Initial seller reaction to eBay changes

Ok we were just on a 30 min break and the buzz was definitely very positive around the paypal seller protection improvements.  The elimination of limits, confirmed addresses and intl expansion are a big win for sellers.

The negative buzz is around the fee changes.  Many feel calling it a decrease isn't really the case. Let's dig into this.

In my first post, I talked about three general buckets of eBay sellers.  Here they are again for reference:

• The media seller - Typically sells in core+store, high conversion items with < $25 ASP in core, low conversions in stores.
• The auction traditionalist - These folks are 100% auction, with low starting prices and high conversions.  They have near 100% conversion rates and tend to have higher ASPs because they sell collectibles.  Exceptions would be jayandmarie who auction CDs
• The fixed-price seller - These sellers sit in-between the media (low ASP, low conversion) and auction traditionalist (high ASP, high conversion) and have average ASP and conversion ( $50+, 50% conversion rate). 

Media seller reaction:

• To most this feels like a fee increase.  Some have quantified it as a 10% and I've seen math that shows as high as 25%.
• The challenge media sellers have is they already tend to have low DSRs on S+H so they don't get the PS benefit.
• These sellers typically put that extra fee into S+H, or item cost, but now they feel boxed in by DSRs so aren't seeing a way to adjust to the fee change.
• It's important to note that most of these sellers don't factor gallery into their equations (you could argue if that's correct or not, but they would argue they don't by it now, so by having it free, it does not save them $).  The reason these sellers don't have gallery is they have found that gallery historically doesn't help increase conversions on these low ASP items.  Now that they get it free, if it does help conversions, it will help mitigate this fee increase.
• Editorial note: I did notice that in the UK eBay announced media category pricing, this maybe a way eBay could address this should it be a widespread problem.

Auction traditionalist

• The auction traditionalist seem to be falling into two buckets:
  • The people that love auction and want to stay with it are facing a fee increase no matter how you slice it.  The high-conversion (associated with a low starting price) kills you in a lower insertion, higher FVF world.
  • The people that are going to switch to fixed-price from auction because the fees are pushing them in that direction.   

Fixed price seller:

• The fixed price seller is going to get the bulk of the benefit in these changes.  The lower insertion fees help them with their lower (50%ish) conversion and they tend to pay for gallery so they are getting somewhat of a double whammy.  Many of these sellers also can pretty easily get their DSRs to the 5% discount level and maybe with some work get to 15%.
• The biggest concern here is around DSRs, especially international buyers.  There's a trend where large sellers with material 15%+ international buyers tend to take a .2-.5 DSR hit.  Those sellers are going to have to figure out how to balance the value of intl buyers ($$) vs. the downside (DSR hit and thus risk on the powerseller programs). We've actually seen sellers start to split their seller IDs into two IDs - one US only (high DSR) and one international only (low DSR).

The next topic of concern is definitely the changes to feedback. The doomsday scenario I've heard is that buyers will now have all the power on the site and hold sellers hostage for positive feedbacks/DSRs.  More on this later as eBay expands on the changes and it settles in.

Comments

[GABE]

