In fact here I will leave you one of my recent Ebay posts for thought, It seems to be very popular on the boards and is currently being published in 2 newspapers.
So you want to know why EBay has and still is making changes that are changing the very basics of EBay for the worse. There is no doubt that most if not all of you out there have formulated some type of opinion of the changes that have been made to date and also as to why these changes have been made. While this is great and I totally encourage you all to get to the bottom of the EBay changes, it is my hope that this posting will help shed more light on the true reasons behind all of these changes that have been made by EBay.
While this posting will be considerably long I do believe that it is needed and will ultimately be worth it to you to read this post in is full length. Unfortunately it is my belief that EBay will quickly remove this post as it shows a more complete version of what is really happening on EBay when you filter out all of the deception and misguided attempts to place the reasons for these changes on the sellers. It is also hoped that all of you will send or direct all of your fellow sellers or buyers or friends to this post so that they might begin to understand the truth and the complexity of what EBay has done and is still continuing to do.
So without further delay let’s get to the truth!!!!!!
1. EBay is the biggest business in online sales; it has the largest base of sellers and buyers and generates the most revenues around for this type of selling and buying.
2. Over the last few years competition for EBay has been growing at a very fast pace. Today EBay faces greater competition from more sources on the web and this has impacted EBay’s profits significantly and is growing.
3. Simple Math: More Competition + Less Profits = Lower stock prices
It is these 3 single reasons that EBay needed to make changes, aside from anything else the bottom line is simple EBay was losing money and when you’re losing money your investors are pits and the value of your company goes down. When that happens people start investing in your competitors who are offering a better online experience with buying and selling and thus giving you more competition. So EBay had to adapt to the changes and it needed to do something drastic, but there are several problems with the approach that eBay has taken so far to date and I will go in to detail in the rest of this posting.
Now please understand I am not against EBay making changes and I really do not believe most sellers and buyers on EBay are against changes either. Changes are and always will be part of life and while nothing is easy changes are essential from time to time it just that changes are either right or terribly wrong and while it is still early in the changes on EBay it is very clear to most if not all on eBay that the changes to date are leaning to the terribly wrong category and EBay does see this and this was not unexpected.
EBay is a very smart company with some very smart people, you don’t make billions without the brains but somewhere on the path to riches EBay lost its common sense about the buyers and sellers on eBay and now eBay has turned that loss of common sense into a strategy that has single handedly done more to hurt EBay in the long run than it has to increase profits in the short term. So let’s discuss what EBay has done.
1. EBay changes in total the feedback system of old and gave us this new feedback system.
2. EBay changed the basic fee structure for buyers and sellers.
3. EBay created a new system for listing priority and search status for seller’s listings.
4. EBay created a fee discount system based on total seller performance.
5. EBay changed the basics of the search listing board today (July 13, 2008).
6. EBay has made many other changes as well but for most these 5 are at the very core of the new problems and uproar on EBay and they will also be sufficient to explain why and how and what EBay is really trying to do here with all of these changes that we all dislike so much. So let’s start with the first one and work our way through all 5 and by the time we are done you will understand the changes and begin to be able to filter out EBay’s propaganda deception and see all of this for what it really is.
1. The feedback change:
1. The Propaganda Deception: EBay has stated and continues to maintain that the feedback changes were needed to allow buyers to leave a more accurate assessment of an EBay seller and to do this without fear of retaliation. This is a flat out Lie by EBay. This was the best reason aside from the truth to make these feedback changes. It is a reason that people both buyer and seller would give some credibility too and at least try to see if it would work prior to screaming foul. This reason was also chosen because it places the changes that empower the buyer against the misery of the seller and keeps the eyes off of EBay for the real reason for the change in the feedback system. It creates a division between the buyers and the sellers and says this is your fault sellers for retaliating against buyers by leaving feedback that is either unfair or in return for a bad rating left against you. The feedback change makes the sellers angry and in search of a way to know which buyers is safe to sell to while not wanting to make any buyers mad at the risk of getting any bad feedback. All of these reasons and problems distract us from the truth about eBay’s feedback changes and after we get through the other 4 reasons I will bring them all together to paint a total and complete picture of all the changes and how this all works to EBay’s benefit and why we are all getting screwed here.
