With ebay’s recent spinoff from Paypal, I thought this was a good time to review what went wrong with the auction giant. Yes, things did go wrong. Otherwise, ebay would be in a much better place. Afterall, ebay admits Paypal was its money maker. Yet Amazon and Google stock are worth hundreds of dollars more than an ebay stock. Why is that? Ebay started only a couple of years before Google and a year after Amazon. Of the three, Google stock is worth more but Google has given us more, literally. Google has provides us with Google Earth, Youtube, Google Books, and Google Analytics…I could go on…all for free. Neither Amazon nor ebay compare in the contribution of free things Google has given the public. Yet ebay that is the really cheap stock compared the other two giants and there is a good reason.
The reason that ebay stock is so cheap after twenty years is because ebay is cheap and forgot why they were such a mega hit when they forgot the seller that put them on the cyber-map. Sellers have been leaving ebay every year for over a decade now, due to their new allegience to China and unscrupulous buyers. My first purchase on eBay was some item, I don’t remember what, that I bought from Australia in 2001. I was so green and didn’t know what I was doing. I remember that the shipping was three times what I paid for the item. I didn’t want to pay it. I didn’t pay for it and of course back then, I did not get it. I got a negative feedback instead, on my first purchase.
I was so naive that I kept that negative feedback. It took years for me to see even 98% positive feedback. As I purchased more and later sold on eBay I realized how dishonorable I was. I deserved the negative feedback. I have since forgiven myself. I just didn’t know.
That was when you could give a buyer negative feedback. That was when PayPal was new and separate from eBay. So much has changed since then. Since then, the eBay landscape is unrecognizable to me. Until a few weeks ago, I had only two sales since 2007: a lot of Little Golden Books that I sold for $.99 (yes, that’s all I got) in 2010 chestnuts from my chestnut tree that I sold for $51.00. In between that time I had been working, working hard with no time or interest in selling on eBay. I was a buyer, though. I bought a lot.
I made many purchases on eBay because at least as far back as 2008, eBay has been a buyer’s market. Buyers rule on eBay. They rule not only in eBay policy but in value for their dollar. As a buyer this was wonderful. Low priced items were plentiful and so was free shipping. Because I had also been a seller, I wondered how sellers were making money. In most categories profit margins appeared to be slim. Of course, you continued to have you high cost electronics and one of a kind collectibles selling for what appeared to be good money, but I questioned if even they were making what they used to make.
I returned to selling on eBay this year, 2011, in June. So much had changed, beginning with limits on how many sales I could have. I wasn’t used to that, thinking I was going to make a killing with my comeback, and I was able to convince eBay to raise my limit to 200 items or $5000, whichever came first.
Before listing items, I did my homework. I researched how much I might get for I what I was going to sell and I did my research. What I discovered was that the auction giant had made serious changes in the years between my last sales. Big changes.
Those changes include high listing fees, high final value fees, new shipping fees, low selling limits, the inability to leave unsavory buyers negative feedback, thousands of Asian competitors, and arbitrary holds on sellers’ PayPal accounts.
Fees started quite small on eBay. That is what made it so attractive to both buyers and sellers. EBay has changed their fee schedule so many times since, that it has left sellers dizzy with frustrations. Most recently, eBay has attached fees to the sellers shipping cost. So, unless you list your item with Free Shipping, sellers now must give eBay a percentage of their shipping cost.
2. Selling Limits
According to eBay, selling limits allow new sellers, or returning sellers like me, to get acquainted with eBay rules. My original selling limit this past July was set at a maximum of 10 items or $500 per month. My limit was increased to 200 items or $5000 per month, as I mentioned, without any problem from eBay. I knew I was not going to reach 200 items or $5000 in my first few months selling again. Far from it. I just didn’t like the restriction. I never listed more than 9 items in a week’s period of time. I didn’t do very well with those items, I only sold one or two items, but I was not discouraged. I was so sure of the eBay platform. Little did I know of the other obstacles that surrounded me and that would so ultimately discourage me.
3. Negative Feedback
Sellers are no longer allowed to leave negative feedback for buyers. This practice in started in 2008. According to Bill Cobb, then President of eBay, North America, “buyers are more afraid than ever to leave honest, accurate feedback because of the threat of retaliation” from sellers. As an eBay buyer, I know this to have been true. Sellers, angry usually because of a complaint from a buyer, or a return, would leave negative feedback for the buyer. Recovering from negative feedback, as I mentioned earlier, was and still is very difficult. I did not find this to be the norm in my transactions. I am sure something had to be done since Cobb stated “that sellers leave retaliatory feedback eight times more frequently than buyers do,” a problem eBay surely had to resolve. EBay’s solution, however, caused nightmares for sellers, especially once buyers realized their new powers. The results are that sellers do almost anything to keep their buyers happy and prevent negative feedback. It is not uncommon, according to the eBay community message boards, for a disgruntled buyer to keep a seller’s merchandise after they were refunded their money.