I must say, the level of complete apathy and total disregard for the plights of the seller by EBay is appalling. We, the sellers, are the proverbial "life's Blood" of EBay If we did not exist, what would the buyers do...what would they buy...air. Because of their new policy I just had to go through an afternoon of extortion. Instead of running my business, I spent my afternoon going back and fourth with a jerk loser who was extorting me by dangling that feedback in my face. My policy is to process items right away--the same day a customer pays, I generate their tracking information, tape up the package and enter the tracking info in pay pal....afterwords, I have a bi-weekly pickup from FedEx.and the items go out twice a week. I ship 3 day express. So all my orders arrive within 5-6 days from the time a customer pays...pretty fast I think. Well, because of this stupid rule change, I had a customer leave me a negative feedback because he checked on the FedEx package status the next day after Paypal emailed it and decided to stay home to receive it on the day of "Estimated Delivery". He never bothered to properly check the tracking info, to see if it was in transit, nor did he check the shipping process which is written clearly in the auction. He just missed a day of work to receive his item. When it did not arrive, (due to my biweekly pickup) he mailed me and said that I am a horrible seller and that it is my fault he missed work. He wanted me to refund him in full, and compensate him for his missed day of work due to my "error" in shipping or he would leave a negative feedback. I tried to explain to him, that his item was shipped in accordance with the shipping terms as promised in the auction and that it has only been 3 days since his payment was made...(counting Sunday .not even a business day.) I told him that we clearly state that we ship via a signature release but if special arrangements for shipping needed to be made, the buyer must inform the seller within 24 hours of the auctions end so we can accommodate them accordingly. His response, was that he lives in San Fransisco and as such he had to be home to receive it so it would not be stolen.(like its my fault he lives in the ghetto) a fact that he felt was not important for me to know...after all...I could have sent it signature required...or had it sent to the hub for pickup...or at the very least, coordinated with him and FedEx to let him know in advance when he needed to be home...but I guess that would not help him at all...instead I should have used my crystal ball like a good seller, and predicted his needs. He expected me to read his mind, compensate him for incorrectly reading tracking information, and for not communicating with me in the first place. Bottom line, I am powerless...If I say no, he leaves me a negative feedback. If I agree to his extortion, he could still leave me a negative feedback and again I would have no recourse. So in this case I took the high road...I kept his money and took the negative. But it ruined my perfect 100 percent score and I know that it will hurt my sales. I have even thought about talking to an attorney and file suit for Libel, and trying to claim compensation for the lost income as a result of the feedback. But it would be impossible to prove accurately how the negative feedback affected me(if at all) since EBay sales are so inconsistent and sporadic. There has to be some way that we, as sellers, can force EBay to make this more fair. Maybe we can create a Sellers Union or perhaps ban together and bring a class action suit citing lost income due to unfair business practices on their part. Lets face it, we are all running "small business's" as EBay sellers. I am certain that if we got the Legal gods together we could probably piece something together and slap EBay with a summons. Most likely we would lose the case...if it went to court..which it wouldn't...They would settle in arbitration But...with any luck... one of the settlement terms stipulated would require a change in the feedback system. Ahhhh, dare to dream. If only Robert Kardashian, Esq. was still alive.....!!!

[M.C. Nygard]

I'm still currently a platinum powerseller, but have stayed away from selling on eBay. I left when neutrals counted like negatives and I lost my perfect reputation. Since eBay has restored my reputation I've still not returned as I sincerely fear the extortion of unscrupulous buyers. Buyers have "power" over sellers and it's not worth it to me to suffer the agony when there are so many other fine venues like eCrater, Amazon, Etsy and Ruby Lane that don't have the same hostility towards buyers. I would return if eBay brought back the leverage to preserve my outstanding reputations.

Incidentally, too many of my colleagues are leaving eBay one by one. With each change they are trying new options. So while "IT" is over for eBay because the sellers are leaving -- "IT" is still a great place to shop as sellers are dumping their wares at great prices. Now's the time to get great deals. And that makes me happy because I make money every time someone on my team shops on eBay.

M.C. Nygard
www.cashbackatebay.com

[Ceceila]

I think that ebay has lost their freaking minds!! Google Please come save us from the Ebaydevil! 10 years ago ebay was cheap to sell and cheap to buy. I guess money made ebay change to the Money Hungry Monster! It is so unfair for buyers to be able to leave feedback and sellers can't. I didn't care much for the feedback system that they had but now I wish that I really appreciated the feedback system when I had it. I sure miss the Old Ebay. They say change is for the better but this new change is just Aweful and unfair to the sellers. I had a buyer threaten to give me bad feedback if I didn't give them a refund. In my auction I stated all sales final and ask for measurements before you buy. What part of that didn't they understand. I am so tired of these buyers with these threats. If only we could have been as lucky as ebay Australia. They didn't let ebay tell them what to do and ebay listened. Well ebay listen to us sellers in America and all the other places that are so tired of these lame changes. The fees are too high, the rules make no sense and sellers are being treated like crap. Ebay the sellers make you!!! Have you forgotten that! I can accept the fee change but to lose the opportunity to tell about how a bad transaction went is so unfair. Ebay should just rethink their feedback system.How about start every one of us ebayers with 100 points and deduct 1 point for a bad transaction. Eliminate the cruel cooments that are mostly lies left by buyers also. The point system would be a great idea for sure. As much as I am angry about ebays changes I am still with them. They are my sole source of income in order for me to be a stay at home mom. Ebaydevil I guess I must do as you say because of these reasons. Google Save US!!!!!

