Former eBay seller DrSteveW's thoughts on eBay

16/07/2009 at 13:36

Steve (eBay ID DrSteveW) wrote about the reasons for his company folding, today he shares his thoughts and opinions on some of the eBay changes that have taken place over the last year. I’ll say up front, some I agree with, some I disagree with, but that’s pretty much been par for the course between Steve and me over the years ;-) Let us know in comments which bits you agree with and where you disagree.

So in his own words…

….What’s going wrong with eBay

I guess I should introduce myself first, as some of you will not know who I am. My name is Steve Antony Williams, and I used to be the Managing Director of Retrowarez.com Limited, an ecommerce company responsible for the sale of DVDs, video games, music CDs and books via 3 websites and (at our peak) 14 eBay IDs, my main eBay ID having 106000 positive feedback. Whether you think my objective view on eBay’s problems is relevant and/or accurate or not is up to you decide ….

A quick note before I get started …. Some of what I will say here has been said before, so I realise some of my discourse will not be “original”.

1. 2008 was year of some major changes for eBay. A lot of the senior management left the organisation and shareholders reacted, as you would expect, and the share prices dropped; dipping as low as around $11.00 at one point. The new management has been less than “popular” and the new CEO John Donahoe came storming in with a “new broom” approach, determined to eBay stronger and more successful. eBay at this point saw Google’s relevance based search results as a good idea and came up with the idea of “best match”. Oh dear!

2. The Best Match search function. eBay’s best match sorts (supposedly) search results by relevance with the intention of giving the buyers the best possible match for what they are actually looking for. eBay (to my knowledge) have never revealed the exact criteria that best match uses or given sellers much help in intimating what would be the best strategies for sellers to use to show they are fairly represented. This is of course intrinsically unfair. Why? Because eBay is supposed to be a “level playing field” and on the grounds that all sellers are paying a listing fee then all seller’s listings should get a “fair bite of the cherry”.

Best match has a habit of only showing the cheapest options at the top (like Amazon’s marketplace) and favours listings with unique selling points such as free postage and packing (free shipping to any North Americans reading). Automatically non free P&P sellers are disadvantaged, DESPITE paying the same listing fees as a free P&P listing for the same product. Now I don’t deny this good for the buyers but it’s not good for the sellers and that’s more important (more on this area in later section 6). The best example of best match “favouritism” is free P&P but there are others ….

3. Compulsory free P&P. Now this is a real stupid idea in my opinion. Great for the buyers (perhaps), but not so great for the sellers. Because there’s no such thing as “free”. Royal Mail don’t give out free postage to their customers, and neither do any of the other postal services worldwide.

I’m going to use the DVD category here as an example of how this all works (or rather doesn’t work) on eBay. DVD was the first compulsory free P&P category to be announced at Small Business 2.0 in Autumn 2008 in London by Richard Ambrose. I would have liked to have told Richard exactly what I thought of the idea there and then but in my experience he is not a very approachable person and had (I say had as he has left eBay now) little time for eBay’s sellers, plus we all know eBay wouldn’t listen anyway.

Anyhow, DVDs are sold at fixed wholesale prices and each wholesale price has a corresponding recommended retail price (hereafter referred to as RRP). If you sell enough DVDs from a particular label or supplier you get what is called a “file discount”, so let’s find an example. The new(ish) DVD “Marley And Me” has a wholesale price from the manufacturer (20th Century Fox in this case) of £13.61 plus VAT (VAT is sales tax to the Americans), with an RRP of £19.99. So you pay £13.61 plus 15% (for the VAT) plus eBay’s listing fees, eBay’s ending fees, Paypal’s “cut”, the jiffy bag to post it in and so on. This exact same DVD is £11.98 from Amazon UK plus P&P. You do the mathematics.

Ok so we don’t all pay £13.61, Amazon obviously doesn’t. Your file discount “kicks in” and you pay £13.61 less a %. The key is how big this % is of course. We were big sellers, but even we only got 20% from Fox. £13.61 less 20% plus 15% is £12.52. This is before you even add eBay and Paypal fees. Harsh isn’t it ?? The most file discount I ever received from a label was 40% and that was very unusual. Even Amazon probably only gets 30% from Fox.

