I Apologize!

I've been taking some heat, over the last couple of days, about one of my recent posts: It Pays To Bitch A Little! Where I was almost giddy about the fact that eBay was communicating with its users. In the post I referenced the recent Chatter Blog post about the T&S policy. I wasn't endorsing the policy, I was applauding the communication. Well unfortunately perception is reality and since I didn't fully read through the Chatter Blog post, I made a boo-boo.

Now for the apology. I should have read the entire Chatter Blog post and I didn't (it was so long and drawn out). I am especially sorry for saying this:

"So please read The Chatter Blog. There is some very good information in the post, even answers to many of your questions."

That was an error that won't happen again. Now, I still have like 101 more apologies to make in my blogging career but I won't make that one again. I think eBay is way ahead of me on the apology meter.

I won't go back on my complement of eBay for communicating though, since the only way for them to fix this mess is to communicate.

I know they are not used to having to deal with these things and for years they were able to hide behind the "venue" label but this is a new era "baby" and someone needs to stand-up and take charge. They need to fix it now. eBay's execution, in rolling out these changes over the last 2 years, has been dreadful. In the past I've called the company "a ship without a rudder" and Ina Steiner just made a very astute observation in her most recent blog post (yes I read it all)
"(Are they making this up as they go along?)"

I love the "Idea" of eBay and that is what I'm passionate about and that is what I feel I've been fighting for but that "Idea" appears to no longer exit. I love the employees of eBay (well love is kind of strong but I like them really, really alot.) But, I have to say this management team has failed.

Sure, its easy for me to sit here in my underwear, writing blog posts saying they are blowing it, when I don't have access to the data or know the technical issues. The fact is, eBay management has that information and is making some big mistakes.

My pet peeve about eBay is they only look at metrics and ROI and never just step back and use some common sense. What was the quote from Jeff Goldblum in Jurassic Park "Yeah, but your scientists were so preoccupied with whether or not they could, they didn't stop to think if they should"

Its time for a come to Jesus moment! Meg needs to step in here and talk in real terms with out any "eBay Speak". She's said in the past she is proud that "millions of people worldwide make all or part of their income on eBay" its time to show those words are not just a promotional slogan, because millions of people are worried that their full or part-time income is going away.

BTW, did you notice that I made this apology on Friday afternoon before a long holiday weekend.

He's Baaaack!

Well, it appears that all the speculation about Bill Cobb not returning from his sabbatical can be put to rest. According to Ina Steiner's blog, Bill returned to work last week. I also just read an announcement that he will be hosting the September Town Hall meeting, so apparently this is still Mr. Cobb's Neighborhood.

Hopefully, the time off has reinvigorated him and he came back with some fresh new ideas on how to improve the site for everybody. I certainly hope that the "Seller Experience" is on his agenda.

BTW, I wanted to share a picture that a reader sent to me. I thought this was very funny.

Keep em' comin' folks! I love seeing this stuff. We all need to have a good laugh every once in awhile.
Maybe MGM will remake the movie with this title.

I hope Bill and Meg have a sense of humor. If you've got funny pictures, videos, etc that deal with any of the companies or people I write about on the blog please pass them along. Don't worry, I'll keep them clean

In Other News - SquidWho News!

Okay, I'll take a break from eBay news for just a second to write a post about another site I'm working with; called Squidoo. The site with a funny name just added a new wrinkle. Seth Godin recently announced it on his blog so I thought I would do him a solid and also mention it here.

Squidoo just announced a new Internet tool called SquidWho a virtual "Who's Who" on the Internet that doesn't limit who can be included like Wikipedia does. Have you ever wanted to see your name in bits and bytes? Do you want to recognize a special person in your life, maybe a teacher, pastor, friend or family member? Now you can with SquidWho. Here's what Seth had to say:

Are you notable enough? I think so.

It occurs to me that the web is redefining what notable means, and so are we. Famous used to mean Gene Kelly and Mae West, or Sandy Weil and Bill Gates. But with the long tail, notable means: you're the #1 player on your tennis team; you're the top of your marketing department; you're a blogger lots of people read and talk about -- you're the best and most" notable" in your niche, however small. That's the kind of famous that SquidWho is about...

This being the web and not the real world, we decided to take matters into our own hands and launch SquidWho. The people-powered open who's who online. If you think someone is notable enough to warrant a bio, then they are. Your call, not ours, not some invisible editor's.

If you don't like the bio you see on someone, build a better one. It's free. Royalties go to charity. Best one wins. (Here's a good one).

The obvious ones (Bono, Mother Theresa and Jaco) are already taken, but that's okay. Build a better one. Not to mention the room for six billion more.

So, take a moment to check it out. It's fun and stress free but watch out it can be addicting. I've already created several:

• Monty Python - The funniest comedy group of all-time! Don't Argue With Me!
  
• Nolan Ryan - My favorite ballplayer growing up.
  
• Will Smith - My favorite actor, always makes good choices for roles (except Wild, Wild West)
  
• Jessica Alba -Okay, before you start calling me a "dirty old man" this was a test to see how a popular name would do on Squidoo (BTW over 250 unique visitors so far) and I certainly enjoy finding pictures to post.

I know you are all very busy in your everyday life but take a few moments to check it out and create a SquidWho lens about your favorite person or group. Even fictional characters are acceptable.

Okay, one mention about eBay (I've got to stop doing that). If you are a memorabilia seller, why not create SquidWho lens on several of your hottest selling people and drive them to your eBay listings. Check out my lenses to see what I did, each of them links to eBay memorabilia listings as well as Amazon listings.

More eBay Stores Board Humor

There was a recent hubbub about a quote eBay made in the last PowerUp newsletter and I wrote about it as well. To refresh your memory, here is the quote: "When sourcing at retail, check the return policy before you buy. If items are returnable, you can always return the inventory if you find it doesn’t sell at a good profit.”

Well today I was reading the eBay Stores board and came across this post in response to the above quote:

"Hey eBay! I bought a 100 auctions from you and only 20 sold. Can I return the 80 that didn't sell and get a refund please?

No, I can't. That's odd. I ran the 100 auctions because you told me to buy the 100 widgets and return the ones that didn't sell back to retailer for a refund.

Isn't it only fair that I can return the extra 80 auctions I bought from you for a refund as well?" from user ID: thepinkelephants

As you can tell, my sense of humor leans towards the sarcastic so I thought this quite funny.

eBay certainly is making changes , some that I think are positive, but sellers probably aren't going to let up. My discussions with sellers say they are still seeing declining conversion rates so eBay certainly needs to improve the value of their product both for Buyer and Seller

It Pays to Bitch A Little!

Sorry for the title but its accurate. If sellers believe they aren't being heard they will express their outrage. Apparently eBay is listening, witness this tome from the eBay Chatter blog. I won't go into it in any depth; I've been writing about it far too often already. Please read it and comment on this post if you would like to discuss it.

eBay has changed there tune a little bit. They are communicating! We need to be patient with them because they are new to this. I have seen significant change in the last few weeks and though I have my hunches why, I won't share them just yet.

Sellers need to encourage this behavior or they may go back to their old ways. I still wish eBay PR would return my emails. They seem to pick and choose which questions they want to answer. Silence just makes me more curious.

So please read The Chatter Blog. There is some very good information in the post, even answers to many of your questions.

I know I can be a little sarcastic at times (CT stop rolling your eyes) but I honestly see this as a positive change that needs to be encouraged, so when you bitch about something in the coming days make sure to keep an open mind. I'm just sayin'

That's My 5 Cents

Update On Month Long Promotion!

Phillip Justus just added an additional bit of information regarding the Promotion that will be good news to sellers who use Gallery Plus and other Featured bundles:

"I have one more piece of good news: Unlike our last promotion, this time you WILL get these Insertion discounts if you use bundles with Gallery, such as Value Pack, Pro Pack, Gallery Plus, Gallery Featured, and Picture Pack. Enjoy!"

Now, this does not answer the question many of you are asking me regarding relisting. I am still waiting for a response regarding that. It's unfortunate that they did not deal with that information in this most recent announcement because multiple announcements about the same thing start to look pretty bad. Hopefully they are addressing this.