[StevieD]

"Buyers have all the power." Well in a market driven system that is indeed true, and sellers should be held accountable by the buying public.

However, on eBay sellers seem to hold most all of the "power." After completing an auction, and the buyer pays the buyer 1) no longer has his money and 2) until the seller ships, the buyer doesn't have the merchandise. Who has the power here? Not the buyer, the seller has the merchandise, he has the money and if its not shipped the poor buyer is stuck with nothing but promises that eBay will "help him out."

Sellers need power in these situations, power to refuse payment (credit card charge back is at least still possible, somewhat). and power to "punish" bad sellers with negative feedback.

Buyers should always have the power in a transaction.

[Ebay Selling]

The old days of eBay are over. Ebay has forgotten who made them who they are today (the little guy) but it is now obvious it has decided to move toward the corporate nature because basically eBay is well aware that their culture has changed and they realize they can no longer survive on small sellers selling things left over around their house. What does this mean? Ebay is squeezing out the smaller seller. If you are an eBay seller - have a plan to maximize your earnings on the backend.

[Mike]

Scary that sellers cannot give buyers negative feedback. What's to stop buyers from making purchases and then switching up items and demanding refunds on threat of extortion via negative feedback?

What happens to the policy of NO REFUND?

A buyer can simply threaten negative feedback and demand shipping and fees from any seller anytime that the buyer feels whimsical in any purchase for any reason.

Not Good!

[Kent Goldthorpe]

I have sold 7 items since the feedback policy has changed. I have received threatening e-mails from buyers on 2 of them so far requesting things I didn't advertise or include in the description or free shipping, with negative feedback the result if I don't comply.

If e-Bay thought they had a problem before it's going to be nothing compared to the Pandora's Box they just opened by restricting the ability of sellers to leave feedback that is in the least indicative of the general sale that took place. What has e-Bay been smoking anyway?

In case someone out there wants to criticize my position, I have 1,100 feedbacks with 7 negatives, almost 300 repeat customers and every negative I have was as a result of "buyer's remorse" and my unwillingness to withdraw feedback. I figure one out of a hundred is a good batting record.

[ken]

"Re: Feedback change - seller inability to leave fb for buyers.

The worst mistake possible by eBay. The one factor setting them apart from all other venues was the system whereby sellers were kept toned down & honest AND buyers were as well. Now, buyers will have extortion powers over sellers. I am absolutely dumbfounded that eBay would take this action. It would appear that management has no appreciation for some of the good things that eBay has had going for it and is in a rush to emulate all the other non-auction "venues" on the internet. eBay WAS unique because of the mutual feedback system."

I think the feedback change is a good thing. There are sellers selling useless wholesale lists and they have 100% feedback, isn't suspicious to anyone?

The only thing a seller should care about is if he gets paid or not.

Most buyers are honest and they pay so it's all good. Few don't pay and very very very few are scammers. In those cases, you can always report to eBay. You can blacklist them. You should automatically blacklist buyers with 0 feedback in the first place. If the buyer is really bad, you can even submit their ID's to http://www.rottenbidders.com - a site where sellers share their bidder blacklists.

[ebay strategies]

It's really great information regarding ebay strategies and especially the buckets information is overwhelming. I love buying and selling many things at ebay but I was not sure how exactly it can be done and I have a fear with in me that I may get a loss at this.

