Tuesday, December 12, 2006

eBay Just Doesn't Get IT!

You may be able to find "IT" on eBay but eBay, as a company, just doesn't get "IT".

Every morning I search the web, communicate with my sources and do my research on ecommerce and specifically eBay. I look for an interesting story or perspective to discuss with my readers. I try and find something positive but most often I find only negative. This morning was no different.

At the Cowen and Company Internet Conference last week four eBay Power Sellers spoke about the problems they faced on eBay. Todd Rath of Rock Bottom Golf, Jennifer Canty, of Dyscern, Dan Yen of Movie Marz (my former competitor) and Douglas Deist, the vice president of operations for Exel-I.

Each of these eBay sellers spoke about the troubles they experienced on eBay. These are not small hobby sellers; they do this for a living. Rock Bottom Golf has annual sales of $18 Million; Movie Marz reportedly does $12 million a year in sales. In most businesses your top clients get treated like royalty, there is constant communication; you definitely want to keep the big clients happy. This isn’t the case with eBay.

Here are some excerpts from the article:

“Mr. Rath is not happy with eBay, and did not mince words. His complaints include a lack of communication with eBay (he hasn't heard from his rep in 15 months), annoyance that eBay tries to maintain a "level playing field" for its sellers (and, he said, consequently caters little to its largest sellers), and frustration with ever-rising fees being charged on eBay.”

And

“Dan Yen, whose company Movie Mars offers more than 250,000 new DVDs, games, and CDs, was most upset with eBay's propensity to change its fees and rules without notice. In frustration, Mr. Yen began selling on Amazon (AMZN $39), where he said he quickly saw a jump in sales. Some of the panelists, though not all, said they saw greater profitability in selling on Amazon, and said consumers have more confidence in the company. Jennifer Canty, who was more supportive of eBay than her fellow panelists, nonetheless agreed that the company had not done enough to boost the image of its sellers.”

After selling on eBay for 5 years I came to the conclusion that eBay does not want large sellers and therefore has not addressed many of these issues. I thought I could make an all eBay business work and I was sadly mistaken. Sellers who want to grow must begin looking at eBay as a customer acquisition tool and budget their marketing dollars accordingly.

9 comments:

Anonymous said...

It is slightly off subject, but I must correct something here.

“Dan Yen, whose company Movie Mars offers more than 250,000 new DVDs, games, and CDs"....

CORRECTION: Movie Marz, (and all of their other ebay and half.com seller IDs), carry virtually NO physical inventory. They simply wait for a buyer to make a purchase, and only then do they try to get the DVD from their distributors. Gee, sound familiar?

If ANY of the ebay buyers out there knew this was how the big media catagory sellers operated would any of them make a purchase from these sellers? Of course not!

I just got a refund from half.com for a purchase from Movie Marz that they couldn't fill, as the DVD was out of print, very typical, when you list that many items, its not possible to know what has gone on Moratorium...

It took 4 months to get a simple refund! The point is that Movie Marz and pretty much most of the bigger DVD ebay sellers DO NOT give out any refunds whatsover unless their hand is forced by a Paypal or a Half.com claim. They obviously keep alot of money from customers who never get it together to file a claim or simply give up. Movie Marz did not even respond to a single email of mine, that would tie up too much of their payroll labor to resond to customers who just want their money back.

I don't know how these people sleep at night? How can they quantify ripping off hundreds of people a month by saying, "oh, well, it enables us to serve thousand of others whose orders we can fill..."

This is what is really wrong with ebay. No seller, big or small, should advertise and accept money for goods they do not really have. An ebay store should be just like a brick and mortar store, with a real physical inventory. To try to do the Amazon model of fullfillment within the Ebay website is not possible without ripping people off and thus, turning people off of using ebay forever....just read the feedback for sellers like Movie Marz, sellers like this are killing ebay...

Randy Smythe said...

I hear you but I am much to blame for this approach. I created the model with Glacier Bay DVD and MovieMarz has just taken it further than I did.

When I started, my only vendor was 5 minutes away from my office. I used their inventory file to list product on eBay and then the next morning I picked it up from them and shipped it out of my office. It was as if I had it in stock at my office. Occasionally an item was out of stock and we communicated with the customer and asked if they wanted a refund, exchange or to wait until we received more in stock.

We had over 400,000 customers and 99% feedback. This is not a bad approach to selling product on eBay 99% of our orders went off without a hitch but occasionally the inventory data we received from our vendors was incorrect and it caused a higher % of "outs". As a company grows they face many challenges with this type of business and customer service suffers.