The Day After! The eBay Month Long Promo Revisited

After taking some time to think over the promo a little more, I can't see any downside for sellers. Sure their are two price tranches that actually cost more to add gallery ($10 - $24.99 and $25 - $49.99) but i still think it is worth it for sellers to test the use of Gallery.

Some important things to consider regarding this Promo:

• The 1 week test of this promo was successful so they made it a month long and expanded it to all price tranches to gather additional data.
• This is a sign that this pricing may go into effect permanently. Many people have said "why not just make gallery free" This approach allows for seller differentiation. The sellers that add Gallery will show up in Best Match and have greater visibility while sellers who do not use gallery will take their chances.
• By discounting listing fees rather than Gallery fees eBay asserts more control of search. Sellers who do not want to play in this new playground will miss out.
• Be prepared for a Gallery filled Holiday Shopping season.
• Now here is my cynical side: The timing and length of the Promo will help eBay's listing numbers and keep Wall Street off their back for another quarter.

I've often complained about eBay's execution and their use of sticks to mold seller behavior rather than carrots but in this case I have to applaud both the execution and the carrot. eBay has managed to improve the Buyer Experience and incentivize sellers in the same move. Now if they will just start advertising again to drive buyers to the new and improved eBay sellers would be happy. eBay, this is a great first step please keep it up.

Notes for Sellers regarding the Promo: (Excerpt from The Seller Evangelist)

If you've never used Gallery before this would definitely be the time to test it. Remember eBay will launch Best Match in September and I'm sure use of Gallery is part of the criteria so if you were considering not taking part in this promo, you might reconsider to give your listings the best shot at being seen.


Just be aware that your total cost will increase in two price ranges:

• $10 - $24.99 - You will pay .20 cents more to add gallery
• $25 - $49.99 - You will pay .05 cents more to add gallery

If you currently use Gallery you will be saving the following amounts:

• $.01 - $.99 - You save $.20 cents per listing
  
• $1 - $9.99 - You save $.40 cents per listing
  
• $10 - $24.99 - You save $.15 cents per listing
  
• $25 - $49.99 - You save $.30 cents per listing
  
• $50 - $199.99 - You save $.60 cents per listing
• $200 - $499.99 - You save $.90 cents per listing
• $500 - Up - You save $1.20 per listing

So if you are currently using gallery you will save in every price range. Think this through, don't go crazy using your savings to add a ton more listings but where it makes sense add listings that give you the best savings.

Finally a Carrot eBay Sellers Can Sink Their Teeth Into.

I hope you're all sitting down for this announcement. I think this may be the first sign that eBay is starting to get it. (Sorry couldn't help it)

eBay is making a huge change in the way they handle promos for sellers, at least for this promo. I'm hoping this promo is a signal that there is a change in the wind at eBay and though it may just me the first move it’s not a bad first step. I honestly never thought I would see the day.

It is clear eBay is/are working hard to improve the buyer experience on the site but the sellers I've spoken with, mostly feel that these changes don't offer them anything and in fact are stressing out over them ie. T&S initiatives, etc.. There is certainly a need for incentives to get sellers on board with these changes and something more substantive than a 1-day listing sale.

For years, eBay has trumpeted the use of gallery as a means of increasing conversion and providing a better buyer experience, and many sellers have agreed, well today eBay appears to be putting their money where their mouth is. Here is what Phillip Justus had to say:

"I have great news for you! Based on the success of our last Listing with Gallery promotion on 8/15, we are running a similar promotion for the entire month of September. Like the last promotion, if you buy Gallery and start your Auction-style or Fixed Price listings at $9.99 or less, we're going to give you the insertion fee for FREE. In addition, for items with a starting price of $10 or more, you'll save 25% off the listing fee (up to $1.20 per listing!).

But wait – there's more! This promotion runs from August 29 to September 30. That means significant savings for our sellers who will be able to take advantage of this promotion for an entire MONTH! (Read here for more promotion details.)"

Now, let that soak in a little -- this promotion is for a full 30 days. This isn't a 1-day sale meant to spike listings and its not a FVF discount which has limited impact on your margins. This is a listing fee deal that gives you the benefit of gallery and can save you 25% of your listing fees. Now media sellers will probably not jump for joy over this news but if they add Gallery to their Auctions and FP for items that start under $9.99 they can save 5 cents on each listing for the entire month. That savings could add up. Where this will really help sellers, is if you currently use Gallery, this is a nice gift that will continue for an entire month. It appears eBay is willing to test their metrics regarding gallery. One caveat is for sellers who list in the $10.00 to 24.99 range you basically get your Gallery for 20 cents.

Now, you know me, I'm usually real skeptical about promos but this one seems to have some bite and will certainly improve the buyer experience. I'm willing to take it on face value. If this is a signal that eBay is willing to change how they deal with sellers, I'm all for this.

This announcement is not earth shattering but it certainly is groundbreaking.

Update to Power Up Newsletter Post.

In a previous post, I asked readers who had received the Power Up newsletter, to forward a copy to me so I could see a particular quote in context. Click on the image to see a readable version.

The quote was: "When sourcing at retail, check the return policy before you buy. If items are returnable, you can always return the inventory if you find it doesn’t sell at a good profit.”

The presumption when reading the quote was that eBay was encouraging buying product and then returning it if it didn't sell. Similar to buying a prom dress and returning it after the prom. Though it isn't the same thing the quote does allow for that conclusion. No retailer likes returns and the suggestion smacks of unethical behavior, so that is probably where most of outrage about this quote came from.

It certainly was a poor choice of wording for a Power Seller newsletter but it doesn't suggest a policy from eBay. Of course It would certainly have been better if someone had read the article before it was sent out and took a moment to think "Should we say this?"

Thanks to a reader for forwarding this to me.

I Need You!

eBay recently sent out their Quarterly Power Seller newsletter (PowerUp) and it supposedly included an article entitled: “Sourcing for Profitability” where it makes a disturbing suggestion

"When sourcing at retail, check the return policy before you buy. If items are returnable, you can always return the inventory if you find it doesn’t sell at a good profit.”

I have contacted eBay PR for a confirmation if this in an accurate quote but as of yet have heard nothing, so I am seeking your help. If you are a Power Seller with access to this newsletter would you please email it to me so that I can understand the context the above quote comes from?

I'll leave my opinions on this subject for a later post, after I've had a chance to review the article. I would imagine major retailers are revising their return policies as we speak, if this is accurate. (Sorry, old habits are hard to break)

Please forward it to me at rksmythe at yahoo you can fill in the rest. Thanks in advance.

In the meantime here are a couple of posts on the subject. Tambay.com and Auctionbytes.

Update: I just talked to my "pals" at eBay and they are sending me the Power Up newsletter so I'll look into it and see what the hub-bub is about.

Amazon Is Firing On All Cylinders

Amazon.com appears to have become the darling of Internet Stocks at the moment, with a lofty share price and a stellar Q2 behind them. Anecdotal evidence, coming from 3P sellers who sell on both eBay and Amazon say their Amazon orders are increasing while their eBay orders are flat to down. Many sellers, are now just using eBay for cashflow until they can ween themselves off of the site. I don't anticipate they will completely withdraw from eBay but they certainly want to change their mix of sales. Because it can take up to 18 months to generate measurable sales from a sellers own website, Amazon is currently the best place to move their business. Sure it has some of the same marketplace dynamics as eBay but Amazon is a retailer that understand ecommerce. eBay is an auction site that grew so fast, so easily that they let things get out of hand and no one wants to be part of the renovation.

In media categories, many sellers are seeing Amazon sales equal to or greater than their eBay sales and with the all important 4th Quarter just around the corner, many sellers are hedging their bets. Many are expanding to Amazon now to get all of the kinks out before the all-important holiday shopping season.

Amazon's model is brilliant, if you ask me, because they have added breadth to their product offerings without having to carry any inventory; they get the best of both worlds. They can be very aggressive with their owned inventory, stocking limited breadth but tremendous depth leaving the breadth to their high margin 3P business. Because Amazon controls the marketplace (they don't call themselves a venue or a community) they have more control over merchandising as well as seller quality. When a category has too much product for the projected demand they close the category to new 3P business. This is a fluid operation that allows them to open again when the demand picks up.