[C Adema]

I'm about 2/3 buyer and 1/3 seller, and I can't fathom how the feedback debacle will affect sellers. As a buyer, I have always felt pretty secure. I know the sellers want to be sure I walk away happy. And if I get scammed, which in 9 years has only happened a couple of times, eBay/Paypal has come to bat for me.

Conversely, as a seller, there really is no protection other than getting fees refunded because of a NPB. In fact, Paypal's buyer protection plan effectively makes the seller guilty until proven innocent when discrepancies arise. And now for eBay to take away the one measly piece of protection sellers have left? Nutty.

To top it off, the sliding scale for good DSR's can only slide down, with buyers having all the bargaining power.

[Annette Hellingrath]

I can't believe the change that e-bay is implementing in May, regarding sellers not being able to leave negative feedback. I thought that the system, the way it is now, is unfair to the seller, this new system is outrageous. Case in point is a negative feedback I have from a customer who states that he did not get a refund and did not get his book. This is a lie. I have proof it is a lie. With his first e-mail to me this customer threatened to leave a negative feedback if I didn't refund his shipping cost due to the fact that his order didn't arrive in two days. To keep the peace, even though I state in my ads that I don't do refunds, I sent a refund to him through Paypal - which he refused. He sent me an e-mailt telling me that he didn't authorize a refund - he wanted his book. So I sent the book and e-mailed the customer his tracking number. That same day he left the negative feedback and complained to Paypal that he didn't get a refund as well. A real winner! This customer actually made me question why I sell on e-bay for the first time, expecially since e-bay took no notice of any of my e-mails about this customer. I sent several of them over several weeks every time this customer harrassed me. I received form letters only. During the entire month of December this customer e-mailed me four times a day and accused me of being a liar, eventhough I sent him proof of the refund attempt and the tracking info of the parcel. His negative feedback should have been removed by e-bay right away given all the facts but nothing happened. The fact that I was threatened by this customer was ignored. I am very angry about this new restriction put on sellers - there is no equality in it. We pay to list an item, we pay every month to have a store, we pay a percentage when an item sells and we pay when we get paid for the item. We have no rights! We are idiots! I received a form letter today that basically puts me on notice because I have negative feedback. I have to do better according to e-bay. I will be restricted, whatever that means. If feedback plays such an important part, then I as a seller I should be able to have the right to defend myself from a loser buyer who lies and know that e-bay will be on my side if an unjust negative feedback can be proven to be as such. I predict that this new system will be met by a lot of complaints and fewer people willing to become sellers, because obviously even if you do everything right nothing can stop a buyer from saying whatever he likes - come to think of it, that's what it's like already.

[Bruce]

As a seller in an intensively competitive category on eBay, I've had a worrying thought.

Seems to me that in our category, sellers have a variety of DSRs and Feedback scores, such that only one or two of the main players will achieve the 15% discount, most of the other big guys will achieve the 5% discount. This is a critical issue in our high volume, low profit environment and will absolutely determine who stays and who leaves the marketplace.

The key issue remains profit after all costs, as always. The costs to buy the product are similar to all sellers, the cost to handle and ship the product are similar to all sellers, the only differential costs now, are eBay fees. The profits available to sellers on very high volumes are below 10% as low as 4%. So one or two sellers receiving a 15% discount on fees and others receiving a 5% discount on the same fees will affect the competitive nature of the market and the elasticity of sell prices offered. Some one has to loose in this equation.

Now the concern is with the new "feedback system" and other recent changes, here's a scenario to consider:

Say that Seller #1 has a great many friends who sell on eBay, due to many years of networking and individual assistance to his network of close associates. How about the following scenario:

1. Seller #1 contacts his 20 closest friends and associates, who all owe him for many hours of assistance and ongoing friendship/support.

2. Seller #1 asks every one to contact two friends who have buying id’s on eBay that are totally unrelated to Seller #1’s associate/friend. 20 x 2 = 40

3. Seller #1 provide a cash payment of $100 to each of his friends – friends to purchase and pay for 4 items (ASP $25) from the targeted competitor on eBay. They can keep the items they buy as a thank you from their friend. (total cost $2000) 40 buyers x 4 items = 160 transactions

4. Each of the buyers is instructed to buy and pay for the items, then wait at least three days and leave negative feedback and the lowest possible DSRs for the seller.

