EBay Deal Irritates Individual Sellers

Dekortage writes "EBay's recent deal with Buy.com appears to be seriously irritating its veteran individual sellers. The deal allows Buy.com and other large fixed-price retailers to list millions of items on eBay without paying listing fees, and appears to be the direction that eBay will follow in the future. Understandably, individual sellers are outraged. 'I've paid eBay many hundreds of thousands in fees over the past several years and believed them when they talked about a level playing field. And they just plain and simple are going back on their word.' This comes after the dire prediction that eBay is losing its popularity."

Comments

No competition

[N8F8]

With no real competition in the online auctions and micropayment system, I don't see things getting better. Craigslist auction anyone?

Re:No competition

[ciscoguy01]

Google auctions, more likely. Craigslist's business model is ridiculous.

Re:No competition

[Notquitecajun]

Many of the hard-core ebay whiners on its website are practically BEGGING google to open up an auction site, mostly because it will have practically millions as a buyer base overnight. Ebay's other competitors can't match that yet.

Re:No competition

[Gewalt]

Their model is to *not* sellout. They are doing quite well at that.

Re:No competition

[Fulcrum of Evil]

But no guns. Heaven forbid you buy a scope on craigslist :)

Re:No competition

[BlueStrat]

That's exactly it. We Americans have a very distorted perspective.

Used to be you could open a little produce shop, live above it, sell produce at a reasonable price and provide personalized service to your customers, and by that make enough money to support your family and pay your bills... and that was all you needed - you were successful, your business was successful, and you were happy.

You did that until you retired, and if your kids took over the store, great - if instead they went to college and became doctors or accountants or opened up a used furniture store and did like you did - great.

The American dream, you were all happy and successful.

NOW, if your produce store doesn't become "FRUITCO," with thousands of locations, grabbing the most market share and beating out "GREENSCO" to become the biggest produce corporation on the planet with diversified subsidiaries, then you're "failing."

Nationally we seem to have an all-or-nothing mentality.

Actually, I think that one of the bigger obstacles to small shops as you describe are the infrastructure requirements and costs to be in the market. The laws, legal liabilities, and regulations regarding any sort of business these days is centered around a large corporate entity.

Complying with regulations and laws regarding things like records, reporting requirements, insurance, certified inspection and licensing, zoning permits, labor laws, taxes, etc etc, on and on, cost a large corporation only a tiny fractional percentage of their gross income, but the percentage does not scale down linearly to small shops and is prohibitive. Not saying that all or any of the above is good or bad per se, just that in total, the costs of all of the burdens that are put in place to regulate and restrain the behaviors of big corporations are beyond the means of many small operators.

Cheers!

Strat

Bottom Line

[Hyppy]

Unless it is in a binding contract, with severe penalties, you should never expect a company to "keep its word." This is especially true when keeping said word affects the almighty Bottom Line. Cash is king, peon.

Re:Bottom Line

[Daniel Dvorkin]

You hear that kind of excuse a lot, just like when a politician does something particularly egregious (e.g. Obama's FISA vote) you hear people explaining, "Oh, that's just a compromise to get more votes. He can't do anything if he isn't elected."

The problem with the stock explanation is that it's very often just wrong. Ebay's current emphasis on big sellers at the expense of individuals is losing them money, just like Obama's FISA sellout is losing him votes. Piss off your core market to chase some other potential market, and odds are you won't do well with either. By all means, businesses should try to expand their customer base and politicians should try to appeal to more voters. But when you abandon the people who got you where you are in the first place, you're almost guaranteed to suffer overall.

Businesses that do well are those which build a steady, loyal customer base that keeps coming back for more. This is particularly true in the online world, where changing to a competitor is very, very easy; the few success stories to come out of the dot-com mania of a decade ago show how to do it right. Amazon, for all its evil, still does a damned good job of selling books. Google, no matter what else it does, remains far and away the best general-purpose search engine. Until a couple of years ago, I'd have counted Ebay among those success stories, but now it looks as though they were just as flaky as any HowFastCanWeBurnVentureCapital.com site; they just took longer to show it.

Suits and their sycophants love to talk tough about how they serve the bottom line ... but in the real world, the suits are wrong more often than not, and here's a sterling example.

Re:Bottom Line

[Daniel Dvorkin]

How was what I wrote a "political rant"? I'm talking about the effectiveness of business and political strategies, not about the merits of political positions. The Obama/FISA analogy naturally occurred to me because, as a Democrat, I pay attention to what my candidate is doing; I'm sure a Republican could have come up with a similar analogy involving McCain.