Amazon's 3P business, IMO saved the company. Imagine where they would be without the margins from 3P sales that are now north of 35% of sales and growing. They have the media market sewed up. Half.com has become primarily a Textbook Sales venue that has two key selling seasons in August and January. If Half.com was a real challenge to Amazon they would be expanding to other countries.

A recent search of Amazon, pulled up Collectibles, Apparel, Sporting Goods Equipment, Cosmetics, etc. In the early days of Amazon they tried to carry this inventory and sell everything including the kitchen sink (and we all know how that turned out). Now, with 3P sellers they can make a handsome margin on product sales where they have no inventory exposure. They've found the "Holy Grail" for an online retailer. eBay can't compete because they don't actually sell anything. eBay has always had sales velocity because of auctions but that is slowing and apparently Amazon is catching up.

eBay is the "King of Auctions" and should have become the King of Ecommerce but that mantel has been passed to Amazon. eBay's bet on improving CORE may have actually marginalized them even more. eBay's like a 55 year-old former starlet who undergoes plastic surgery to recapture some of her youth.

Amazon has been around for as long as eBay but they seem to be hitting their stride now while eBay seems to have pulled a "hammy".

One caution for 3P Sellers who are looking at Amazon as the "Holy Grail", they are still a marketplace and you are advised not to "put all of your eggs in one basket". Begin the transition to your own website because it may take up to 18 months to drive significant sales through it.

You can find more information on Amazon 3P offerings at their website or visit the AmazonServices website.

I Knew It Was Bad, But Not This Bad!

Are you ready for an eye opening experience? I've been ranting about eBay's recent T&S crackdown and their decision to include neutral feedback in the calculation but I was basing my position on my experience with Glacier Bay where many neutrals were not negative at all. After going to http://www.toolhaus.org I have a completely different perspective.

The Toolhaus 90Neg tool allows sellers to see if they are in danger of falling into the 1% of sellers that eBay is restricting. Here is the FAQ for the 90Neg tool.

Quote from a Pink on eBay's Seller Central Discussion Board:

eBay requires sellers to maintain minimum standards in buyer satisfaction. Our goal is to ensure that the marketplace is a safe and reputable place for the community to buy and sell. We have found that 1% of eBay sellers are responsible for 35% of bad buyer experiences on eBay. This not only impacts buyers, but is harmful to other sellers and the eBay marketplace as a whole.

Sellers receiving this notification have been identified as part of this bottom 1% of sellers as measured by Feedback and Item Not Received complaints over the past 90 days. If more than 5% of a seller/s buyers are dissatisfied, as measured by negative and neutral Feedback left or Item Not Received complaints during a 90 day period, the seller is in violation of the Seller Non-Performance policy.

If you pick a seller ID and search using the tool, it will display all of the negs and neutrals for that seller over a 90 day period and provide % of bad buyer experiences, 5% being the guideline set by eBay T&S. (Be aware that it takes awhile to calculate the totals and show the comments)

My suggestion is to pick a seller with a low feedback rating, maybe 97% and then compare them to a seller with 100% feedback. The majority of the neutrals are negative in nature even though you will find the occasional "Perfect transaction with a neutral rating" The vast majority of neutrals are negative in nature.

The problem with this tool is it only presents the negative comments, so buyers using this to pre-screen sellers would look at this data and never buy on eBay again. The perspective is skewed. Use this tool with caution.

It is also important to note that by reading some of the comments left by buyers you will get a feel for what sellers have to go through on a daily basis to make some people happy. Just check the responses left for a seller with a rating of greater than 99%

Please remember that the vast majority of eBay transactions are completed satisfactorily even from the poorly rated sellers. Heck a shortstop in the Major Leagues can win the Gold Glove for excellence with a 98.7% fielding percentage. Even eBay stated they were please with users response to eBay Express that was stated as 9 out of 10 Express visitors liked the site. That rating would get a seller kicked off of eBay.

There is a buyer satisfaction problem on eBay but the recent crack down will do nothing to solve the problem. It is also evident that eBay needs to discard the neutral rating completely and allow buyers to rate the transaction with a Positive or a Negative becasue that is all eBay is measuring for.

Is eBay Trying to Become Amazon?

I spend a great deal of time reading message boards, blogs, articles and emails from readers, some would say way too much time. With the launch of eBay's new home page and the redesign of the look and feel of search, I've read a number of comments and analysis that eBay is trying to become more like Amazon. I believe this is true but not because they are changing the look and feel of the site.

While I believe eBay is trying to be more like Amazon in many ways, eBay's changes to the look and feel of the site are more of a response to the changes in ecommerce. If eBay doesn't improve the UI (User Interface) then new buyers won't even bother to shop there. So, these changes are long overdue. BTW, I like the changes to the look and feel.

Where, I believe, eBay is trying to become more like Amazon is in control of the marketplace; T&S initiatives and Finding 2.0. For so many years eBay has ridden the coattails of their mantra "We are just a venue" which gave them tremendous legal wiggle room, when it came to fraud, counterfeits and the negative side of online commerce. The SOP (standard operating procedure) was not control of the marketplace but supervision. Those days are long gone.

In order for eBay to deal with a maturing marketplace they need to exert control over the marketplace and mold it into their new vision. They must control the buying experience and by exerting that control the eBay seller will face the brunt of any changes. Change is not fun, especially when it is being forced on you. Is it any wonder there is some friction in the eBay vs. Seller relationship?

eBay Sellers are independent types with small operations, even the biggest business on eBay is small to the rest of the world. For many of these small businesses even the smallest change or restriction can have a major impact on their business. So you can imagine the ulcers that are being created by eBay's new rules.

One major difference between eBay and Amazon, in this regard, is that eBay is forcing change on sellers who were used to running their business in a certain way, while Amazon is enforcing the rules up front. It is always easier to control the seller at the beginning of the relationship rather than many years into it. eBay must make these changes to survive (I know that sounds ominous) but the future of the eBay marketplace business, requires them to exert control over it. Where eBay is failing miserably is in the execution of these changes.

Rather than partnering with their very loyal sellers and being up front with them that serious changes were needed, they basically said "this is our marketplace and if you don't like it go someplace else". Well, up until recently there was no place else to go. Amazon saw this void and expanded their 3P offerings, benefiting from the unrest in the eBay marketplace. A migration began that is still in its early days. Many large sellers have moved a substantial percentage of their business to Amazon with plans to make eBay nothing more than a marketplace to recover some of their investment in inventory, that doesn't move elsewhere. In short, they will sell their crap on eBay to get some of their money back.

Substantial change is needed to turn around the eBay Marketplace, but due to eBay's poor execution they've pissed off one of their most valuable assets; the seller. They once had an emotional hold on sellers that they have since lost in great measure. The hammers of control have landed too many blows. Shortly, the only move left for eBay will be the Carrot of incentives and how will that go over with investors?

In all my years being involved in ecommerce, I never thought I would see eBay moving more towards the Amazon model rather than the other way around. Amazon sees a wounded opponent and is ramping up to reach out to the best of eBay's sellers leaving the newbies and poor sellers to fight for what's left of the eBay marketplace.

It is imperative that eBay make some of these changes but they must include the seller in the process or Amazon will continue to take their best and brightest. A quick note to Amazon management: Make sure to partner with your sellers rather than manage them so you don't have to deal with these same issues down the road.

Online Sellers! Help Has Arrived!

I am pleased to announce a new marketing relationship for My Blog Utopia and The Seller Evangelist. As you can see by checking out this blog I have begun promoting the E-Commerce Merchant Trade Association or ECMTA for short. I am very excited about this new relationship for several reasons:

• It allows me to network with a larger group of online sellers, many of these companies and vendors I would not have access to otherwise. I usually sit here in my home office and communicate with the world by phone, IM and eMail (notice I didn't say Skype) but now I can participate in ECMTA's Forums, trade shows and Conferences. I'm always looking for new sources
  
• ECMTA is an online trade association that reaches out to all online sellers both large and small and is not specifically geared to any one marketplace or vendor. This is especially useful as sellers expanding into multi-channel sales.
• ECMTA helps the little guy. As a small online business it is difficult to grow your business by yourself. You often don't meet the requirements for vendor discounts and special offers but with a trade association like ECMTA, you now have access to all of those great offers.