5. So the seller will receive, (over one thirty day period) feedback totaling 160 negatives or neutrals and also get hit with DSR down grades equivalent to scores of -0.1 star for each of 5 DSRs multiplied by 160 transactions (actual result will depend upon volume), in addition to their normal feedback and DSR problems.

6. The result would cause serious harm to a seller, maybe even send them broke if eBay enacted the “Seller Non Performance” clause and suspended them for 30 days. The minimum result would be a loss of at least 10% of their fees discount, maybe as much as 15% plus downgrades in search/finding on eBay.

7. So the seller gets a major Whack! And the buyers get off without penalty (not even a negative comment or score).

8. eBay will tell us that in this case the seller is able to add all these buyers to the New, Bigger and Better blocked buyer list. So then the buyers just have to open new accounts and start the process all over again, or find new buyers for the next month. Remember eBay doesn’t limit the number of accounts you can maintain as long as you have a different email address and don’t use the same credit card for more than three eBay accounts (if you verify, which is not required to buy…). Besides which the damage is already done.

9. A concentrated and planned “flame attack” like this would have a seller on his knees in no time, maybe two to three months at most… without redress or an ability to appeal the decision.

So I’d like to think that no one would be as immoral as to consider enacting a plan like this, I just wanted to examine the possibility from a risk analysis perspective. I’d be very interested to hear comments that relate to protecting us from this sort of scenario, if you have any ideas.

I’m sure that multi-channel selling is good insurance, but eBay is still the core of our business and I’m seriously worried about getting shut down by a competitor. This plan would require maybe as little as $2000 and up to $6000 to be effective. In business terms most of us are spending more than this on Adwords and advertising each month and getting rid of a big competitor on eBay would provide economic benefits for the winner.

[Chuck Hamsher]

I am a small Powerseller and have sold on ebay for over six years and find the new policies the most extreme change to ebay's terms of service ever and in direct conflict with ebay's stated community values.

I built a business with ebay, which now includes a bricks and mortar store and my own e-commerce website. Ebay has been an important component of my overall business plan. While concerned with the fee increase, the same way I am with all rising costs to my business, the primary problem with the new policies are the changes to the feedback system.

I detailed my concerns on my blog in an open letter to ebay. This can be viewed here:

http://amodernguy.wordpress.com/2008/02/01/an-open-letter-to-ebay/

I am uncertain of what my ultimate response to this will be but it most certainly will impact my business. Perhaps I will greatly limit or eliminate my ebay listings and instead invest what I would pay in ebay fees to do more online marketing of my website. Time will tell.

[Douglas - Schuhstore]

Finally a bit of give on the fees. Great rewards to be gained for the high volume, high ASP seller, just have to keep the service levels!

[Jay]

When a Company like eBay arbitrarily decides to take the constitutional rights,
of expressing the opinion of their constituents
they are violating the very base of the US Constitution.
We need to have the freedom to express our opinions; we have the legal right to
defend ourselves; The new feedback policy violates the fundamental freedom
given to us to express ourselves, when only one individual has the unilateral right
to leave negative feedback, the seller is no longer entitled to voice that opinion,
in a clear violation of our constitutional rights to free speech
or the right to express ourselves.

eBay not only is increasing the fees by 67%
PayPal -an eBay Company- will also Freeze our accounts!

We need to remain eBay that we are in the United States
and not in Countries like North Korea, Iran, and others
where the freedom to give and take your opinion
is silenced by the dictatorship of the individuals running those countries.

We have no protection and I feel vulnerable,
eBay is denying us of our constitutional rights.

Jay

[Eric]

The fee changes are a fee increase. I am a fixed price seller and use auctions to drive traffic to our fixed price listings. The > $25 FVF increase is an increase of $0.88 per unit sold. A majority of our products are over $25. This FVF increase kills any gains from decreased posting fees if our customers purchase one more unit on eBay.