2. The Fee Structure Change:
1. The Deception: EBay changed the fee structure under the excuse that there were too many fees being charged by sellers on items and that a simpler fee structure was needed that buyers could understand better and thus know what the fees were on an item and thus know when they were being overcharged. This was a nether good excuse by EBay that again was placed on the backs of the sellers as the reason for being needed. This change was not argued as much by the sellers as the other changes but nonetheless has been a significant source of anger for sellers against EBay.
3. The Listing and Search Status Change:
1. The Deception: Sellers will be ranked according to their 30 day eBay feedback in an effort to benefit better sellers who are focused on customer service and satisfaction. Buyers will be able to reward good sellers with good ratings and let other sellers know where they need to improve. This will create a system where the more customer friendly sellers will get a higher placement in the search status and have their listings shown above others. Those that have a lower rating from buyers will be placed at the lower end of the search pages and tell the seller that they need to improve. This has been the single biggest deception eBay has pulled over everyone’s eyes. EBay placed the buyer as the villain against the seller. EBay gave the buyer the power to really hurt the seller in a powerful way through feedback. EBay made the buyer feel powerful and knew that the buyer would use this power without fear of retaliation. EBay knew the seller would suffer tremendously because of this and this was very planned and wanted and needed. EBay deceived the buyer into believing this change was made for them. That the better and more honest the seller the better there placement would be in the search page. But this change wasn’t made for the buyer; this change in search status from feedback was designed for EBay and was for EBay’s benefit, not the buyers. EBay made the buyer feel powerful and has used this to rake in countless millions in new fees from EBay sellers because of the need to adapt to the lower search status countless thousands of sellers have now experienced. This change that was made in search status in combination with feedback has been and will continue to be the cornerstone of EBay’s new financial gains and it was done by using the buyer against the seller. What is the old saying “Divide and conquer”?
4. The Fee Discount Deception:
1. The Deception: A new fee discount system will be created to reward good sellers with better DSR Ratings with a way to offset the new increased fees of EBay. Those sellers that maintain higher DSRS will be given a discount on their final value fees in accordance with their DSR scores. Discounts will be 5% or 15% and now the new 20% discount. This deception has probably been the worst of EBay’s attempts to deceive sellers and buyers. It just hasn’t worked. Sellers were smart enough to see through this deception and have cried foul from day 1 but I do not believe that the sellers as a whole have truly figured out how big a deception this really was and is. This deception didn’t just try to convince you that you were getting a discount for good ratings. This deception wasn’t totally aimed at the sellers; it was also aimed at the buyers. Yes, the buyers. As most of us have and EBay’s hopes will continue, it is that we buy as well as sell on EBay. EBay knows that countless buyers have watched and thought that maybe they might want to sell on EBay as well. The lure of a financial windfall has brought most if not all to EBay and EBay’s continued success is based on this fact. Bring in new sellers, bring in new buyers. Give incentives to the new seller that make him or her want to try their hand at EBay. Make them believe that it is based on quality of service and that for great service you will get a discount on fees. New buyers sign up, open a store, start there listings in a hope to get rich quick and then realize just how hard EBay is to succeed at. The buyers think EBay is simple, back 5 years ago maybe but today no way. Today EBay is difficult at best, large sellers can offer better prices, more diversity, and have become experts at EBay. For a new seller the lure of a discount and rewards for being a good seller have created and influx of new sellers and this has created millions in profits for EBay. But this has had both a negative effect on both the buyers and the sellers that most if not all have not seen and this deception that started as a discount on fees that most if not all sellers knew was a sham has still created millions. The fallout of this deception though is now starting to surface. The new sellers are selling, the older sellers are selling less and the prices on EBay are rising. What was once .99 cents from a larger seller has now become $1.25 and the increase in price has gained EBay more fees. The sellers lost business, the buyers lost good prices and EBay gained more profits in the form of higher fees. Deception at its best.
