How Amazon and Google are taking eBay's Business

prostoalex writes "Wall Street Journal says many online sellers who started on eBay are now going solo, being helped out by 'name-your-own-price' Amazon Marketplace and Google's and Yahoo's advertising programs, which allow small businesses to direct their ads to search engine users interested in specific items. The article discusses several companies where online sellers, being disappointed with eBay's falling profit margins, increasing fees, disruptions coming from PayPal account freezes and high fraud rate, are leaving eBay. Many start with setting up their own sites, continuing to do business on eBay, but then switching to solo e-commerce entirely after looking at profit margins."

Comments

I don't know about other people...

[Txiasaeia]

...but Amazon is much easier for me to sell stuff than eBay ever was. Sign in, type in what item you want to sell, name a price, and that's that. Buyer pays Amazon, Amazon tells you to ship, you ship to buyer, Amazon pays you. The first time it takes a while, but after that it's extremely fast.

A.ca takes 15% off the top, but they give you a generous shipping allowance so it doesn't cut into your profit margins (and it's actually fair, so if you *buy* from a seller, that reasonable price stays reasonable b/c the seller can't jack up the price). Win-win for both buyer and seller. The kicker is that every time I've sold something with A.ca, it's taken at the longest a week before somebody's bought it.

eBay? Never again. I'm willing to pay 15% just so I never have to *think* about Paypal.

Disclaimer: I work for neither Amazon nor Google. I'm not getting paid for this. The reason I'm saying all this is because Amazon is the only company I've dealt with over the past few years that has made me feel like a human instead of a problem.

Re:I don't know about other people...

[boodaman]

I've been using Paypal since 1998. As a seller and a buyer. I also have my iTunes account hooked up to it, and also use their ATM/debit/Mastercard. Transaction amounts have ranged from as little as $1.00 to as high as a couple thousand for a laptop.

I've never once, NOT ONCE, since 1998, had a problem with Paypal. The only issue I have with them is their practice of taking a couple extra days to credit my account, but this somewhat sneaky (it is only sneaky because I don't like it, they clearly state how long I might have to wait for my funds) practice is outweighed tremendously by the convenience of their service.

I've been mystified for years at all the complaints about how bad Paypal is...I've never experienced any evidence of it at all, and neither has anyone I know.

This makes me doubt the stories describing how bad Paypal is...I would think that in 7 years of use, me or someone I know would have experienced something bad if Paypal really was as bad as the stories describe.

Re:I don't know about other people...

[LetterJ]

Allow me to introduce myself (then you'll know someone with a Paypal problem), I'm J. Since you're relying on your anecdotes as evidence of Paypal's innocence, the $12,000 that was stolen from my credit cards and linked checking account, coupled with the fact that, even after they'd been notified that the transactions were fraudulent (which I had to tell them, even though all of the real banks involved notified me immediately), they tried to push the transactions through 2 more times (as a "convenience"), puts them in a pretty crappy category in my book. I, too, started using them in 1998. I, too, had their Mastercard. However, I had what you apparently see as a mythical bad experience with Paypal.

So, after signing over the naming rights to my backyard, I finally got a phone number to deal with them (note that all of the 10 or so real banks I currently have accounts with ALL have phone numbers readily available). Of course, Paypal's "dispute" resolution process is to lock all sides until *they* are satisfied that it was fraud. It actually took me nearly 6 months to convince them that, despite the fact that the most I'd moved around prior to that point was $400 and all of it domestic, I suddenly decided to transfer $12,000 to the Czech Republic at 3:00am on a Saturday. Once I finally convinced them that I wasn't the one who sent it, it took another 6 months to get the $150 or so I still had in the account.

Paypal wants to be treated like a real financial institution, but doesn't act like one.

Re:I don't know about other people...

[Fishstick]

well, my experience directly contradicts that and my anecdotal evidence suggests that 100% of people I know using paypal had problems.

I opened an account using a card I got specifically for online purchases. I was a first time bidder on eBay and saw that the seller only took paypal. I opened the account, but never used it (didn't win the auction, never had occasion to use it).

Months later I got a cc bill with all kinds of charges from $50-$500 all to paypal over a couple weeks for a total of around $2,600. I called up the cc company and reported the fraud. They did not seem surprised/skeptical in the least and immediately canceled the card, credited the charges and issued a new card. They sent out a form for me to fill out and sign -- that was it.

Since then I've gotten all kinds of email from paypal telling me that my card is expired. I tried once or twice to contact them to have them cancel my account with no response. Eventually I got a new email address when Comcast took over ATTBI and I've obviously never heard from them again.

I still have no idea how someone was able to use my account, but they apparently bought a bunch of stuff online and the cc company must have ended up eating it.

My brother-in-law also had bad charges show up through paypal. He is the only other person I know who used paypal and in both cases we had problems.

This makes me doubt the stories of people who claim that they have used paypal and never had a problem, or even heard of anyone they know having a problem.

Maybe over the long term this will hurt.

[WebHostingGuy]

EBay, with more than 147 million users world-wide

With this sort of penetration any impact will be neglible for quite a while. There are still a ton of people trying to emulate the largest person to person for sale site.
eBay increases their fees because they can. If they thought these other places were such a direct threat yet they wouldn't do so. There will be a time this combination will be a large threat, but not yet.

