Posts filed under 'eBay'
Wasn’t it just 2 years ago that eBay wanted to bring back the “vibrancy” to core by encouraging 99 cent starting bids? In 2006 they decreased the listing fee for the 99 cent starting bid while increasing the costs for eBay store listings. eBay felt the need to go back to their roots – the auction format.
So it was with shock that I read the new fee structure. eBay’s 99 cent auction sellers are no longer the darlings of eBay. They have been hit the hardest by the new fee structure. Because the traditional 99 cent auction sellers generally have a very high sell through rate, they are being hit hardest by the large increase in Final Value Fees. Although their insertion fee has decreased by 5 cents it’s nowhere large enough to make up for the 3.5% increase on the backend.
Yet Fixed Price sellers, who generally have a low sell through rate, have seen their insertion fees decrease greatly, especially the majority who use gallery. They still pay the increased FVF, but the decreased insertion fees will more than make up for the increase in FVF’s for those seller with sell through rates below 50%.
I call this the “eBay flip flop”. Just like a politician, eBay can’t make up their minds if they want to be an auction site or a fixed price site. They tried to have a separate format for fixed price, ie eBay Express, which has been such a failure that it is being discontinued in the UK.
When did eBay make this sudden turn to woo Fixed Price sellers? Was it in 2007 when they noticed Amazon’s third party marketplace suddenly grow by leaps and bounds? eBay started getting worried that they were losing market share, not auction market share, but Fixed Price market share. This seems to have come as quite a surprise to eBay management. Suddenly they realized that Fixed Price listings make up 40% of all listings. Yet sellers are flocking to sell on Amazon.
In order to compete with the Amazon Marketplace, it appears that eBay has decided to throw their true auction sellers to the wolves and woo back the Fixed Price sellers. Yet this does not seem to be a very good long-term strategy. Has eBay not noticed all of the niche auction sites? There are auction sites for baseball cards, shoes, liquidation items, etc. What are you going to do eBay? Wait for these niche auction sites to take away your true auction sellers and then do another flip flop in order to woo them back? At least one very large traditional auction seller is seriously considering either starting his own auction site, or negotiating with other auction sites to move all of his auctions and customers away from eBay. It’s been done successfully before, and it will continue to be done until eBay gets a clue and starts treating these two formats differently.
What will it take for eBay to realize that pure auctions and fixed price listings are two different animals that require different fee structures? They seem to understand now that there are buyers that prefer auctions and there are buyers that prefer Fixed Price, yet they still charge the same fees for both.
I say this because I was recently thrown into one of eBay’s search tests. My results were shown in two columns, one with Fixed Price listings and one with Auction listings. This is a good start, but does not go far enough. Different fees should be charged to recognize the differences in selling in each format. If eBay doesn’t realize this and make this needed change, they will continue to lose their large sellers. Last year they lost Fixed Price sellers, this year they will lose large auction sellers.
Why different fees? Because the needs of Fixed Price sellers are different than true Auction Sellers. Sellers with multiples of items need lower insertion fees so they can afford to list all of their items at all times. Let them pay for success – when an items sells. eBay has started to “get” this.
However, true Auction Sellers have close to 100% sell through, so why penalize them for selling by charging such a high back end fee? Charge them a higher insertion fee, since you know their item will sell, and lower back end fees. This will encourage the auction sellers to stay and to list higher value items at lower starting prices which will encourage auction buyers to stay on the site and continue bidding. The auction buyers are the backbone of eBay; by chasing away the true auction sellers, eBay chases away the auction buyers. And that is bad for every eBay seller.
Cyn
February 2nd, 2008
This week Ebay announced several major changes to their platform that will go into effect over the next 5 months. The first change starts February 20th and will affect Ebay fees. The second change comes in March 08 when ebay makes “best match” the default search, which I beleive includes “finding 2.0″. The third change is planned for May 08 when Ebay will restrict sellers mutual feedback privileges.