Apparently you missed the actual point of my post, so I'll say it again: businessmen, like politicians, very frequently do really dumb things, and they always have sycophants who will explain that they're doing those dumb things in pursuit of getting more of whatever they're interested in (money in business, votes in politics) while ignoring the fact that they actually end up with less of whatever it is they're after. So yes, it is just making excuses instead of actually looking at (to borrow a phrase from another hot topic) the facts on the ground.

Duh

[Daniel Dvorkin]

I know several people who used to do a lot of business on Ebay who are rapidly becoming disgusted with it because of its clear preference for giant sellers over individuals; I'm not at all surprised to hear that this is a general trend.

Why is it that so many executives feel the need to destroy a successful business model? Ebay started as an online auction house where individuals could find a worldwide audience for cool, quirky stuff, and it was wildly successful as such. If its executives want to start a site for selling commercial products with free-floating prices -- which is essentially what they're turning Ebay into -- then fine, but why are they abandoning the business that made them successful in the first place? Ebay was one of the few real success stories to come out of the dot-com boom. It's really sad to see them throwing that away now.

I based my business model...

[TheRaven64]

... entirely on a single corporation with major incentive to see me succeed, and now it turns out that they aren't acting in my interests!

Some people really make me wonder about humanity.

Ebay not going away, but changing...

[Notquitecajun]

I'm getting a little more and more irritated about this stuff with ebay, and I would honestly jump ship if there was another decent auction-style competitor that is close to the ebay of the early 2000s.

Ebay is doing some SERIOUS wrong by the small seller (mostly through their fee issues, I don't think the feedback issues are as bad as some sellers try and make them out to be), and despite their platitudes, is turning into Amazon-lite. I have no huge problem with this, but they really need to make a decision on who they want to cater to and either split into two divisions or send the small-time buyers and sellers somewhere else.

I completely understand that businesses need to make money, and the buydotcom route may be one way to do that. However, ebay is WIDELY opening a door for another company to undercut them in the small seller market, and those of us who collect, buy, and sell anything used on a small scale and aren't interested in just shopping online for new stuff that we can get down the street at Wal-mart or wherever.

Their gun policy made me bail on them

[m0nkyman]

Their anti gun policy made me stop using ebay years ago....

Re:eBay is a shareholder in Craigslist

[longacre]

eBay's stake in Craigslist does not allow for any management input on eBay's part, and based on Craig's previous behavior I don't think he'd have any qualms about competing with them.

Natural monopolies

[sjbe]

Ebay has name recognition. That's all...

Sadly that is not all eBay has. EBay has network effects working for it which makes it VERY hard to displace them no matter how much money and talent is thrown at the problem. Buyers go where the sellers are and vice versa. Amazon and Yahoo both tried to take market share from eBay and both failed miserably. There are lots of other auction and e-commerce sites out there but none of them are likely to displace eBay anytime soon.

That's not to say eBay won't cut their own throat (they might) but that's pretty much what it will take to make a real dent in eBay's market share. Ebay's business tends towards a natural monopoly as do many marketplaces.

Re:The harder they fall...

[Anonymous Coward]

Well, it is an auction, and a fixed time length.

One thing eBay should do to fix one of the major problems of their auctions is that every time a bid is entered, and there is less than 5 minutes left on the auction, the auction time should be extended to 5 minutes.

That way, there is none of this nonsense of waiting until 10 seconds before the end of the auction and then bidding furiously. If you knew that each time you bid you would extend it 5 minutes to give other's a chance, items would be selling for realistic values and not trumped up values in the last few seconds of an auction.

The Need for Growth

[sjbe]

I know several people who used to do a lot of business on Ebay who are rapidly becoming disgusted with it because of its clear preference for giant sellers over individuals; I'm not at all surprised to hear that this is a general trend.

The only sellers that should be disgusted are ones with their head in the sand. EBay's costs mostly fixed so they grow through volume. You get volume through larger customers who can provide that volume. Economic inevitability.

EVERY non-regulated company I'm aware of besides eBay provides volume discounts in some fashion for larger customers. I was an individual seller as well as a high volume power seller. One of the (many) reasons I no longer sell through eBay is precisely BECAUSE they provided no incentive for me to bring additional business to them. They kept raising rates instead of providing incentives to bring additional volume. Basically they priced me (and lots of others) out of their marketplace. It was too expensive as an individual or a business to continue to sell on eBay.

but why are they abandoning the business that made them successful in the first place?

The short answer is that they decided a long time ago to become a publicly traded company and the growth demands of being public is the deal with the devil you make to get equity funding. That's why companies don't really want to go public unless the owners are either cashing out (private equity) or they have no other choice. Had eBay remained a privately held company they could have chosen to stay their present size.

