eBay Strives to Regain Balance as the Dragon Stalks

Customer Unrest May Be a Smokescreen to a Bigger Threat

Assoc Content, Yahoo! Contributor Network
Sep 11, 2006 "Share your voice on Yahoo! websites. Start Here."

Strange rumblings of discontent are evident within the eBay community and for the past few weeks I have been investigating what all the fuss is about.

Since announcements went out around the world that eBay would be increasing fees to their 'store' owners, a torrent of complaint and blogging mayhem has appeared on the Web. At first glance a few cents extra to list items on eBay and a modest uplift in the final sales commission didn't seem to warrant the uproar that followed. But, by reading eBay's own forums, exploring various other sites and speaking to eBay vendors, I now have a much clearer picture.

First we need to understand that eBay has been aggressively marketing the stores concept to users who sell relatively high volumes through their site. A store owner pays a monthly subscription of between $15.95 and $499.95, depending on the size and features required by the store. This store is effectively a mini semi-branded website within the eBay trading community. The store owner still pays to offer an item for sale, charged every thirty days it remains unsold, and he also pays a final commission to eBay on sales. However, it seems the predictable controversy and complaint over the fee hikes has been, not just fueled, but ignited by a drastic reduction of the visibility given to store listings when buyers use the main eBay search engine.

One high volume seller reported an immediate drop off in his sales numbers approaching 80%. Now I was beginning to see the reasons for the outcry. Losing such a level of sales and being hit with additional costs does seem to be a very aggressive move against store owners who, just weeks before, were being actively recruited by eBay. One post on an eBay forum described it this way; "The fee hike we've been handed to stock the shelves is a pain. The added fee hike we've been landed with each item we sell makes it a much worse pain. But to then have our store windows boarded up so we have no buyers coming in is killing us."

This extraordinary policy by eBay has been implemented in most of the leading eBay sites around the world. It is reported that 800 stores have been closed in Australia alone. Sellers in the UK are planning a boycott of eBay lasting four days and similar protests are being organized by North American eBayers too.

The issue now appears to be acting as a catalyst for yet more grievances by angry eBay customers. I have seen numerous references to eBay's uphill battle in China, where they have chosen to make eBay free to sellers, and endless calls are being voiced for eBay to do more to tackle the problem of fraudulent listings and scams executed on its site.

Bill Cobb, President of eBay North America, justified the recent price and search changes as necessary to 'rebalance' the eBay marketplace. He claimed stores were accounting for too many items listed on the site compared to the level of sales they generated. Regardless of the validity of his claim, he has certainly used a very heavy handed tool to tackle the problem.

Initial reaction from the financial markets was positive on hearing about price increases but this seems to have been quickly tempered, or even confused, following conflicting reports by stock analysts. Most people I have spoken to on the subject expect the unrest to die down eventually despite the competitor sites, currently all in eBay's shadow, benefiting from additional custom and exposure at the moment.

In months to come this may prove a hidden cost to eBay but that could be nothing should the reported global expansion plans of Jack Ma, the man behind the phenomenal Alibaba Internet based trading empire in China, become a reality. Ma has quite simply left eBay standing in eastern Asia and numerous reports are circulating that he now intends to expand across the globe. With plenty of cash in the bank and no shareholders to answer to, Ma could prove well placed to capitalize if the auction giant alienates too many of its users now.

Testing times appear to lay ahead for eBay. Few people can cast doubt on their success and they will undoubtedly be written in to history as one of the names that opened up cyber-space to the masses. But that is by no means a guarantee of future prosperity. Should eBay be risking the alienation of loyal customers just at the time the dragon in the east appears to be flexing his muscles?

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eBay Strives to Regain Balance as the Dragon Stalks

Customer Unrest May Be a Smokescreen to a Bigger Threat

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