The feedback changes are the worst changes eBay has made to date regarding feedback. The sellers with 99.5% plus feedback will see their feedback scores decrease because you cannot give negative feedback. The sellers with lower feedback scores will see their feedback score increase because eBay is counting multiple purchases from the same seller and the unpaid item dispute changes.

As usual eBay is setting unrealistic goals for sellers. 4.6 rating on all detailed seller ratings is very high to even receive the seller discount. 4.8 rating on all DSRs is almost impossible. eBay is doing this to give something to sellers but make it unattainable for a lot of them.

[Josh]

Based on our December numbers, we'd see a 23% reduction in eBay fees based on these announcements...however, that reduction is based almost solely on the fact that gallery will be free - in our categories and on our items, we have to use gallery on all of our listings.

However, what I'm wrestling with as I'm punching through the numbers is the impact gallery being free will have on the effectiveness of gallery. I did some research, and on one common search our items appear in, there were 680 active listings in the past 2 weeks. Of those, 616 had gallery.

However, in other categories, roughly 50% of the listings in the past 2 weeks had gallery. If gallery becomes free, will more of those 50% of gallery-less listings add gallery? How many more?

I'm puzzling over this because I'm wondering if since eBay reduced Gallery Plus from $0.75 to $0.35 (what Gallery currently costs - very smart on their part), we'll see more people that were selecting Gallery now select Gallery Plus to try to stand out from the crowd of free Gallery listings.

If that does happen and we have to start using Gallery Plus on all of our listings to keep up with the competition, we'd actually see an increase in our eBay bill of about 22% with these new fee changes.

[Dave]

Wow. There goes the "community." It is now us against them.

I can't believe eBay removed the only tool of any real value sellers have to keep buyers from blasting them with negative feedback. No longer will buyers have any incentive to mutually withdraw feedback. (In fact, why have mutual feedback withdrawal any longer?) I can't believe eBay didn't test this -- they seem to test just about everything else before they roll it out.

We will need to get used to a whole new feedback paradigm. I expect eBay feedback ratings will drop 5%. Our eBay feedback is 99.7% and our Amazon feedback is 94%. We treat all out customers the same, the only difference is that Amazon does not let us leave feedback for bad buyers. So buyers can say anything they want in Amazon feedback, regardless of whether it is true or relates to seller performance. Don't like the color, leave a negative. Didn't get your package on time because you provided a bad address, leave a negative. Don't like the restocking fee on returns, leave a negative. Ordered the wrong size, must be the seller's fault, leave a negative. This is what we can look forward to on eBay.

While I can understand that eBay does not want to scare away buyers, they could have solved this by making the system easier to use and improving buyer education. Most buyers who get scared away by negatives are newbies who just need some training on how to be a good eBay buyer. (i.e., this isn't a shopping cart and you can’t change your mind, so don't buy-it-now on items you don't really want.) Blocking negatives on buyers is a disservice to sellers and does not give buyers any incentive to improve.

Of the entire announcement, I think this is the most troubling change and will have the most unanticipated an unintended consequences on sellers and on eBay. For example, I bet unpaid item disputes will increase becuase buyers will have no reason to pay.

I can change my prices. I can tweak my auction/fixed/store ratio. But I don’t know what I can do to mitigate the results of this feedback change.

Here is my suggested fix/compromise: Allow sellers to leave negative when they receive one, but not to initiate a negative on a buyer with < 10 fb.

[CS]

Okay so we cant leave negs.... But we can still block buyers if they have negs...... How do buyers get these negs so we can block them and not have to deal with them?

[John]

Re: Feedback change - seller inability to leave fb for buyers.

The worst mistake possible by eBay. The one factor setting them apart from all other venues was the system whereby sellers were kept toned down & honest AND buyers were as well. Now, buyers will have extortion powers over sellers. I am absolutely dumbfounded that eBay would take this action. It would appear that management has no appreciation for some of the good things that eBay has had going for it and is in a rush to emulate all the other non-auction "venues" on the internet. eBay WAS unique because of the mutual feedback system.