Businesses out grow their original business model all the time. Some businesses simply do not scale beyond a certain point. Amazon started as an online bookseller that had no warehouses of their own. That only scaled to a point. IBM got out of the personal computer business not long ago. That particular niche of the industry just didn't hold enough growth/profit potential for them anymore and was more of a distraction than an asset. When you are a publicly traded company shareholders demand growth and eBay has hit a wall with being the world's premier online flea market.

Re:Google doesn't want the liability

[torkus]

Well the big difference is that eBay tries to act like wal-mart. Making everything fit their ideals, extra safe, family oriented and nicey nice ... as long as they can squeeze out the extra .01c per transaction.

Is it me or has the size of eBay become the other half of the downfall. I hate searching for something and finding a million junk auctions or ubsurd shipping (which ebay is mostly to blame for anyhow) on many others. People that list 1000's of items simultaneously all for 'buy it now' aren't auctioning anything - they below in a store. Perhaps part of a larger, searchable multi-store "online mall" but still.

Ebay is trying to move away from 'auction' and towards 'online store front'. Meh.

Give me a google auction site and maybe i'll start doing online auctions again. Or better, convince Visa, MC, AMEX, or anyone to offer a realistic e-payment system that supports micropayments and fees somewhere close to reality. Seriously.

I can understand the reason for those, though

[phorm]

Guns, alcohol, and many others can be a regulated or restricted market. There are age-limits, and various others (permits required, restrictions against owning a firearm, etc) which makes the whole thing rather complicated. When your business is general-auctions, some things are best left to the specialists.

Re:Google doesn't want the liability

[EdIII]

All that of course assumes Google could take marketshare from eBay where Amazon and Yahoo failed. That's a BIG assumption.

A big assumption? Hardly. Amazon and Yahoo were competing with eBay when is used to be viable. That was very hard to do, VERY HARD. Amazon was really only good for literature and music anyways and they seem to be moving in that direction still.

I used to search eBay for items FIRST . I would get an idea of what the prices were, how much I could bid, how long to win, etc. I got many a laptop at 60-70% off retail prices for my clients doing this. I sold my cars on eBay, even though I never actually completed a sale. I just got leads.

Once eBay forced to me to offer PayPal I instantly canceled my account and told them why. I have not even used eBay as a buyer since then at all. In fact, I don't remember even visiting their website in quite some time. I now use Google Shopping quite a bit to locate good prices on the equipment that I need.

Google could have a user base millions strong overnight, and not by taking active eBay users either. They would have those millions that are waiting in limbo for the next big auction site to service their needs better than eBay.... like me. As soon as another company comes along that offers anything close to eBay I will give them a shot. I doubt that I am alone.

As for sellers, eBay just committed the final act of suicide. I cannot understate that. Inking a deal with a major outfit like Buy.Com is a big move, and without listing fees, a fatal one. The Power Sellers will not stand by and "compete" with Buy.Com in a one-sided unfair fight. That's ludicrous. How could they? Buy.Com could compete with volume alone and with the savings that no listing fees represent it force regular sellers to destroy their own profit margins to stay afloat.

No, I don't think it is a big assumption at all. I think you underestimate just how pissed off people are, both buyers and sellers alike. eBay is losing market share to the VOID . People would rather be doing anything but eBay, even if that is nothing at all.

eBay is losing both buyers and sellers at a pretty fantastic rate. Only they really know, but I bet they are being tight lipped about it. Probably even lying to themselves that they don't need those people or that they will be back. eBay is becoming less and less relevant as an online auction site for the common man. That is how they started it, and they have forgotten their roots. Perhaps they want to push to become something bigger and new, but they can't do it without the people that started it. When Joe Blow can't sell his stuff on eBay anymore, I don't see how he will continue to buy stuff either.

Personally, I thought eBay was going under after the PayPal scandal. With this new development.... start the death watch today, July 14th, 2008.

Re:Google doesn't want the liability

[sjbe]

I am not insulting you or flaming you either. Those bastards LIE. LIE, LIE, and LIE some more. It's always worse than what they are telling you, and I am sure some pretty fancy "Arthur Anderson" type accounting can hide how many users they have lost.

Again, nothing surprising to me here since professionally I'm a degreed industrial engineer and a certified accountant. When I'm not trying to be an entrepreneur I'm in the business of operations consulting so I need to know every sort of problem I'll run into including cooked books. I know all about the games that can be played with the numbers as well as the operations.

If you want the the short version of my opinion on eBay's prospects, I think eBay is on the verge of some serious problems but they aren't there yet. It's sort of like Microsoft in a way. Few people really love them but they haven't quite pissed everyone off enough to really torpedo their business. I think the biggest threat to them actually is litigation from luxury goods makers. That has the potential to drastically increase their costs and open the door to other marketplaces. But I don't expect anything in the near future. I expect eBay to remain a cash cow for the next several years at least.

But hey, here's to hoping eBay goes down like the Titanic...