The bigger the movie label, the smaller the discount, as you can imagine. So you add all the eBay and Paypal fees and then almost straight away you’re priced out of the market BUT in some cases, with some labels, you can compete. UNTIL eBay introduce “free P&P”. There’s no such thing as free, so you add it to your item price and hey presto you stop selling DVDs …. As if the stupidity over free P&P on DVDs wasn’t enough they’ve introduced it to other categories, including computer accessories. Computer accessories don’t cost much to post right ? Well not if it’s an RJ45 cable, but you know how much it costs to post a laptop docking station (I bet Chris does !!).

All in all free P&P is buyer centric, but I believe it is actually counterproductive. Because all the sellers do is increase the item price, so suddenly it is no longer seen as “competitive”; because most sellers were already running on tight margins, adding free P&P is the “straw that breaks the camel’s back” for many sellers ….

4. Feedback. Oh dear, where to start on this one. Now I have had a bit of a reputation for leaving negative feedback in the past on my main eBay ID. On rare occasions I have left negative for some spurious reasons for buyers and with hindsight these may well not have been deserved. However, the vast majority of negative feedback I have left has been wholly deserved in my opinion. I still fail to see why non-paying bidders shouldn’t get negative feedback, ditto for time wasters, thieves, scammers and the like. Other eBay users should be kept informed, as long as the feedback is deserved and accurate.

Now I know this is a difficult area for eBay to intervene in, it is only people’s opinions and perceptions, after all. BUT a little common sense should be shown, if a buyer has essentially admitted they haven’t paid (“I told the seller i didn’t want it after all” or “my autistic son bidded by accident” etc) then any negative feedback these “buyers” (I use the word “buyers” loosely here) should be removed, end of story. Anyone who can’t prove they’ve paid, again they should lose the right to leave negative feedback.

Then there is the Detailed Seller Ratings (hereafter referred to as DSR’s), a complete dog’s breakfast of an idea in my opinion. The idea is buyers leave specific ratings for specific aspects of the “transaction”, such as postage cost, communications, item description etc. You leave ratings out of 5 for each aspect of the transaction, with 4 being good and 5 excellent etc. Which is a nice idea, perhaps, except eBay may kick you off the site if your DSR’s go below 4.3; hang on a minute I thought 4 was “good” ? More eBay stupidity. Oh and here’s the classic bit – Going back to free P&P, one of the rated aspects is P&P cost and buyers can give you a 1 out of 5 if they want, even if the P&P was free. Utter stupidity in my opinion.

The DSR’s are also used to calculate Powerseller fee discounts every month. Now this might just sound like a conspiracy theory, BUT many sellers will tell you the DSR’s have a nasty habit of going down and being “not quite good enough” when the monthly invoice from eBay is suddenly due. Surely not ?

5. Assorted eBay bugs and new “features”. As a seller I’ve not suffered from all of the issues that have been mentioned by other sellers, but there are a number of them. The sell your item form has been notoriously “flakey” and I understand the Markdown Manager has never worked properly since it was launched.

The site is also overloaded with scripts, bells and whistles and features sellers simply don’t want or need. It’s as if the programmers are trying to justify their jobs, well guys HOW ABOUT FIXING THE STUFF THAT DOESN’T WORK first ? How’s that for a radical idea ? As I understand from my friend Andy (he who lives in the middle of nowhere) eBay is no longer useable on dial-up. Heck we had a 4mbit (unshared) leased line and a 50mbit cable connection into my house and eBay was slow on BOTH connections. I even tried eBay via one of our servers (using remote desktop Manager) which was in Rackspace’s data centre in London (100mbit) and eBay STILL seemed sluggish. We have a term for this clogging up of sites and applications, called “bloatware”.

6. Who is the customer exactly ? I could go on for hours but the fundamental problem with eBay in my opinion is “who is the customer exactly ?”. Sellers are eBay’s customers. No matter how you look at it, or try to justify it the sellers are eBay’s customers NOT the buyers. The sellers pay the fees, and if eBay continue to come out with non seller friendly ideas in an attempt to attract buyers then the sellers will leave, simple as that. Whether eBay like it or not the seller is their customer and every little mistake eBay imposes upon the sellers is like another nail in the coffin.

Consider this. If you ran a market stall and the market manager came round and said “we’re putting a screen round your products and directing the customers to Joe Bloggs on the other stall because he’s cheaper” you’d be pretty annoyed right? The reality is market managers just go round and take the daily rent for your right to sell there, they don’t intervene in your pricing or try to tell you how to sell your products.

Until eBay starts listening to its sellers nothing will improve and eBay will, in my opinion, cease to exist.

- Steve