5. The new listing Board:
1. In the line of changes the new listing board rolled out today and is working in conjunction with the rest of the changes eBay has made to date but with some new significant twists. Did you notice them? You better look hard the changes are very settle. The first change and maybe the most significant is that the EBay store no longer has its name on the search page. Yes you heard right, you no longer have your name on the page and this is huge if you are a seller with a large store that generates a lot of store sales. For years eBay preached generating store sales as a means to get a final value fee reduction. If you can generate a sale from another source you can get a reduction in final value fees for the sale that was generated on one of your other listings with certain rules. Many large sellers have worked hard to set up this strategy to get full benefit of it and keep fees down, well today EBay essentially wiped that away without even a word to the sellers. Along with that buyers no longer know who the seller is unless they open the listing. This change now eliminates all of the hard work so many sellers have gone through to create a good name for themselves. EBay once preached generating a good business name. But because so many can use the name to go off of eBay to the web this name area was removed. Research shows that if a buyer opens a listing that they are less likely to go buy somewhere else. You get them in the door and essentially the sale is over, fees are generated and eBay makes money. It is a dirty tactic and trick by EBay but it will probably work for them. Along with this change in the listing board the location column disappeared. Many a buyer buys in relation to distance from home. Closer sellers get business, but also foreign sellers are seen and can be avoided if you don’t want to risk the international purchase. This is no longer the case. As is in the categories I sell, there are countless foreign countries and many a buyer will stay away from them because of the risks involved. But now with the locations removed the buyer must be more aware of where sellers really are. This opens the door to foreign sellers offering knock off sales and slave labor and sweat shops to cut the throat of honest American businesses. Essentially EBay has gone WALMART on us. If you can’t keep up with the Chinese labor price you will not be growing your EBay business unless the buyers catch on to this trick by EBay. As for the rest of the changes on the board only time will tell how much damage this is going to do to EBay and the buyers and sellers.
The Total Picture:
Now that you have read the deceptions lets tie all of this together to show the effects all of this has had on the buyers and sellers of EBay and how EBay used all of us in a pursuit for more profits and a better stock rating and happy investors. Hold on to your hats, you’ll be pist to see how bad you have been screwed by EBay.
As we all know the vast majority of changes on EBay have affected the sellers, while this is very true it has also hurts the buyers but the hardest hit in all of the changes has been the larger Gold Level Power seller and above sellers. Over the years large sellers have spent countless hours and dollars learning the EBay system, rules, strategies and how to turn this into profits through volume sales and good prices and all while keeping their EBay fees to a minimum. In every category on EBay large sellers have dominated and controlled the markets and listings and any new sellers were quickly pushed out. This market control not unlike EBay web dominance but in specific categories has built some good companies with employs and created jobs in many a place. But as with all things a market cap is reached and revenues max out, no new sellers join and eBay’s profits stay consistent. But all businesses must grow to survive and EBay knows this. EBay’s stock were staying and starting to slide back and it looked as if the top had been reached. But EBay could not handle this, new competition was taking customers and EBay needed to take action. The best way to take action was to create more competition in an effort to bring eBay back to a more competitive market situation. In other words the larger sellers had to be taken down much the same as Microsoft was split. EBay had to open the markets up to new buyers. New buyers that didn’t know how to maximize profits and sales and avoid fees. So eBay developed all of the changes we see today and more that are still to come. For over 18 months EBay researched what is taking place today. EBay tweaked and changed all it could in a study to figure all of this out prior to actually doing it. While some changes are made on the fly most have been considerably thought out for EBay by EBay. So step one open the market to smaller sellers.
To open the market EBay had to systematically find a way to lower larger sellers without just lowering them and getting 5000 lawsuits so EBay invented the DSR system. The DSR system would rate the sellers on feedback but in a very specific way that was not going to allow almost any large seller to be able to maintain market control for long. You see DSR’S are made from 5 stars and ratings in full stars 1, 2, 3, 4, or 5 stars but the twist on this is that the sellers will be rated in tenths of a star. 4.6, 4.7, 4.8, 4.8. 5.0. You as a buyer can leave a full star and only full stars but sellers would be rated in tenths of a star. This rating method was decided on because it is so blatantly slighted towards EBay’s goals of lowering the large sellers. As we all know large sellers get more feedback but what we don’t realize is that a significant portion of buyers will not give 5 stars in any case. It is simply they don’t believe in rating anyone as perfect. With this in mind EBay created the DSR rating system to work in tenths of a point for sellers because the shear 4 star numbers would lower the sellers DSR over time and not all at once. While it is not know yet it is figured that most large sellers with end up around a 4.6 rating because of this system possibly less. What is also not to widely recognized is that on a buyers feedback page is that 4 stars is given a title as a good rating so those who are new to eBay or a part time buyer will think that that is a proper rating to give. It is only the more knowledgeable that will give the full 5 star or those that are so happy they give a perfect rating. But the odds clearly favor some variation of 5 and 4 stars. If you do the math on this which is difficult for even some pretty smart people it basically comes down to this. If you get one 5 star and then a 4 star your average is a 4.5 and thus does not qualify for any discounts and also places you in lower search status. As a larger seller this is very bad if not deadly. For every 4 star you receive you need 2 consecutive 5 stars to keep a rating above 4.6. If you get a 3 star you need 5 consecutive 5 stars to maintain above a 4.6 DSR Rating now adds a 4 star to the mix and it just grows. When your daily feedback is in the area of 40 ratings a day and above your DSR scores are in serious trouble and thus your discounts, your search status and you sales.
