EBay Sellers - Will You Strike?

Feedback was the foundation stone of eBay's original user community that had to be built on trust. It is true that sellers rarely give buyers negative feedback but, when they do, it is often a retaliation for what they consider unjust or unfair feedback posted by a buyer and, at times, these claims are justified. However, I also accept sellers can also mask substandard service levels with this retaliation ability. I also agree that buyer feedback can serve as a valuable early warning tool for others that they need to be careful when dealing with a particular individual. While eBay stress the non-paying bidder process will remain available, this is a private process which other sellers will know nothing about. In that respect I feel eBay do need to reconsider a little. Can the number of outstanding non payer warnings be displayed with feedback ratings?

But I see this discussion as a diversion from the main issue. The massive impact, that few sellers seem to realise yet, will be the fundamental change about to emerge because of the removal of meaningful buyer feedback. Buyers WILL become more pragmatic and sensible in the review they give for service they receive. The current feedback process has developed largely in to a "you neg me I neg you" farce over the years but, by removing one side of the status quo, eBay will create a major shift in buyer attitude. This is human nature we're talking about, so put the spreadsheets away.

Now this effect may be good in fact. More relevant and considered feedback about sellers will probably improve a buyers perception of sellers before they choose to trade. On balance I would possibly support the change if it weren't for one thing - and this is where my cynical business head takes over. At the same time as encouraging buyers to rate their sellers more honestly, eBay also puts the buyers finger on the trigger when it comes to fee discounts for sellers. I believe this is deliberate and calculating by eBay and will cost their powersellers dearly.

To qualify for meaningul discounts sellers, apart from meeting volume targets, will have to maintain a Detailed Seller Rating (DSR) of 4.6 out of 5 or more, across all the factors rated. Why 4.6 and not 4.5? Well, the higher figure means you must get more perfect 5s than pretty good 4s. So, with more "down to earth" buyer ratings determining whether discounts are awarded, it will virtually ensure the much hyped reductions are rarely paid as time progresses. I believe eBay know this and are banking on it, although not many sellers seem to have recognised the threat yet.

The net effect will mean the cut in up front listing fees is going to be dwarfed compared to the final value fee increases being introduced. In the UK the base rate of the final value commission eBay will now take is going up from 5.25% to 7.5% - an increase of more than 40%. In the US - where a free gallery feature has been introduced - the base commission rate goes up even more to 8.75%, more than 65% higher and buyers are to be the sole judge of which sellers get a discount to these fees. Cute eh?

Plainly, with more and more sellers likely to fall below the DSR ratings required to earn any discount, these massive commission increases are going to impact significantly on business margins - significantly well for eBay but significantly bad for sellers. When you do a few scenarios based on various item prices, mark up margins and sales success rates and forget the discounts, sellers are being well and truly taken. The bone tossed in by cutting the small up front listing costs doesn't impact anywhere near as much as optimistic views suggest and, frankly, should be dismissed

All the time eBay spin these changes and the media report them as separate issues - ignoring the clear linkage between the feedback, fee discounts and increased charges - then people are only being shown the message I believe eBay wants them to see. If sellers are naive enough to continue using eBay under this new regime then eBay stock is looking very cheap to me!

So, if I agree the changes are disasterous for sellers, why is a strike the wrong course of action now? A strike will barely cost eBay a cent. Some sellers - if they are true to their word - will sacrifice a week's earnings. So who will learn a lesson from the proposed strike? Many sellers will look to sell twice as much the following week attempting to recoup their losses. No, I'm sorry, a strike is pointless but the underlying cause is still extremely serious for sellers. Sellers that strike for a week are basically telling eBay "we're going nowhere" and, in effect, giving eBay the green light to squeeze an even bigger cut from their sales - yet again.

It seems many of these sellers haven't the faith in their own ability to continue in business without eBay holding their hand and that concerns me. I readily salute eBay for creating a generation of entrepreneurs but now I worry about the naivety of many. Too many eBayers seem to have bought in to the eBay doctrine and simply refuse to see how little control they now have on their own destiny.

This isn't the time for short term strikes and squabbles by sellers just leading to more long term super profits for eBay. This is the time to use the fundamental principles that underpin our free market economies. Sellers should be organising support for the myriad of eBay competitors as their response. Competition is the ONLY thing that will influence eBay, and rightly so. Investors in eBay do not, and should not, worry about sellers profitability. They demand an ever increasing return from their company, eBay. That is the reality of our system and eBay sellers need to learn from it.

I can hear the usual cries already; "But the buyers are on eBay"! How long for if the sellers go and the listings continue becoming ever more bland and even poorer value? It is the sellers better listings that eBay use to attract buyers. So the buyers are only on eBay because that's where the sellers are. No items listed, no buyers.

To list and sell at competitor sites costs a tiny fraction of what eBay demand. That leaves fortunes on the table for able and creative sellers to use for advertising. Yes it means adapting, yes it means hassle and a hit on sales rates for a while, but what's better; Total control of your own business destiny where the business owner decides who provides it with chargeable services? Or is to better to just roll over, pay up, and assume eBay buyers will not get fed up with the increasingly poor value on offer?

At what stage will sellers say enough is enough and really mean it? When they realise they are in a low paid job effectively working for eBay?

What we call eBay today was originally a global community of people trading with each other and enjoying it. But eBay decided it would follow the Wall Street route of development - for which I do not criticise them. So the reality has become an 800Lb profit hungry gorilla. Where we once marvelled at the ability to trade across the globe, eBay now controls visibility. Where we once profited from dusty forgotten about items in our cellar, eBay now encourages dropshipped chinese imports. The eBay we look at today is not the friendly community we like to remember.

Increasingly the eBay marketplace is being dominated by rival businesses rather than people and characters. The days of community are gone. But we have to recognise that eBay will behave like an ever more demanding parasite on the businesses that it gets under its control. It often becomes the sole advertising medium for sellers who get trapped. In return they can expect eBay and paypal to eat away around 15% of their turnover and a very much higher percentage of their profitability.

EBay in my eyes stopped being a cost effective aid to sales some time ago and became nothing less than a voracious extra mouth in the already burdened food chain small businesses have to support. It's no longer the cheap, cost effective gateway that enables a buyer to come to you. It's an expensive drain that makes businesses unable to compete and afford other options. I see this 800Lb parasite feeding on the sellers stock as it has none of it's own and it's too late to change it's own nature. It must live on sellers as long as it can until the food source runs out. My analogy projects forward to the time when the creature can eventually kill the supporting host even if that means the death of the parasite too. So I fear the final destiny of eBay rests largely on the weakening strength of the sellers who mistakenly believe they depend on eBay.

EBay sellers strike? No. The more able business people will look to reclaim control of their own future instead.