Sunday, July 01, 2007

eBay Trust & Safety Bringing Down the Hammer.

As I wrote a few months ago, eBay traditionally has had three levers available to them to mold seller behavior. Price (fees), Product (Finding 2.0 and Decreased Store Visibility) and Policy (Trust & Safety). Well, over the past 18 months it appears they have pulled all of those levers. First there was the store fee increase to re-balance the marketplace (Price), then there was the S&H crackdown and Feedback 2.0 to improve the buyer experience (Policy), then they came up with "Finding 2.0" in an effort to control product, or at least the product the buyer sees (Product) and finally they use policy in the form of Seller Non-Performance to restrict the "bottom 2%" of sellers. (Product and Policy)

Why don't sellers do what eBay wants them to do? Because they are all independent business people, entrepreneurs, and individuals. eBay created a monster when they gave regular people hope that they too could have a better life selling on eBay. They trotted out sellers like myself (GlacierBayDVD) as shining lights to the community. Look what you can achieve! They talked the talk over the years -- The Power Of All Of Us! Social Commerce! and more catch phrases. Management doesn't understand that once you give someone hope they sure aren't going to give it up without a fight. Instead of embracing sellers as the fuel that propels their business they treat them as pawns in a high stakes chess match.

What is the result? Seller discontent is at an all-time high. The anger that began with the Store Fee increases has not subsided but turned into resolution. Sellers are actively looking at their off eBay options. Multi-channel has become the rallying cry of vendors all over the Web. All because eBay doesn't realize who their partners are. Maybe this is the nature of online marketplaces and there is no real solution but the results of eBay's behavior modification tactics has driven their once loyal sellers to the edge.

In my view, the only solution for sellers who want to grow their businesses, is to create an independent online presence. Throw off the shackles of the marketplace and strike out on your own. Use Marketplaces like eBay, Half.com, Amazon and others as segments of your business not the entire thing. Don't wait until you are restructuring for the 2nd time on eBay before you make the move. Don't make my mistake of waiting too long to launch your website.

Many sellers are dependent on eBay and their anxiety increases as they see other sellers fall to eBay's T&S policies and wonder if they are next. Many are afraid to venture outside their comfort zone and look at creating their own online presence. I know it can be difficult but you owe it to yourself to at least look into it.

As we celebrate our nation's independence this coming week take some time to plan your own independence from the marketplace.

6 comments:

Anonymous said...

PESA's statement of unhealthy marketplace dynamics talked a lot about low buyer confidence and I think bringing down the hammer on the worst sellers is one of the best things eBay has done in a long time. It won't be enough to turn unprofitable businesses into profitable ones though.

Honestly I think one of the reasons that it's so hard to do well on eBay is due to the extremely low barrier to entry. If you look at all of the changes to eBay since its inception, the seller friendly additions actually hurt profitability. Back in the early days of eBay if you could get a single picture up of your item you were worlds ahead of your competition! Know HTML? You're a god! Items went for a great price because there wasn't nearly as much competition

Then they added things like picture services, and the advanced text editor in the selling form, and suddenly everyone can have decent looking listings. Your knowledge advantage suddenly counts for a lot less.

You said it yourself that when eBay added pre filled item information that your sales were levelling off. Now anybody can get a copy of eBay's fileexchange and load up 20,000 dvds. Because of this practically non existant barrier to entry, the profits are miserable. I don't see any way for eBay's management to "fix" that.

This extends beyond eBay as well. Now there are sites like ecrater and Google product search where you can list whatever the heck you want without paying a thing. It's getting easier and easier to get an online presence, which I think is ultimately just going to keep making it harder to be profitable.

Do you forsee a way for sellers to keep a real advantage over other sellers going forward in the world of ecommerce? I fear the barrier to entry will dissolve entirely with more and more powerful tools that keep getting cheaper, and sellers will cheer at these tools until they become their own undoing.

Randy Smythe said...