None of them are worth it

[DogDude]

The problem is this... all 3 of these aggregators (Ebay, Yahoo, and Amazon) all focus solely on price. Anybody who knows anything about business knows that competing on price is a very, very bad idea. It's almost always a losing battle. On top of that, the fees that these sites charge for selling are outrageous. We've decided to use *none* of them, and instead sell on our own. We get to keep our profit margins, and we get to offer real information to our buyers. We may not be the cheapest to the nickel, but honestly, that's not the kind of business we want. People who are pinching pennies are not the kind of customers you want because there's 0% loyalty... and that's what these agrregators strive for... making the sellers relatively anonymous, and focusing *only* on price. Amazon, eBay, and Yahoo will always be good for small sellers that don't have the means to set up a web site, credit card processing, etc, but once you can do all of that, it makes no sense to work with these big guys, where you'll just be a number in a crowd.

This is the way it should be

[v3rb]

EBay was originally set up to allow individuals to sell merchandise to other individuals. That's why the feedback system was so important. Before PayPal and BidPay you had to use personal check or money order. Do you buy from a seller business with a feedback score of 65322 over one with 4352? When people had feedback 100 it mattered.

People started selling so much they started businesses. Then Ebay started jacking up the fees because they saw businesses making money off their website. Ebay was supposed to be for used merchandise. Now everytime I do a search for used merchandise I can barely find any because I have to wade through businesses that post 20 ads a day because they have 500 units in stock. Ebay just isn't made for that.

The moral of the story is there is a progression that goes from being an individual seller to a company that sells on ebay. If you continue to grow...it just makes sense to get off ebay.

One word.

[dema]

Good.

I was a big fan of ebay back in the day. I still have an account that I use on very rare occasion. But today ebay seems to be nothing more than a portal for people who don't want / can't afford to setup physical shop. Ebay lost is greatest quality, IMO, a while back: the personal experience.

The last few things I sold a couple of months ago were random shirts from indie bands. Of the five people I contacted after winning, none of them ever replied to my emails. One of them left me negative feedback because she felt the shirt was in poor condition. I would've been glad to refund her the money and let her keep the shirt if she had contacted me, but apparently talking to another human (even by email) is a bit too much for ebayers these days.

Dear Seller

[Letter]

Dear Seller,

It's true that Amazon takes 15% of your selling price. But did you realize that they also make money on shipping?

The amount they reimburse sellers is less than they charge buyers for shipping.

Sneaky.

Letter

Be Warned!

[pandrijeczko]

Do not think that you have any degree of protection from PayPal either.

A friend of mine was robbed of £400 after he made a PayPal payment to a seller for a PC. He never received the PC and PayPal took absolutely no interest in refunding the money.

The excuse PayPal gave? The seller didn't have enough credit in his PayPal account to refund the money - and has since been kicked off of Ebay.

Neither PayPal or Ebay care about you being fiddled of money, they take their percentage for basically doing nothing.

phishing

[Fairwind]

The amount of people falling victim to phishing on eBay is frightening. Users with perfect feedback and years of eBay activity can be fooled by a single email asking to verify their account information. I've seen some strange auctions listed from what seemed to be honest and trustworthy people. However it was an account hijacked by a phisher. As the number of phishing victims rises, the feedback system will become obsolete. I hope amazon and google don't suffer a simliar fate.

Re:Ebay will still rule the online garage sale

[NilObject]

I, being a college kid, had a fat stack of old books and textbooks I needed to get rid of quickly and earn some spending cash off of. So I went straight to Amazon.

It took me about an hour total to start a new account and then list (apporx) a hundred books. Then I just sat back and watched the e-mails roll in. "Send this book to this person" "Send this book to that person" Zip! Schwip!

And I made several hundred dollars in the space of a few days by selling a fraction of the books.

With EBay, I would have had to spend an entire day listing listing items, dealing with PayPal, and then getting porked from behind for the fees.

Bah humbug.

I can easily see myself running a full-time used bookstore from Amazon. There's a number of brick-and-mortar companies getting rid of a lot of inventory and making money on Amazon. I can see why: it's so easy that you make up for your 15% commission in the time and labor costs you save.

eBay's biggest problem...

[slavemowgli]

EBay's single biggest problem, in my eyes, is the fact that you still have to pay a considerable fee even if your item does not sell. For casual sellers at least, this makes the whole platform unattractive - other services, such as amazon, only charge you when you make a sale and leave your item up there pretty much indefinitely until you *do* sell it.

Of course, the downside is that you have to pay more; amazon.de, for example, charges both a percentage (15%, I think) *and* a flat fee, so if you have something that you want to sell for less than a handful of bucks, you might actually even lose money - the shipping fees they charge the buyer wouldn't even be enough to cover actual shipping to start with, and they're usually more than eaten up by the fees, too, so you may well end up with a net earning of only one buck for a book that cost the buyer eight or nine bucks, including shipping (it's happened to me). The bulk of the money is, ultimately, shared between amazon and the postal services.

That's one reason I really hope Google gets into auctions - there definitely needs to be some competition in this area so prices will go down. And I trust that Google has both the financial and the technological strength to pull this off - not to mention the "do no evil" philosophy which would make me trust them to not rip me off *too* much at least.