So how do you combat this DSR nightmare? Simple, you need more 5 star ratings. How do you get more 5 star ratings by offering better service is eBay’s answers, that is a bunch of junk. You still need sales to generate feedback and remember you need many more 5 stars to increase a lower rating so therefore you need many more sales. But you are faced with the ultimate paradox in how to generate more sales when your search status is lowered and your listings have less visibility. So how do you do it? How do you improve your DSR’S.? The only way you can if you want to survive, you flood the market with listings to generate sales by sheer volume. You generate quick easy sales that boost feedback. While this works it also does something else. It generates EBay and incredible amount of Fees. As a larger seller you original system and business model is shot and you have to change. Your EBay fees are skyrocketing in order to stay afloat, after all you have employees. EBay is raking in the dough your listings success rate is plummeting, your fees are increasing, your feedback is slowly rising and then you figure out the reason for the new discounts and incentives on EBay. Your once solid hold on a category, your once great prices are now trumped by the new seller with 5 items sold per week that has a 4.8 rating that is sitting atop the search page. His listing price is higher because he doesn’t have your buying power. His prices are crazy because he is new to EBay sales, and he doesn’t know how to make the most of things to avoid EBay’s wild fees. So through a simple feedback switch EBay made huge benefits for itself. EBay has brought in new blood that is paying full fees and maybe getting a 5% discount on 50% in final value fees, while you the large seller are getting no discount and paying twice what you were in fees. What is worse is that the buyer who is rating you in this system they believe is for them to leave honest feedback about is really designed to hurt you and them as well. The buyer was told it will help you, WRONG. It didn’t help you to a better EBay; you the buyer helped yourself to higher prices, and higher fees. Tell me this isn’t intense.
EBay has created one of the biggest profit driven systems that screw not only you the seller but the effects are starting now for the buyer and the new sellers that are listing are getting a chance to try their hand at EBay and thinking this is so cool while they are small sellers. It is a fact that 90% of EBay businesses fail but they will spend 5,000 dollars getting there and EBay loves every penny of it.
I will be honest I could go into this even further. I could show you individual circumstances and examples but like I said at the beginning EBay will wipe this out quick. The best thing you can do as a buyer or seller is inform your customers and friends about all that is going on with EBay. Point out the deceptions, point out the truths and observe. See the changes being made and check into them. EBay thinks buyers are stupid and that sellers will cut each other’s throat for a buck. If EBay is right then this will never change, but if they see this backfire changes will be made. EBay must have money to survive and if the prices rise to high as many a buyer has told me in general about eBay them people will leave for other places on the internet. In the end I do believe EBay will make more changes that will return some things to normal but it will never return to the best way it was. It is clear that if you are a large seller you better diversify to other media quick. You better have other sources of income and use EBay as a source for new customers only because until EBay changes this is going to be a long and rough ride and I would be surprised if half of the top 5,000 survive this without significant loses.
So far in the first 45 days of this my current loses are at or over $3,000 dollars and climbing plus one employee lost job and I run a very honest and fair business. I am not getting rich on EBay by any means but in the last 45 days I feel like I am rocketing to the poor house.
This is all your fault EBay and I can promise you that I will continue to preach the truth to all who listen. I am working on a book about this and I will continue to send flyers in my packages educating my buyers about this and the results to date are positive for me. People are glad to see the truth. You may not like it EBay but the buyers and sellers both control your future and if you continue to snub them, not take phone calls and continue to try to offer deception and propaganda as a means to conduct business to charge more fees and increase profits then you are no better than the worst offensive sellers on EBay.
Do the right things EBay, encourage fairness, create fairness and a system that works for all, you are becoming larger than a private company and at some point the government will step in to bust up this monopoly like they did with Microsoft if you don’t keep your eye on keeping everyone happy.
John Donahoe or any other EBay Executive can contact me any time, I am glad to debate any in EBay and help them improve what they have so terribly screwed up.
Copyright Joe Johnson 7/13/2008