The ECMTA, was launched as a response to a growing need in the marketplace. It has it origins in PeSA the Professional eBay Sellers Alliance, an organization of top Platinum and Titanium eBay Power Sellers, that was created to address the many issues sellers faced on eBay. PeSA organizers realized that the marketplace had changed and there was a growing need for a trade association that would reach out to all online sellers and provide access to the tools, connections and vendors that would help sellers grow their business.

Many smaller eBay sellers did not meet the requirements of PeSA membership but were anxious to be part of a trade association to help grow their businesses. Amazon sellers, Yahoo Store owners, and independent website owners were on their own when it came to expanding their business. Now, with ECMTA these business owners can take part in all of the benefits a trade association has to offer.

One of the benefits of my new marketing relationship with the EMCTA is that I can get you hooked up for less, if you sign-up with my invitation code ECM1435 (you can save $100 on your annual membership. (This is a limited time offer) Here are some of the benefits of membership.

I'm pleased to be a member of the EMCTA and I look forward to growing my association with this great organization. Many of you who know me personally, know I'm kind of a Lone-Wolf when it come to business and in retrospect that was not such a positive trait when it came to selling online. I regret not taking advantage of the resources and relationships that were available through membership with PeSA. Now that your small businesshas access to a trade association for your online business, don't make the same mistake I did.

In Other News!

Well, so far the scorecard reads 50% of readers have eMailed me to tell me I'm a loon for my latest posts and 50% like the move towards the negative. I have to say, I surprised myself by the anger in my previous post. I usually like to keep an even keel. So to take a breather from eBay land for a bit I found this little tidbit from Seeking Alpha:

Microsoft's Ballmer Starting Own Yahoo-Buying Rumor?

Paul Kedrosky submits: Steve Ballmer apparently wants people to think his Microsoft (MSFT) is buying Yahoo (YHOO). Here he is from an interview yesterday in New York with Charlie Rose:

Rose: Are you in talks to acquire Yahoo?
Ballmer: If I were, i wouldn’t say anything, and if I weren’t, I wouldn’t say anything.

Just a little non-eBay speculation to clear the pallet. Now back to our regularly schedule eBay bashing.

Warning eBay Sellers! Data Mining In Progress.

Something I must have overlooked when I was writing my previous eBay T&S rant, is the fact that eBay used Data Mining software to determine that most of the neutrals left for sellers were actually examples of a negative buying experience. I guess it just didn't hit me at the time but that would have to be one very sophisticated data mining program to provide measurable results. Just think of how many different comments had to me mined, cataloged, rated, etc. I know eBay doesn't do much manual labor, so the software must have done it for them and the results were so conclusive that they included Neutrals in the calculation for Seller non-performance.

eBay lives and dies by metrics, so I would have to conclude that there was truth in their comments regarding Neutral feedback even though my own personal experiences were different than that.

This is where I normally would just end my post but I am hearing disturbing news that eBay T&S is actually using comments left in feedback to crack down on sellers. Well of course they would, they have such a powerful data mining tool and now they can look for comments in feedback based on keywords like fraud, crook, counterfeit etc and restrict or suspend sellers based on a comment left by a disgruntled buyer. Where will this end as eBay becomes Big Brother? Will eBay start mining feedback left by sellers looking for words that are abusive? Will they now hold comments left in feedback against sellers? This is a very slippery slope we're on.

Now, I am a pretty conservative guy but if this Data Mining tool is not reigned in, your choice of words may come back to haunt you. Right now, I am hearing of sellers being restricted solely on the basis of comments left in a customers feedback, stating that the product was a fake. eBay apparently is not researching the validity of the complaint nor is it contacting sellers to hear their side of the story or seek proof that the product in question was legitimate. Instead these sellers are just being restricted.

Extend this out to its logical conclusion. eBay doesn't accomplish what they wanted with the current crackdown on sellers. Too many sellers cleaned up their act so they have to move one step further in their crusade by targeting sellers specifically. This may even be happening as I write this.

Word of warning to sellers, watch what you say in your feedback to bad buyers, it may be the last feedback you leave.

Update: BTW, I have contacted eBay PR for a comment and will let you when and if they respond. As I said in response to a comment left by a reader. I have heard this from sellers
who have been restricted for comments in feedback from buyers.

Sorry, More eBay T&S Ranting!

I just listened to an interview that Ina Steiner had with Matt Halprin, Vice President, Trust and Safety for eBay and I had to write another post, about the Trust and Safety debacle that is eBay. I would suggest every seller listen to this interview.

I agree, that there has been a problem with bad sellers on eBay and many of those bad transactions have driven buyers away from eBay but I disagree with the enforcement of this new policy. Philipp Justus stated in his announcement:

"The vast majority of eBay sellers deliver consistently positive experiences to buyers. However, a very small minority -- just 1% -- of sellers currently cause fully 35% of bad buying experiences. This small minority not only damage their own reputations, but also indirectly damage all of the good sellers who benefit from a strong and vital eBay marketplace. To address this problem, we have begun enforcing our Seller Non-Performance policy in stricter ways than in the past by considering a seller’s buyer dissatisfaction rate."

Now, I wasn't a math major in college, so bear with me here, but doesn't his statement mean that even after they clean up this 1% of bad sellers they are still going to continue to have 65% of all the bad buying experiences? Is this another example of "eBay Math"? I always thought that 65% was a larger percentage than 35%, was I wrong? So in reality this effort will only stop around a third of the bad buying experiences. So buyers will still be leaving the site because of bad buying experiences.

It is certainly easier to go after that 1%, even if there is collateral damage and you get a few dolphins caught in the nets, rather than try and tackle the 99%. This T&S initiative is a great PR move even though it accomplishes next to nothing in reality, the majority of bad buyer experiences will continue to happen. Maybe they are hoping that the sellers who remain, will be so fearful of the potential for restriction that they will get their act together. I really don't know.

Philipp Justus and Matt Halpern apologized for the way this policy was implemented and Matt admitted that they should have done a better job of communicating the policy enforcement. Look, I can be as forgiving as the next guy but waiting nearly 2 months to announce a policy crack down that had been in affect since before eBay Live is just plain wrong. They just got caught in a bad PR situation, so they had to apologize. I have heard this management team say "I'm sorry we should have a done a better job" more times than I can count in my years following eBay. If I had an employee who made that many mistakes I would have fired them long ago, yet eBay just wants sellers to accept this. We're sorry!

Tell that to the good seller (by any other definition except eBay's 1%) who has had his business crippled by the crackdown. eBay can handle a 2 day disruption on PayPal or Skype, they have $3.8 billion dollars in the bank a small seller who is reliant on eBay for their livelihood may miss a mortgage payment because of the restriction or possibly have to lay off an employee or two. I just don't think, "we're sorry" carries much wait.

eBay holds sellers to this new standard, yet they can't even communicate the policy effectively, nor is eBay's customer service even close to the standard they are requiring of sellers. Sellers have become great scape goats for the problems eBay is facing.

Fee's have risen, conversions have decreased and sales have flattened out or decreased. Sellers in many categories cannot afford to spend the money on customer service that is necessary to correct the problem. If eBay wanted the problem resolved they could have dealt with it years ago when sellers like myself, told them that customer service was our biggest challenge. The number of emails the average seller must handle on a daily basis is unreasonable. The same number of sales generates roughly 10% of the emails on Amazon as they do on eBay. This is a cost to eBay sellers and many have decided that it is better to take a neg rather than answer the incessant emails.

At Glacier Bay we chose to answer all of the emails and it directly affected our margins. As sales decreased my costs stayed the same so my choice's were to layoff CS people and deal with the negs or continue to spend the money so the customer experience wasn't damaged. For years eBay didn't invest in customer service because the ROI was not there. Do you think sellers don't face those same decisions?

I've rambled long enough so I will conclude with this:

This current non-performing seller policy will have a unintended consequence for eBay and the marketplace. Sellers who are worried about getting caught in the cross-hairs of T&S will withhold Feedback in an effort to prevent a neg or neutral. Negs for buyers will increase dramatically because a neutral is calculated the same as a negative in the new policy. Sellers will give buyers negatives if they receive a neutral because eBay considers a neutral as a negative buying experience. The problem is, 1 neg to a buyer may kill their feedback rating and send them off the site for good, in fact that is a metric that eBay acknowledges. Negs affect buyers more than sellers, so what will be the outcome? Sellers will continue to be hassled by eBay T&S living in fear that their business will be ruined, many will stop selling all together and some will move to other sites. All the while customers will still continue to have bad experiences on eBay and continue to leave. There is a real problem here but this crackdown is not the solution.

