coupon was something new (though it is rare to receive one - my wife received a coupon, I did not and rarely have). I believe others have expounded upon the deeper issues that I touched upon so I don't feel obligated to repeat them again here. But there is another issue you have missed: While you and I may have known about the promotion, I believe by far the majority of Americans did not and I wanted to help spread the holiday cheer. Of course there are some who may agree with you and turn their noses up when offered 30-40% off their holiday shopping bills. But I think most Americans would be very happy to save so much, this season more so than ever before. Times are tough these days and I'd like to think that maybe my article helped make them a little brighter for some.

Though caveat emptor- some ebay sellers have started raising their prices now that they are aware of the cashback program. Make sure your final price is still a deal.

Now tell me, where can I find me one of those new Lisa computers you were talking about?

Microsoft and eBay Team Up: Desperate or Brilliant?

To Mr. Hernje, I'm afraid I don't really understand your comment. My apologies if my writing was not clear. What I meant is that I like eBay for being eBay and Amazon for being Amazon and I shop accordingly. I feel that eBay is trying to compete head to head against Amazon and is changing their business model to be more like them. I have bought and sold items on eBay both personally and professionally for over 10 years and believe I have a good understanding of the way the company works. But in recent years, I have become increasingly dissastisfied with the way they have run their business and over that time, I have been using their site considerably less. The majority of my dissatisfaction has come with the changes that have impacted sellers rather than buyers though. eBay is still my best bet if I'm looking to buy or sell an obscure item. Otherwise I'm more likely to use Amazon. Or at least I was until they started charging sales tax. But that's a different story which can be found here: seekingalpha.com/artic...

Amazon vs. EBay: Looking Beyond E-Commerce

This was a well put together article and I agree completely. One other issue that will be interesting is how eBay recently decided to eliminate its "level playing field" concept which is what made eBay a success in the first place. eBay started out giving the little guys a chance to compete with the big guys. Everyone was charged the same fees to compete evenly in what has become the world’s largest market place. But eBay is now giving the big guys a price advantage in the form of lower fees for high volume inventories (starting with Buy.com). This is a complete about face of the level playing field mantra; it gives a decided advantage to the big players once again in a misguided attempt at making eBay more Amazon Marketplace-esque. This, combined with the ever increasing fee structure does not bode well for the many users who have turned their eBay sales into a small home business and depend on this income for their livelihood. It convinced many eBay users that the company cares more about profits than them. Of course most eBay users were already convinced of that. Without serious changes eBay’s glory days are behind them and the future lies with Amazon . Amazon has time and time again proven its creativity and adaptability in seizing new business opportunities.

Amazon vs. EBay: Looking Beyond E-Commerce

Great Article!