It is impossible to tell how the overall combination of changes will have affected the majority of Ebay sellers 6 months from now, but some guesses can be made about the impact of each individual change and anyone who is concerned will find many more discussions on the topics on the IMA member forum. The initial opinion of some IMA members is that the fee increases will cause a 0-25% increase in fees. Twelve members have stated their overall fees will decrease. The sellers who estimate a decrease are those with a lower sell through rate (10-40% sell through), and a typical selling price between $1.00 to $25.00. Those hardest hit on fee increases typically have a high sell through rate, and higher average sale price. The Auctionbytes blog has a very good article where numbers show everyone’s fees will increase.
The second major Ebay change will occur in March 08 when all categories default search will be changed to “best match” or “finding 2.0″. Some sellers with low DSRs and a high level of buyer dissatisfaction will begin to place lower in search starting in February. It is impossible to tell how best match will affect sales. I personally saw a drop in sell through from a high of 40% to a low of 5% during the weeks when Ebay was testing the best match algorithm in unrelated categories. I suspect it was due to buyers confusion with the new search, and possible glitches with the overall finding mechanism on Ebay during these tests. My sell through would increase as soon as the search returned to normal. The “best match” algorithm is below:
The third major phase of changes is scheduled to begin in May 08 when Ebay takes away seller’s right to participate fully in “mutual feedback”. Sellers will only have the option to leave positive feedback while buyers will still be able to give negative feedback. This dynamic creates an “Amazon” like atmosphere for feedback. Sellers who sell on both Ebay and Amazon have reported that their feedback on Ebay is 100% positive, but their feedback on Amazon is anywhere from 78% to 98% positive feedback. So the future of 100% positive feedback on ebay looks bleak. Unfortunately, there have been no announcements about whether the powerseller requirement of 98% positive feedback will be changed accordingly, but there are rumours that Ebay will be watching closely and change the requirement if they think it is “needed”.
I tried to find some Amazon sellers feedback to compare, but I couldn’t find the seller feedback displayed anywhere. There is apparently very little emphasis put on feedback for Amazon sellers. Which is unfortunately not true for Ebay. The sellers most susceptible to having this change hurt their business would be those who sell luxury items where buyers need to be able to trust the seller’s reputation before they buy a gold watch, or vintage diamond ring. The sellers least hurt will be those selling a large amount of items with lower selling prices. Buyers don’t care about negatives if the price is right on low dollar items.
There are a multitude of perks being given to powersellers if they keep their 30 day average Detailed Seller Ratings (DSRs) up, but none of those will matter if their overall positive feedback dips below 98%. So it isn’t worth spending the time discussing.
The reason Ebay gives for taking away sellers participation in “mutual feedback” is an increase in sellers leaving buyers negatives after the implementation of DSRs in combination with the buyer dissatisfaction suspensions in April 07. Many sellers suddenly found out that if 5% of their buyers left them negatives/neutrals their selling privileges would be revoked (I say suddenly because it was overnight for many). Ebay representatives told them to approach the buyers and ask for a mutual withdrawal. Unfortunately, most buyers won’t consider a mutual withdrawal unless they also have a negative to remove. Ebay also made neutrals count as negatives without giving sellers any warning. So, a lot of Ebay sellers desparate to save their livelihoods starting leaving negatives for buyers who left negatives/neutrals. Ebay says the number of buyers leaving the site because they got a negative has increased 4x since Apr 07.
Oddly enough, I went through my feedback for the last 90 days and found that the buyers who are no longer registered either were non-paying low feedback buyers with multiple negatives for not paying, and/or buyers with 100% positive feedback whose accounts had been highjacked so many times they felt safer closing their account until they decided to buy again.
Whatever you sell on Ebay, one of the changes listed above is going to affect you. A very good description of the affect on different selling styles is given by Scot Wingo on his blog with comments from some ebay sellers. And another great interview by Ina Steiner can be found on the Auctionbytes blog. Pay particular attention to the question Ina asks at the end about whether Ebay is going to begin offering the same type of customer service Amazon does since the fees charged are now very close.