Trust & Safety Crack Down Round 2!

eBay finally came out with the rules for the recent T&S crackdown but since I deal mostly with larger sellers I hadn't really considered the plight of the small seller until I came across the following thread on the eBay Trust and Safety board.

Suspended account- 1 neg in 90 days 43 positive- how can that happen?

The OP (Original Poster) had this to say:

" how does ebay figure this stuff out for account suspension?
in 90 days I have 1 neg response- Zero neutral and 43 positive
that does not make 5% dissatisfied customers"

Of course this was posted prior to the announcement by Philipp Justus. Fortunately an eBay Pink (moderator) popped in to save the day.

"cfoldphoto,

At the time your account was evaluated and restricted (not suspended) you actually had 2 negatives from unique buyers and 25 positives from unique buyers over a 90-day period: a buyer dissatisfaction rate of 7.4%. Both negatives were received from well-established community members.

The restriction on your account should have been lifted earlier. I apologize that it was not, and have asked that the situation be corrected.

-- Steve "

It appears one of the Negs he received was from a Non-Paying Bidder which in my mind should not be counted against a seller. It looks like he left a negative for the buyer who didn't pay and the buyer retaliated with a neg as well. Does any of this seem remotely fair or reasonable. Besides the fact that the seller was restricted in June and it took until August for someone to take care of it. Had "Steve The Pink" not been reading the thread the seller would still be on restriction indefinitely.

I'm sorry, but eBay T&S is out of control. eBay has royally screwed this up. Add to this the fact they are counting neutrals as negatives and it boggles the mind. I recall from my selling days we regularly got neutrals from customers saying thanks for the product etc.

Small sellers are scared to death:

" Wow.. I'm scared to sell anything and I've got 100% feedback..

I don't like what's going on here but there isn't anything I can do about it.. "

I am really restraining myself from using inflammatory language to get my point across but this problem has got to be resolved. The sellers on eBay pay the freight. eBay's ham-fisted T&S troops need to be reigned in. They should be spending their time going after fraud and criminals on the site not good sellers who have 2 angry buyers. Small sellers have absolutely nobody to help them out.

Do you know what the result of these T&S actions will be? Soon, Sellers who used to give positive FB as soon as the item was paid for, will begin holding that FB until they receive the customers feedback and if the customer chooses to give the seller a Neutral that seller will now give the buyer a Negative. Because, according to the rules a neutral is a negative.

I had more to say but after walking away from the computer and calming down I will end the post here.

Blast From The Past!

Occasionally, I like to look back at what I wrote in the past and see how close I came to being accurate. It serves as a great barometer for my analysis, well I was going through some old post and came across an article written by Allison Hartsoe CEO of Aspyro (formerly Internet Business Skills). She wrote this article back in December of 06' It seems pretty prophetic to me. Here is the post in it's entirety.

eBay 2.0 - Marketing Vehicle

I found an interesting article on Auctionbytes.com this morning. It was another take on what I've been discussing for months: eBay as a Customer Acquisitions tool.

The article is entitled: The Challenge for eBay Sellers and is written by Allison Hartsoe of Internet Business Skills. She does an excellent job of explaining how eBay has changed for the sellers using the concept of software versions. She writes:

“Classic eBay, or what I'll call eBay 1.0 was about creating an efficient market to liquidate goods and make money. Back in the late 1990's when the ratio of collectibles (i.e. beanie babies) to consumables (i.e. ink jet cartridges) was 80% to 20% of eBay auctions, this made sense. The collectibles industry lacked the ability to bring the Pez dispenser seller in contact with the Pez dispenser lover. Enter eBay and voila! Prices for hard to find items equalized with demand as sellers found buyers. And sellers made money.

Then in the early 2000's collectibles and consumables switched places. I'll call this eBay 1.5. Gradually, consumables become a larger part of eBay listings until it's 80% consumables and 20% collectibles. But the consumables industry doesn't operate like collectibles. Consumables require reliable suppliers with recurring products and price reductions driven by volume purchases. By manipulating factors outside of eBay, sellers still made some money.

And now we have eBay 2.0. The gap that allowed sellers to make money on eBay has steadily closed. Costs have risen in the form of eBay fees, external tools and competition. Sellers are screaming that they can't make money. Some feel they've hit a revenue ceiling. eBay has responded by purchasing 5x the volume of search terms from Google that they ran last year. They also rolled a completely new platform (Express) to attract a different type of buyer. The challenge for sellers is that no matter how many new buyers eBay brings to the platform, sellers still cannot make money if each product is purchased for the same miniscule net profit.”

She goes on to say that eBay 2.0 is no longer a sales channel but a marketing channel. I know eBay management would disagree with this assessment but they’ve been blind to the dynamics of the site for quite a long time.

EBay 2.0 is a marketing channel and with Sponsored links, Shopping.com, and Classifieds eBay 2.0 will be an entirely different place to do business. In its current form that is not a good thing for sellers. Maybe eBay 2.1 will be the right version.

Read Allison's entire article here.

One Difference Between Amazon and eBay!

While there are many differences between Amazon and eBay, one does stand out to me: Amazon communicates better than eBay does.

eBay began a crackdown on sellers, back in June of this year, without making that information public, nor did they reveal to sellers what the rules were. They just restricted them if they fell within the bottom 2% of sellers. Sure they worked with some of the larger sellers, but for the most part the smaller sellers had to fend for themselves. The rules and guidelines were very vague. It took eBay until last week to announce what the rules were and that announcement came with an apology from Phillip Justus, Senior Vice President Auctions.

"It’s also clear we need to do a better job communicating with sellers on these issues, and helping them understand what to do to avoid problems, or resolve them after they’ve occurred. My hope is through better education and communication, those sellers who are impacted can change their practices quickly and as painlessly as possible for their continued success and the good of the whole marketplace."

I'm sorry if I consider this apology disingenuous (I love using that term). I've been around eBay since 1999 and this is their "modus operandi". They only communicate when there is sufficient stink around their decision or action. I've heard eBay management say over and over again through the years. "We've heard you and we need to do a better job at that" yet they continue to operate the same way. See my post eBay Live! - Let's Walk Down Memory Lane!

Amazon, on the other hand, announces that there will be restrictions in place for the the Toys & Games category in the 4th quarter, giving sellers enough time to adjust their business. Auctionbytes has coverage of the announcement. Amazon Places Holiday Restrictions on Third-Party Toys & Games Sellers

"Effective September 19, 2007, Amazon.com will not be accepting new sellers to sell within the Toys & Games category. Effective November 19, 2007, existing sellers who do not meet certain performance criteria will be unable to sell products in the Toys & Games category during the period beginning November 19, 2007 and ending January 7, 2008. The Holiday Selling Guidelines for the Toys & Games category are the following:

• Seller must have been selling in the Amazon Marketplace for the 60 consecutive days preceding November 19, 2007.
• Seller has processed and shipped at least 25 orders total during the lifetime of seller’s account (does not need to be in the Toy & Games category).
• No greater than 5% negative feedback rate for the last 90 days.
• Must have feedback received on at least 5 orders for the last 90 days.
• No greater than 0.5% seller fault claim rate for the trailing 90 days."
  

The difference between the two approaches is that eBay sellers must react to the changes eBay makes while Amazon sellers get to prepare for the changes. Is it any wonder eBay sellers are working hard to transition their business to Amazon?

Now, there is one caveat to this discussion. Sellers should not be dependent on any one marketplace and I would suggest that they not delay their own web presence just because sales are good and they communicate better at The River" (Amazon). A marketplace is going to look after their own interests first, which means, when times are tough (see eBay) Sellers will get the shaft. Much the same way employees get laid off during down times in a business.

Sellers need to grab as much control of their business as possible so that they are not dependent on any one marketplace but at least for now it appears Amazon wants your business.

Skype Still In The Dark!