4. Asian Sellers
These sellers are selling items for $.99 and sometimes less. When I was just buying on eBay, I was one of those who purchased from China. I bought a baroque coffee pearl memory wire bracelet for less than 50 cents two years ago. In addition, some of the sellers, from China in particular, sell items for 99 cents with free shipping! Such bottom line selling is difficult, if not impossible to compete with. This phenomenon is not missed by the eBay message boards. The boards are abuzz with not only how can one compete with that but also how are they able to make any money? Enter more research and what I found was an article in Bloomberg Business Week, How EBay Found a Secret Way Into China by Bruce Einhorn. According to the article, eBay lost money purchasing China’s Eachnet, “at the time China’s top e-commerce site.” Einhorn goes on to explain eBay lost over $200 million on this purchase. So what does eBay do? According Einhorn’s article, eBay subsequently brought small Chinese entrepreneurs together with non-Chinese consumers. In addition, Einhorn reports that eBay “launched a service, together with China Post and the U.S. Postal Service, to provide a way for foreign buyers to track their China purchases and allow sellers on the mainland to offer free shipping.” You can visit Ebay’s China site at ebay.cn. You should go “incognito” though because ebay has a mechanism in place to block you. The site is in Chinese but you can do a Google translate of the page. What you will find are tools that no European or American ebay site has to help sellers with their products. I also didn’t see any buying by the Chinese, just selling. It makes sense that ebay and even our own postal service have sold us out. How else can a Chinese seller sell an item for $1 and free shipping.
5. 21-day Hold
This was the last straw for me. First let me tell you how it used to be. Previously, a buyer paid a seller through PayPal and once that payment cleared, (instantaneous unless done by an echeck), the money the seller earned through his sale was then available to actually ship the item. I have experienced a hold, although it was several years ago. Back then, as soon as a buyer disputed a sale, for any reason, your PayPal funds could be frozen. Otherwise, as long as there was no dispute, fund were released to sellers immediately. Recently, sellers were told that this hold policy would be enforced on sellers with few sales, no sales, risky items, etc. Now, in present day eBay Purgatory, it appears that the hold is a random policy. Payments from buyers are now held until the buyer receives the item and/or leaves feedback. What if he doesn’t leave feedback? Many buyers do not. This policy took away the last bit of incentive to sell on eBay. This policy has been enforced recently, with a vengeance. Initiated in 2008 the policy states that,
Clarification is included about instances where seller funds may be held as pending in their PayPal accounts. eBay has at times requested, and may continue to request, that PayPal hold seller funds to help facilitate smooth transactions. eBay will make such requests based upon factors including, but not limited to, selling history, seller performance, riskiness of the listing category, or the filing of an eBay Buyer Protection claim. PayPal may also hold funds pursuant to their own Funds Availability Policy.
Unfortunately, the recent implementation of this policy has frozen accounts of sellers in good standing and newcomers alike. Sellers are complaining that their PayPal funds are being held after recent sales. Some of these sellers have no negative feedback. Some are new sellers with tragic stories of not being able to ship items because their funds (payments from buyers) are frozen. As I mentioned, often a seller uses the money from the purchased item to ship that item. When I sold on eBay, I usually shipped with the shipping costs the seller paid. Rarely did I pay “out of pocket” and when I did it was because it was convenient. After reading the nightmares sellers were experiencing on eBay with this 21-day hold, a hold that, according to some sellers, sometimes lasted more than 21 days, I slowly backed away from eBay.
6. 14-Day Minimum Return Policy
Ebay’s most recent anti-seller policy is their 14 day minimum return policy and partial refunds to buyers. Ebay gives buyers way too much credit. Yes, most buyers are honest and I am witness to that. Only once did I have a buyer try to swindle me after they received a product. I offered to return their money and pay for their shipping both ways (and this was before this also became a quasi ebay policy). Because I really liked the item, it was OK. The buyer decided to keep the item. Even in retail, people know that buyers can sometimes be dishonest but this has not deterred ebay from favoring them. So not only does an ebay seller have to provide refunds up to 14 days after a sale, they also may have to refund part of the money they made if they buyer complains and at the amount ebay says they must refund.
In addition, and perhaps most important, ebay has partnered with China Post (China’s postal system) and US Post Office to make shipping easier and cheaper for the Chinese to sell on ebay. You can visit Ebay’s China site at ebay.cn. You should go “incognito” though because ebay has a mechanism in place to block you. The site is in Chinese but you can do a Google translate of the page. What you will find are tools that no European or American ebay site has to help sellers with their products. I also didn’t see any buying by the Chinese, just selling. It makes sense that ebay and even our own postal service have sold us out. How else can a Chinese seller sell an item for $1 and free shipping.
It is one thing to have policies that may irritate a seller because they make what used to be a simple auction site into a more complicated selling venue. It’s another thing when you’re not sure if you are going to be able to access the money you earned and believe me, you work for the money you make with eBay. Sellers take pictures of every item they list. Sellers write descriptions of every item they list. Sellers monitor every listing for accuracy and questions that may be asked about their items. All of this has sellers asking themselves, what is going on? What is eBay really doing to the American seller?
The answer to what eBay is really doing may rest in an article written by a person claiming to be an eBay insider. The article was originally posted on eBay’s discussion board in May 2008. According to one source, this post was removed by eBay but upon our search, the entire post is still there, although not by the original author. The post was a prophecy of sorts. It is prophetic because even if the author was not an insider, much of what the author wrote has come true. A sinister plan by eBay emerges, according to an anonymous author who wrote, “The powers that be want to transform eBay into an overstock warehouse.” After warning seller of many things that have come true, the author warns, “Sellers, my advice is simple. You are not wanted. Leave. If you stay, you will be crushed. Leave. Go away. You cannot win.” This article can be found throughout the internet. You can read it at the here in its entirety.
Many people have made a nice living, even fortunes on eBay. When it was started, it shined with all the glitter of an ingenious idea that allowed people to make extra money or a lot of money. It connected people from around the world. Today, the only thing keeping sellers on eBay is that it is the only eBay there is. Regretfully, there is no other auction site as well known or with as many users. Unhappy sellers are looking, though, looking hard. One day, someone will find eBay’s replacement or program it themselves. When that happens, and it will, eBay will be a memory of a good model gone bad.