Thanks for the comment! You make some very valid points. I agree that eBay needs to address the bad seller aspect of their marketplace. But the “dolphins” (good sellers) shouldn't get caught in the nets.

Marketplaces like eBay, Amazon, Half, StubHub, Overstock and a myriad of others need to have rules and regulations. They also need to protect their margins, so sellers are always going to feel the impact of each change, that is why I suggest sellers develop their own online identity so as not to be dependent on any one marketplace. When Marketplace dynamics change, sellers are always going to have to change with them so why not develop and market to your own website to serve as a hedge against those market dynamics.

Independent webstores are actually a barrier to entry, as many sellers are just too afraid to launch out on their own. They will continue to use the marketplaces as their sole channel and will be driven and tossed by the changes. Sellers who want to grow their business and become profitable need to identify what products sells best on each marketplace and make that part of their sales and marketing plan. Having limited product on each marketplace while they maintain all of their product on their website will allow them to use the marketplaces to acquire customers. It isn’t an easy task to move buyers from the marketplace but it can me done.

Sellers who become multi-channel marketing experts will always have an advantage over the selling masses. Movie Marz was successful in competing with Glacier Bay because they sold on Amazon, Half.com eBay UK and eBay AU we didn’t. They also expanded to games and books to add product breadth, we didn’t. They were able to grow sales so that the margins could be squeezed a little, but even they haven’t developed an independent web presence as a hedge against those marketplace dynamics.

Thanks again for the comments. What do others think?

trevor Ginn said...

Talking to a lot of eBay sellers, some of them seem to feel that if they sell off eBay then they are in some way betraying a good friend. It only takes an event like the google-eBay spat to show that you can't have all your eggs in one basket. My recommendation, sign up with a program like channel advisor which will easy you into mulit channel selling

Randy Smythe said...

I Agree Trevor. ChannelAdvisor is the perfect model for a multi-channel approach but may be better suited to the larger sellers.

There needs to be a tool for the smaller sellers as well. I am aware of one that is in the works and should got to Beta very soon. As soon as it does I will let you all know.

Anonymous said...

This is a great discussion, I agree with everyones points here.

The first poster is dead on right about the online selling tools having hit a critical mass that is only going to get worse for full-time online sellers.

More and more new people will become infrequent to part-time sellers-on ALL the marketplaces, not just ebay-and furthur crowding the market. Thus, I see ebay slowly reverting back to where unique items come back to the sales fore, as the glut of ordinary commodity sellers go down to part-time selling or give up. For example, in the old days, knowing something about music or movies was meaningful if you were a seller in that field, before the marketplace was ruined by the endless sku/pre-fill sellers. Prices are never going to recover in such commodity catagories where shipping and handling are the only tiny profit margin.

Also, its only the sellers of unique items, that still have a slim chance of developing their own sales channel online thats truly profitable versus the sweat equity. Remember, the web was already glutted up with ordinary commodity sellers years ago. That's why independent online stores by ebay media sellers like Movie Mars or White Elephant (the list of independent US media seller-sites is literally in the hundreds now) don't stand a chance in a marketplace dominated by serious corporate sites like www.deepdiscountdvd.com (a major seller, so big they buy cheap from the movie studios-not the distributors)....I agree wholeheartedly that multi-channel selling is the way to deal with the changes in the ebay marketplace-but sellers need to be honest with themselves, do some serious research on the competion, and ask themselves.....is everybody already selling what I'm selling....and selling it in a big way with alot of muscle...

Randy Smythe said...

I agree that commodity sellers are going to have the toughest go of it. That's why I shut down Glacier Bay. I was in need of a complete overhaul of my business and I looked into the future an saw little hope that I could get there in the media market. My options were to keep trudging away and work for free for a couple of years while I ramped up my website, look for other product to sell or shut it down. As you can tell, I shut it down. I had already built it once I didn't want to rebuild it with a limited upside.

Good Points.

PS My guess is Movie Mars is right where I was a year and a half ago. Their sales are greater than mine but the future doesn't look any brighter.