I was doing my morning surfing today and saw numerous stories about eBay's Skype service still being down. Normally when I see a lot of stories, about a topic like this, I usually don't post anything. I prefer to add to the conversation rather than just say the same thing as others are. But I have some personal experience with Skype and my experience with the service has been dismal. Though it has been nice to make International calls without any cost, the sound quality and call consistency are pretty poor. In fact since I updated with the latest version of Skype, any use of the service other than IM causes my computer to reboot. So you can imagine I'm not too concerned that Skype is currently down for the count.

Even though I am a registered Skype user I haven't received anything from Skype to explain the current service problems. So I have to rely on friends to forward information to me. Here's what I received.

"Hello everyone,

Apologies for the delay, but we can now update you on the Skype sign-on issue. As we continue to work hard at resolving the problem, we wanted to dispel some of the concerns that you may have. The Skype system has not crashed or been victim of a cyber attack. We love our customers too much to let that happen. This problem occurred because of a deficiency in an algorithm within Skype networking software. This controls the interaction between the user's own Skype client and the rest of the Skype network.

Rest assured that everyone at Skype is working around the clock — from Tallinn to Luxembourg to San Jose — to resume normal service as quickly as possible. "
By Villu Arak on August 16, 2007

Outages happen, its happened to eBay and PayPal as well. It usually is a momentary inconvenience and a PR black eye but over time everyone just forgets it happened. At least when there are few competitive options like in the case of eBay and PayPal. Skype on the other hand has a host of competitors and it is yet to be seen what the long-term impact of this outage will be.

The Skype purchase has always been questionable IMO and has had a dampening effect on eBay's share price. Maybe it's time for eBay to extricate themselves from this business and sell Skype to a company that can get the most out of it.

Here is the latest on the outage from the Skype website:

Hello all,

Here’s the latest on the sign-on problem. We’re on the road to recovery. Skype is stabilizing, but this process may continue throughout the day. An encouraging number of users can now use Skype once again. We know we’re not out of the woods yet, but we are in better shape now than we were yesterday.

Finally, we’d like to dispel a couple of theories that we are still hearing. Neither Wednesday’s planned maintenance of our web-based payment services nor any form of attack was related to the current sign-on issues in any way.

We’ll update you again as soon as we can. Thanks for hanging tight.

Please see our Heartbeat blog for ongoing updates.

UPDATED 17 August, 2007 11:00 GMT

eBay Shares Take A Hit!

The Market recovered some today, though it still finished in red territory but eBay ended up losing over 2.5%; closing at $33.64 -- down nearly $4 from the 52 week high it set just last week. It looks like the Skype blackout is the main culprit for drop in share price. This reminds me of the eBay Blackout in 2002 and the huge PayPal outage in 2004. It's the eBay outage Trifecta. Now they will have to revise their slogan the Power of Three!

Good thing Meg and Rajiv Duta sold their shares last week; the timing saved Meg $1.6 million and Rajiv $388 thousand.

Huh??? What is eBay Doing Now?

Okay, call me completely confused!

eBay has spent the whole Spring and most of the Summer bringing down the hammer on the bottom 2% of sellers; hoping to clean up the site as well as reduce the low priced crap. I understood the idea behind that move, even if i didn't agree with how they went about it. Now they announce a new marketing effort to get new sellers. Does this make any sense?

"Here's how it works:
From today, August 15th through September 15th, we'll give you $5 for every friend you refer to sell on eBay (up to a total of 10 friends) via our Refer a Friend site. Note that your friend (or better still, friends) should never have sold on eBay before and should list an item during the dates mentioned. We'll credit your referral reward to your eBay Seller Account 6 weeks after the promotional period."

So you can earn $50 in credits if you refer 10 people to open a seller account and list at least one item. Such a deal!!

Why are they trying to get new sellers, especially newbies who are clueless about selling on eBay, when they are trying to clean-up the site. eBay is supposed to be getting new buyers and improve the buyer experience how does this effort accomplish that? I could understand referring 10 friends to buy on the site as a promotion but eBay doesn't need more sellers. The sellers who are here already can barely make ends meet.

eBay has told us over and over again that there is too much low priced crap on the site. What do you think these new sellers are going to be selling? My guess is a lot of low priced crap. Do they even think these promotions through? Besides, a large number of sellers are trying their hardest to get off of eBay, what makes eBay think they would refer anyone? This is a promotion doomed to fail.

What can eBay be thinking? I would love to hear your thoughts.

Shopping.com Items To Be Listed on eBay Express!

eBay announced today, that beginning in late August they will begin listing Shopping.com items on eBay Express. Here are the details:

In order to be eligible for exposure on eBay Express, Shopping.com sellers need to:

• be part of Shopping.com's "Cart" program, which allows their items to be purchased directly on Shopping.com, and
• have demonstrated reputable business history (e.g. through a positive relationship with Shopping.com for one year or longer).
  

This could mean that eBay sellers, with listings on Express, will begin competing against large retailers like Overstock.com, Buy.com Circuit City, TigerDirect and many more.

It looks like eBay is trying to increase both the quality and quantity of inventory on Express, in preparation for the holiday season. In addition to the Shopping.com listings, Express will be expanding its merchandising efforts. eBay sellers can take part in this merchandising if they use combined shipping or Markdown Manager.

I don't really see too much of an impact on eBay sellers because Express is such a small portion of their sales but Shopping.com sellers, who meet the requirements, have just added additional exposure for no additional cost. Since Shopping.com Sellers will need to have been on Shopping.com for a year this may limit the number of sellers eligible.

eBay Speaks About Seller Non-Performance.

Wow, it only took them most of the summer to address this issue openly. Philipp Justus,
Senior Vice President, Auctions announced today on the eBay announcement board.

"The vast majority of eBay sellers deliver consistently positive experiences to buyers. However, a very small minority -- just 1% -- of sellers currently cause fully 35% of bad buying experiences. This small minority not only damage their own reputations, but also indirectly damage all of the good sellers who benefit from a strong and vital eBay marketplace. To address this problem, we have begun enforcing our Seller Non-Performance policy in stricter ways than in the past by considering a seller’s buyer dissatisfaction rate."

Here are the new rules for sellers:

New enforcement of eBay’s Seller Non-Performance Policy
There are currently two types of input from buyers which we use to measure a seller’s buyer dissatisfaction rate: the percentage of negative and neutral feedback they’ve received and the percentage of Item Not Received complaints filed against them. Sellers who have demonstrated buyer dissatisfaction rates greater than 5% within a 90-day window are now subject to temporary 14-day restrictions in the form of selling sanctions or reduced listing volume. Sellers with dissatisfaction rates that are 10% or greater are now subject to indefinite restrictions until they improve their buyer dissatisfaction rates to less than 5%. In both cases, sellers are given instructions on how to resolve their open disputes and take other recommended actions to in order to regain their full selling privileges. (Please read Seller Non-Performance policy and our Frequently Asked Questions for more information.)

Today is August 13th and this crackdown has been going on since at least June. Why is eBay just now deciding to make this new policy public. I would have thought that the 1% of sellers who were causing the problems would have all been restricted by now.

While I agree that bad sellers need to be dealt with, I still haven't seen a viable reason for including neutrals in the calculation. As I've said before, I'm sure if eBay had not included neutrals, they never would have reached the desired number of sellers to restrict.

I'm glad they have chosen to publicly address this situation but they should have done this 3 months ago.

Speculation! - eBay Considering Spinning Off Minority Stake In PayPal!

"Ebay could be contemplating an IPO for a minority stake in its PayPal unit, according Stifel Nicolaus Internet analyst Scott Devitt."

This seems like wild speculation to me. eBay doesn't traditionally think this way so I think this post falls under wishful thinking but if you go on to read the article it does bring up an interesting point.

Devitt went on to say in a research note, “We believe a spin could be a component of a more significant shift in its business, towards the benefits of high-quality consumer credit and away from transactions as the sole source of revenue.”

I've highlighted the section I find the most interesting. All of the signs, point towards eBay diversifying PayPal's business so as not to be dependent on transaction revenue, much the same as they have diversified the marketplace business by growing non-GMV business.

I think eBay is more likely to consider a complete spin-off of the company to maximize the value and avoid anti-trust issues rather than a partial spin-off.

What Should eBay Do With All This Money?