Jennie
February 2nd, 2008
Written by Cathy
I had the opportunity to go to eBays ecomm program and I want to thank those who were a part of my invitation. And like everyone else, waited patiently for the announcement and I knew my business had to adjust again if I wanted to continue to sell on eBay. As soon as ebay announced the changes that they were going to implement in the next few months, all negative emotions poured out with eBays top sellers. Thoughout the day and evening I listened and observed, the complaints that all sellers had. Speaking to over 50 businesses, only 1 (an IMA member) said the changes would not hurt him. His DSR was so good in shipping that he will receive the 15% rebate on his FVF and this covered his additional fees.
That afternoon there was a Q&A and you can hear the complete session here. Click here to watch video
I am still in DC and sitting in the hotel lobby and had the opportunity to talk to at least 35 stores and asked again, what are you going to do. It was a different attitude and I guess the shock wore off and every seller told me that they have work to do when they get home. And the majority of the sellers said the same thing, communicate with the buyers more.
I feel for the 99cent sellers and when they look at the new changes, their increases are at least 50% higher. I personally witnessed our IMA President go to bat for them and dont quit yet. (I am convinced that the Energizer Bunny is really Steve Grossberg is the pink bunny suit.)
For those that are not 99cent sellers, eBay had no choice. Unfortunately Meg ignored the many problems for many years and the drastic changes had to be made. The good sellers will get through this and to join an organization, like IMA, you have an opportunity to talk to other serious business sellers and guide you through this.
Me? I personally am excited to see the bad sellers not get the top search and if it costs me a little more money, it will come back two fold. I welcome the changes and I thank eBay for FINALLY recognizing the problems and FINALLY taking action.
January 30th, 2008
One day my curiousity got the better of my common sense. I decided to find out if running only Ebay auctions with low shipping would put me higher in the ebay search, and increase my sales. So I started a brand new Ebay selling account, and tweaked some things.
The new account has core auction listings only. I lowered my shipping from $4.00 to $2.75, and offered free shipping with the purchase of two items. I ship items the day after they are paid for instead of my normal two days a week. Otherwise, the level of communication is the same, and the auction format is the same. In other words, I made sure I was doing everything in the recommended Ebay 5 star way of thinking.
I found out that my placement in search is not better. My Detailed Sellers Ratings (DSRs) are lower on the new selling ID even though I am offering better service and lower shipping. And Ebay needs to work on the tools available to new sellers.
Why isn’t selling manager free! The only way a new seller can send a free automated shipping notification through Ebay is if postage is purchased through Ebay???? It seems pretty clear that selling tools should be free especially if DSRs, and buyer happiness are important. Why not make every selling tool free to new sellers, so they can increase buyer ecstasy?
And what is with the DSR ratings????? They can’t have any validity if the incredible service I am giving combined with super cheap shipping gets 4’s more often than 5’s. What gives?? I have to laugh when significantly lower shipping charges result in a lower DSR rating for shipping and handling charges.
The sell through rate is about 35-40% which is the exact same sell through rate for vintage jewelry on my old selling ID. I have had my new selling ID for a little over a month, and it is very obvious to me that I need to find a new product line that I can sell on Amazon. The new ID keeps the numbers right in my face. I calculated my costs, and found that I am making a whopping $2.50 per hour selling vintage jewelry on my new selling ID. So, unless the profit increases with my feedback, Amazon here I come!
I have to admit though that I got a thrill when I received my first star, and I felt a tingle up my spine when I got the e-mail from Ebay congratulating me for passing 25 feedback rating. So the magic in selling on Ebay for the first time is still there. I estimate that I will be getting a coveted “Meg Whitman” signed bronze powerseller certificate in the next month or so. I think I will have this one framed since it is sure to become a collectible.
Overall, I found this experience to be liberating. I have found out that tweaking the small things like shipping charges, and shipping time make no difference to buyers. And it makes no difference to placement in search. It does however create repeat buyers which has become the key to core auction success on Ebay in my opinion.
Jennie
December 6th, 2007
I recently discovered that the Walmart employee who developed the statistical analysis packages that put Walmart at the top of the discount retailer heap, is working on the same type of statistical analysis for Ebay. This started me thinking about comparisons that can be made between Walmart business policy and Ebay business policy. What is the same about both corporations, and what is not?