In regards to refunds taking 4 months, I agree that is unacceptable. If we had a stock error we refunded the customer ASAP.

beadyeyeguy said...

Anonymous:

I hear ya. Agredd 100%. As a saavy buyer of media as well as a smaller pro seller on Ebay, I will NEVER sell an item I don't have in hand or at least know is in transit to my facilities.

People like Media Marz has KILLED the category for me. I am now shifting gears (again) and offering a mix of clearance video games and items carrying deals from my distributors and have given up on the DVD category altogether.

How the hell can Media Marz make money on Amazon? I read that and almost choked on my soda. I have tried to sell on Amazon and there is no way in HELL anybody can make money buying from AEC, Super D and B&T WHOLESALE and selling below cost. Caiman, Media Marz and 5 others do it regularly, yet with Amazon's fee structure, there just isn't any way to be profitable selling media there with all the cutthroat sellers!!!!!

Anybody know how they do it? I sure don't. That is why I've found more novel categories to sell on Amazon with minimal competition that doesn't cutthroat me pennies at a time just to be #1 on the depth chart.

Funniest yet is that Amazon doesn't even ATTEMPT to challenge these folks for abusing the condition settings. Sorry Caiman, you aren't selling USED, yet you use that category to give yourself further awareness with the marketplace customer.

Argh on folks like Media Marz. They have a good point about Ebay but screw them. If folks like that are allowed to have carte blanche, they will put the rest of us OUT of business.

Ebay should cater to their biggest sellers but not at the expense of sellers like me.

Sounds like PESA to me...shove out potential competition by expecting special treatment. Sorry, I don't buy it.

Frank Ross said...

Managing inventory in a drop ship arrangement is one of the biggest challenges of such a business model. I use the term 'Drop Ship', because that is what #1 is describing. The seller does not carry the merchandise. The seller orders only after the item is sold.

As the 'virtual inventory' list gets larger, this process gets more difficult. Not sure how you did it Randy, but our only way of managing this is with product feeds and some software that I slapped together (basically compares two lists to see what's out, what in, etc).

Furthermore, I have never found Drop Shipping to work very well on eBay. I somewhat agree with beadyeyeguy that eBay might favor the seller who actually has the goods. This is especially true nowadays with the increased competition.

In either case, there should be a process in place to handle the exceptions as there certain will be exceptions. Not wait 4 months until a complaint is filed! That's just not good business.

Now Randy, your point once again rears its head about how eBay treats its large sellers - the same as all sellers! Arguably, across the board equality might not be the best business model. Larger sellers should get some scalable benefits that smaller sellers don't as long as it doesn't lock the smaller sellers out. Fine post as usual Randy.

bonni said...

Interestingly, most smaller sellers think that eBay gives some sort of extra special treatment to big sellers, when in fact, other than the mostly worthless "PowerSeller" logo, all most bigger sellers get is to pay more fees!

Randy Smythe said...

Franks point regarding giving sellers the opportunity to scale their fees is important.

I started as a small seller just as most other eBay sellers did. I was treated the same as everyone else. The only benefit to getting bigger was I was able to get phone support rather than email support and they paid for my first 2 eBay Live conferences and gave me a bunch of gifts. By eBay Live in New Orleans they no longer did that even for their Titanium sellers.

I spent $1,500,000 with eBay plus another $500,000 with PayPal over 4 years selling on eBay. I should have been offered listing discounts as I grew. PayPal figured out how to offer discounts for greater volume how come eBay couldn’t?

There is absolutely no incentive to grow your eBay business other than the increase in cashflow and even that will level off or decline eventually.

godwinshelley said...

I have a question for you guys: how easy is it to fake/pad your own feedback when you are a seller on Amazon?

I'm wondering because I had some problems with Moviemars recently and posted a poor feedback review. They suddenly had lots of great one or two word feedback reviews from repeated names (some like "stockroom"). It sure seems suspicious to me.

I'm not a big purchaser on the internet - this was only the second time I bought something on/through amazon.

So now I have some bad feelings about Moviemars AND Amazon.

GS

Randy Smythe said...

GS,

You can't really pad feedback on Amazon. MovieMars has so much feedback that 1 neg will not affect their percentage.

PrinceofWhales said...

Wow! I've never had a problem with Moviemars. Haven't bought from them lately though. I guess I lucked up? Hmmm...