The Perfect Storm

The "Perfect Storm" is building over San Jose, California. eBay is sitting on $3.6 billion in cash, can borrow up to $3 billion more and has free cashflow of $1.3 billion. They are beating Wall Streets estimates each quarter and with the recent run-up on the stock eBay's Market Cap has grown by $6 billion in the last week.

Now is the time to strike if they are going to make a major move. So for fun, I thought I would lay out my plan. Granted, I haven't got a clue what all the ins and outs of M&A are and what follows is really just for fun. So take this with a grain of salt.



So what should eBay do with all this money?

• Some analysts think they should initiate a one-time dividend of $3. This just doesn't seem like an eBay thing to do.
• Others want them to buy back even more stock, maybe as much as $5 billion. This seems to be the approach that the majority of analysts think will happen.
• Start acquiring smaller companies to fill out the holes in their business. While this seems to be the prudent approach, I don't see them loading up on a lot of little companies. Remember this is the perfect storm that is building. They need to do something big.

So what do I think? Well since I'm a blogger and not an M&A expert, I really am just having some fun but I think they need to do the following: (Now don't laugh at me or my feelings will get hurt)

• First they need to buy Facebook but not spend anymore than $6 to $7 billion for it.
• Next they merge with Yahoo. Many would say they don't have any real reason to merge with Yahoo if they had Facebook but I think owning Facebook gives eBay a ton more leverage in a deal with Yahoo and Yahoo certainly needs Facebook.
• Lastly, once they have accomplished these two things they then can spin off PayPal.

I know many of you are saying, that is way too much to accomplish and I would agree but with all of the elements lining (the "Perfect Storm") up right now. If they were ever able to accomplish this, now would be the time.

Amazon, is aggressively challenging their marketplace business. Google, is certainly not going away. Facebook, will only get more expensive. PayPal, may face anti-trust pressure down the road. Yahoo, is struggling right now and the two companies would be a great fit. If not now - when?

BTW, on their own, none of these ideas are original -- except maybe a Facebook purchase, I seem to be the only one calling for that move. I have to thank OnlyeBay for the PayPal spin-off idea and a number of bloggers and analysts think the ebay/Yahoo merger makes sense. I believe though, that I am the only one in the entire blogosphere, who thinks all three should happen in this order. Maybe that makes me crazy - maybe not!

Just my 5 Cents!

eBay Shares Set New 52 Week High

eBay shares followed a greater than 3% gain yesterday with another gain of greater than 3% today to close at $35.86 a new 52 week high.

I normally don't comment on stocks but this was a notable improvement. I'm sure employees and investors with long positions are exceedingly happy today.

Buy.com Announces Garage Sale for Facebook.

Buy.com announced today that they have launched a shopping cart application called Garage Sale for Facebook users. The idea is to leverage the network effect of Facebook's very active user base to sell household items.

Ever since eBay commissioned a new survey conducted by Nielsen, that revealed the average American household had over $3,100 in unused items just laying around their home, companies have been lining up to reach out to the casual seller.

Buy.com has now jumped into the fray. Their application is not a solution for full-time sellers but it does address some of the problems the casual seller faces when selling that $3,100 in items sitting around the house.

The Buy.com application is by no means a "killer app" but if they can find a way to collect all of this inventory that Facebook sellers will be selling on a marketplace site. It may very well be the beginning of something big.

eBay's bread and butter is not the casual seller but they wouldn't have commissioned the survey if they didn't want to reach out to that segment of the marketplace.

I've said it several times in the past; eBay's problem is not one big competitor but thousands of competitors chipping away at a segment of their business -- Death by a thousand cuts. Garage Sale by Buy.com is just another of those thousand cuts.

How does eBay react to this new app? Do they ignore it or aggressively target Facebook users? Perhaps they just buy Facebook so they can own the real estate.

I added my own Garage Sale item so you can see how it looks.

Whatever Happened To eBay Express?

It has been slightly over a year since eBay Express launched to much fanfare and a multi-million dollar ad campaign, so I thought I would take a look and see how the site was doing. Unfortunately there just isn't much information available. The eBay Express discussion board has very little activity. There have been no announcements regarding Express since June 7th when Lara Housser posted prior to eBay Live!

Last December, there was a promotional push announced by Gary Briggs, eBay CMO

"eBay Express is also getting a lot of coverage. Rosie O'Donnell spread the eBay Express message on The View recently, and she gave Nikon cameras to her lucky audience, courtesy of eBay Express. Similarly, Tyra Banks sent her audience home with iPods last Monday on behalf of eBay Express. On December 10th, our own Griff was interviewed in a USA Today Article about Holiday shopping where he had the opportunity to talk about Buyer Protection on eBay Express.

To complement all these celebrity spots, we continue to have a heavy presence in television to drive demand. Following our brand TV spots that began earlier in the fall, our holiday TV ads have been running on all major networks, including FOX, NBC, CBS, and ABC. These holiday-specific commercials have aired so far this season to the tune of 683 million impressions. If you haven't seen them yet, go to www.whatisit.com."

Express is currently only available in the US, UK and Germany with no apparent plans to add additional countries.

I liked the concept behind Express but always believed it should have been a standalone site not connected to eBay -- a new fixed price marketplace to go after the web customer. Unfortunately it looks like it has been a major failure. Would eBay have been better off buying an existing site like Overstock.com, re-branding it as Express and then opening it up to eBay sellers to list their Fixed price items? I wonder.

I think Express has moved from a great idea to an eBay after thought.

Google's Eric Schmidt Defines Web 3.0

Update On StubHub And PayPal

A while ago, I wrote a post asking why Half.com and Stubhub didn't accept PayPal. I never really received a satisfactory response to the question until today. It appears that StubHub does use PayPal as a method for paying sellers. I'm sure I would have known that, had I ever sold a ticket on StubHub before, so at least part of the question was answered. I would imagine that some day, in the not too distant future, StubHub would allow buyers to use PayPal also. So that at least makes since. What doen't make sense is why Half.com doesn't use PayPal in any form. They could at least use PayPal to pay their sellers like StubHub does. Wouldn't it pay to have PayPal integrated into Half.com? Just look at all that transaction revenue PayPal is missing out on.

Is Something Big in the Works for eBay?

I just came across this notice from the AP EBay Doubles Credit Pact With Bank of America to $2 Billion From $1 Billion Now, let me ask you something. If eBay never once used the original $1 Billion credit line, why do they need to grow it to $2 billion?

They are sitting on $3.6 billion in cash on their balance sheet, have bought back nearly $1 billion in stock and now have upgraded their credit line by $1 billion dollars. Me thinks somethin is up!

They certainly don't need all the cash for a merger with Yahoo but if they are seriously looking at making a move on Facebook they might need to negotiate a cash plus stock arrangement. Facebook, is still a little expensive in my view but eBay has certainly positioned themselves to make a move if they want to.

I'm no M&A expert but this certainly looks to be a viable deal.

Amazon Payment Service Is Official!

I wrote a couple of days ago, about the rumored Amazon payment system. Well, according to Ina Steiner of Auctionbytes, the system is now official.

I have to say, I like the direction the Amazon system is headed but I have reservations about it being a major PayPal killer. As long as PayPal is not accepted on Amazon, then Amazon's payment system won't be accepted on eBay, therefore you will have two ecommerce giants with their own payment systems. eBay's market is much bigger than Amazons.

The actual battle is much more likely to be held outside of either marketplace. I do think that PayPal will act quickly to combat the threat, perceived or real. This new threat of competition should benefit sellers using PayPal. Also, PayPal will have to get real aggressive with their off eBay business. I think this may marginalize Google Checkout because Amazon's system reportedly will act like PayPal, allowing for a user to maintain a balance in their Amazon payments account and transfer money directly rather than using a credit card. Google checkout is essentially an e-wallet for credit cards.

I am also very intrigued by the Micro-payment aspects of the planned service. This will be very beneficial to Amazon as they move more aggressively into digital sales and help them manage cost in their competition with Apple's iTunes.

Right now management at eBay's PayPal and Google's Checkout are in their respective war rooms, planning the next move. Ok, maybe not but they are at least discussing it at lunch.

Update: Here is a first hand account from a developer who had an early look at Amazon's payment system.

Good Sellers Caught In eBay T&S Net!