For starters, both corporations are concerned with profit above all else, and bringing products to the consumer at the cheapest possible price. Both have a reputation for offering products at rock bottom prices. Walmart is known for taking advantage of manufacturers to get the best deal.
I got that far, and an interesting comparision came to mind. Suppose Ebay saw all the sellers on their platform as manufacturers? Say we Ebay sellers were considered the same commodity to corporate Ebay as the manufacturers of goods are to Walmart? Walmart is known to have broken many a manufacturer by refusing to sell their product until they lowered their price. Walmart can get away with this because they have gained control over so many small town retail markets. It hurts not to have your product sold at Walmart.
So how can Ebay break us unruly sellers to make us lower our prices? By implementing a new search that puts the cheapest product, being shipped at the cheapest rate, ahead of everyone else in search? By creating a secret algorithm that allows them to place any seller above all others in search? Will the sellers with the cheapest priced products always be first in search after Finding 2.0 is implemented? I don’t know the answer to any of those questions, but I do know that Ebay goes out of their way to encourage me to lower my opening auction bids.
I get e-mails telling me that if I start my auctions at a lower opening bid, I will get higher overall auction sales. I have buyers who don’t bid the first time I list an item waiting for me to relist my items at a lower price. Ebay allows sniping of auctions at the last minute which lowers final sale prices. And there are many more examples.
Why do both Walmart and Ebay believe that offering products at the cheapest price is a good business practice? Wouldn’t it be wiser to offer quality products at a price that keeps your manufacturers/sellers in business? Ebay could try to raise their profits and reputation by implementing practices that raise buyer awareness of realistic pricing and shipping costs. It would be an interesting Ebay world where they spent more time teaching buyers why products are worth more, rather than training sellers to expect less.
Jennie
December 1st, 2007
One of the most interesting aspects of internet selling is anonymity. The mild mannered insurance salesman sells hardline harley motorcycle gear on the internet. The shy Ohio housewife sells racy red silk lingerie as Mimi an immigrant from Paris France. Because the buyer on the internet can’t see a balding head, or mousy dress, and make any assumptions. This type of anonymity has positive and negative consequences to an internet business.
The positive consequence of anonymity is that discrimination, or generalization due to a sellers appearance is all but eliminated, but it also creates a problem. It is difficult to create buyer trust for an internet product, or seller. In a typical brick and mortar store a wary customer can converse freely, and develop a bond with a seller leading to a purchase. On the internet, there are very few opportunities for conversation and/or communication of any kind before purchasing. So, for an internet seller, the buyer will trust you as much as they trust the venue you sell in. In other words, we internet sellers are at the mercy of the reputation of the venue we sell in.
Take eBay selling as an example. Mention that you sell on eBay, and the common comment is “I have bought things on eBay, and I haven’t been taken yet”. Ebay is seen as the arena for stolen goods, the fence for crap from dumpsters, the lying description that suckers you into paying too much for that “gotta have” one of a kind item. The consequence is what many sellers call the eBay “discount”. You have to sell cheap on eBay to overcome the buyers distrust of eBay sellers. Buyers are only willing to risk so much money buying items from sellers they don’t trust.
On the other hand, Amazon sellers are pretty non-existent as individuals. But it doesn’t seem to matter. Buyers are flocking to Amazon to purchase the same products sold on eBay, and paying more for them. Sometimes, Amazon buyers are purchasing from an eBay seller who is selling the same product on Amazon and eBay, and the Amazon buyers are paying more. Why? Is it because Amazon has a better reputation, and creates more trust in the buyer?
Perhaps a combination of individual and corporate anonymity are working against eBay, and for Amazon? When a problem with a purchase arises, eBay tends to put the blame on the seller when communicating with buyers, and Amazon just fixes the problem by offering unconditional returns. Can the problem with buyer trust in eBay be changed for the better? Will the changes eBay is making to the venue increase buyer trust? It will be interesting to see the numbers a year from now.
But for now, anonymity on the internet can be fun, but might also be working against eBay sellers bottom line .
Jennie
November 30th, 2007
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