Scot Wingo's post yesterday Neutrals are now negatives in TnS policies... hit a nerve, with me, on two levels: first because Kevin Harmon of Inflatable Madness is a friend and secondly because I know the hard work and additional expense he's put in to turn this around. He isn't presently restricted but who knows how long before the hammer comes down.

What really gets me, is the idea that neutrals are now included in the calculation. I'm sure eBay looked at the numbers the first time, going by negatives alone and realized it wouldn't affect enough sellers, so to reach their restriction quota they extended the net to include neutrals. Including neutrals is just plain wrong in my opinion. Customers leave neutrals for any number of reasons that have nothing to do with bad customer service, as Scot points out in his post.

Kevin, posted a response to Scot's post and I've asked if I could include it here:

"Hey Scot, great post and I am glad that somebody has brought this out publicly.

Indeed, we are in the crosshairs right now - in fact it feels like we are fighting for our lives. We all know that eBay lives in its own ecosystem and makes its own rules - we large sellers just have to accept that. When eBay suddenly begins evaluating their sellers on brand new criteria - criteria which even defies eBays own current feedback policies as you describe above - well, it just makes it very challenging for us.

I recently volunteered to explain why we have recently strayed from our historical excellent feedback rating and what we are doing to stop it. In the interest of understanding, here's an excerpt from a document I wrote:

"Origins of the Decline:

Inflatable Madness has been selling on eBay for over 5 years and has achieved Top 25 status as a seller. Historically, our feedback rating has been very good – as high as 99.5% and averaging 99.0% for over 4 years.

In an effort to find more profitable items that could compensate for the fall of 2006 store fee hike, we decided to begin selling used product. We began buying used DVD’s and Video Games and selling them on eBay. We also started a disc repair center to repair scratched games and movies.

There were 2 challenges that developed because of this move:

1. Used product doesn’t always work. No matter how much time and effort we put
into inspecting, testing, and repairing discs, we will still average 5% defective.

2.We were not ready to handle the customer care that was needed by people receiving
a defective item – in short, we were not prepared to become a liquidation seller vs. a new sealed seller.

These issues combined together created feedback problems which we had never experienced before, which caused the rapid fall of our feedback beginning in December of 2006.

How We Are Correcting The Problem

I want to clearly state here that Inflatable Madness is 100% dedicated to improving our buyers experiences on eBay. There is absolutely nothing that is more important to me right now than to fix the problems we have been experiencing. Due to the low margin business we are in, even a minor limitation placed on our account would put us out of business, and so we have taken many different steps to improve our customer experience:

a. We hired another full time customer service representative in June. This representative both assists with answering email and processes returns. We are also able to refund faster than before.
b. We put a new returns process in place. In every package that we ship out that contains a used DVD, Video Game, or PC Game, we place a flyer which instructs the buyer to email a special dedicated email address if their item proves defective, and we answer that particular email immediately with instructions for return.
c. We began an aggressive Mutual Feedback Withdrawal campaign, which to date has removed almost 1,000 negatives. This confirms my personal belief that we were not responding to complaints quickly enough, and were receiving negatives because of it. However, we ALWAYS refund a buyer if there is a problem. So, a month after a neg was left, the buyer had been refunded and was then satisfied with the outcome, as the Mutual Feedback Process has proven.
d. We hired more shippers. The end result here is that we can ship an order almost 24 hours faster than before, and we can deal with any inventory stock out issue in a more timely fashion.
e. We completely rewrote our inventory software and completed a 100% recount of our entire inventory – no small feat for an 8,000 sq ft warehouse with 125,000 items in it. The end result is that our inventory control is nearly 100% now and we have stopped overselling items.

Results

I am pleased to say that our efforts are paying off. In June and July, we had the highest number of positives that we have had since Christmas and, even better, we have reduced our negative and neutral feedbacks by 50% over the previous 3 months. We still have work to do to get our feedback back to the excellent rating we have enjoyed for 80% of our time on eBay, but we are making strong progress and will continue to do our best to improve the buying experience"

Scot, we have expended tons of time, energy, and money fixing and improving our system to make us a significantly better eBay seller. I really believe that I have done everything in my power to correct this problem. All I can say now is that it would be absolutely tragic for me and my 16 employees to have all of this time and effort go to waste.

By the way, our 5 year lifetime feedback is: Positives - 297,769 Negatives - 4,921

Kevin Harmon
CEO
Inflatable Madness LLC"

I agree with Scot, that something needs to be done about sellers like Bargainland (and it appears they have been dealt with) but good sellers like Inflatable Madness and many others in a similar situation are finding that their continuing existence as a business, is now in the hands of a judge using faulty judgment. If you look back at 90 days worth of data to come up with your numbers, you need to give the sellers 90 days to make the changes needed to right the ship.

eBay News Today!

EBay Inc.'s ticket-reselling subsidiary StubHub said Wednesday it has signed a five-year deal which makes it the official secondary ticket reseller for Major League Baseball.

Congratulations to Chris Tsakalakis and his team at StubHub.

Also in eBay other related news, PayPal announced today that they will be offering Pay Later, a new service offering instant credit on websites. This will put them in direct competition will BillMeLater.com. A bold move and I applaud the PayPal team for their aggresiveness.

Now, with these two new developments and the company coming off stellar Q2 earnings, you would think eBay's share price would rise substantially, but as of this writing it is up barely 23 cents on the day. I've asked this question over and over again: Why can't eBay's stock get any traction? There is something going on "outside the numbers" investors are obviously not confident in the growth of this stock. (While Amazon keeps hitting new 52 week highs)

I believe the share price has a huge upside but current management is failing to grasp the needed changes. I do not own shares in eBay and I wouldn't be holding them now, if I did. eBay Marketplaces should be taking over the ecommerce world, instead they are dragging down the stock. I certainly hope they get their act together before the 4th Quarter.

Amazon is becoming the ecommerce darling becaue they are growing. Sellers are falling all over themselves to get a foothold in Amazon's marketplace, while they look for an exit from eBay.

No wonder insiders are selling their shares now, they must not see any growth in the stock either. eBay needs to "wake up and smell the coffee" before it once again becomes just an auction site. Could you imagine where they would be without PayPal, StubHub, and Shopping.com (Don't get me started on Skype)

I don't want to sound like a broken record but when Investors, Sellers, Buyers and I'm sure many employees are unhappy with the direction of the company, something is definitely wrong.

Sorry I took good news and turned it into a downer.

Amazon Payment System Rumor

Techcrunch posted a rumor today that Amazon is working on a new payment system similar to Google Checkout. Well apparently everyone is talking about it. If it is true, then eBay should be very concerned. PayPal's growth and its future are based in transactions outside of eBay. They already have to contend with Google Checkout in that space so now if Amazon launches their own service things get complicated.

Amazon understands transactions, so this gives them an advantage over Google but I don't see them as being much of a threat to eBay's PayPal. As long as eBay protects PayPal's ownership of the Golden Calf (eBay marketplaces) they will continue to hold a commanding lead in the payments biz. Amazon's entry may slow down PayPal's growth though and that will raise concern with investors.

Instead of gathering all of the posts on the Amazon payment system, I've collected them in my What Am I Reading" links in the right side bar.

Now This Is A Great Business!

Apple's iTunes has sold 3 billion songs

ITunes sells 3 billion songs

Bloomberg News

Article Launched: 08/01/2007 01:39:56 AM PDT

Apple said its iTunes store has sold more than 3 billion songs since its debut in 2003. In the first quarter this year, the iPod media player helped Cupertino-based Apple surpass Amazon.com and Target to become the third-largest music seller in the nation. It now trails only Wal-Mart Stores and Best Buy, the company said Tuesday. Apple sold its first billion songs by February 2006 and a billion more by January. Apple's revenue from song downloads and related service totaled $608 million in the third quarter, a 33 percent increase from a year earlier.

- Bloomberg News

$608 Million in one Quarter from music downloads, .99 cents at a time. Wow, that is amazing. Steve Jobs has done a fantastic job of turning a niche computer company into a multi-media empire. He will find it more difficult to duplicate the results in the video world but he is sure trying. Apple has been successful with TV shows download because they are short 22 to 45 minute programs, I think it will take some time for full-length feature films to grow past the early adopters. Apple is trying to get around these problems with iTV but it may take years before this idea grabs hold of the market.

See, I can write about something other than eBay.