Sunday, May 25, 2008

eBay Needs a "Come to Jesus" Moment!

We've all heard about the eBay seller boycott attempts over the past year and the reality is they have each failed -- sellers rely too much on the income that comes from eBay to stop listing.

I've never been an advocate of boycotts mostly because as John Donahoe says; "With sellers, there's nowhere else to get this volume." source eBay Strategies.

Too many sellers are hooked on the "crack" (volume and cash flow) they are addicted and going cold turkey is too painful. eBay management knows this and uses it to their advantage.

Additional reasons boycotts don't work:
  • eBay is a competitive environment and too many sellers will list items to replace those removed by the sellers who are boycotting. Until every seller acknowledges they are addicts and they want to change, boycotts will continue to fail.
  • eBay controls the flow of "crack" and can just "push" a listing promo, so sellers decide they just can't pass it up. When your personal income depends on eBay, you can't take the chance.
  • PeSA, ECMTA and IMA have never backed a boycott. If the largest sellers or those sellers involved in these organizations do not back a boycott, it will fail. The only way for an action by sellers to succeed, is if all three of these organizations support it.
  • There have never been any stated demands -- all sellers are doing is protesting. I'm not sure if boycotts are ever really successful, but if there are no stated and agreed upon demands then failure is assured.

The title of my post is: eBay needs a "Come to Jesus" moment and they do, before they ruin the best seller empowerment story ever.

I will say this in print right now; the moves eBay managers are making will backfire and end up marginalizing the platform. As Stephanie Telenius mentioned at the ChannelAdvisor Catalyst conference earlier this year "we won't recognize eBay, this same time next year" She was 100% correct, but should have added, "next year at this time nobody is going to care about eBay".

Investors should be very concerned that this management team is taking them down the wrong path. Many of the changes are very necessary, but the execution is wrong.

What will bring eBay managers to this "Come to Jesus" moment? Perhaps a boycott that addresses all of the issues I laid out above, but more than likely the "Come to Jesus" moment will happen around January of 2009 when the eBay board of directors decides to find a new management team to once again fix eBay. I fear it may be too late to avoid this outcome.

It has always been my opinion (my 12%) that eBay can once again grow faster than ecommerce and therefore become a growth investment again, but only if eBay management embraces sellers, rather than use them.

The "carrot and the stick" actions of management, will only motivate sellers in the short-term, but even if these moves change seller behavior, they will in the end deepen seller resentment.

eBay managers are very intelligent and the senior execs all have advanced degrees, but they don't live in the real world. They have no real world experience, nor do they care about real world experience -- they've always viewed the marketplace from their ivory tower. Metrics are the driving force behind all of their decisions, but common sense doesn't seem to be included in the calculations. They are book smart, but real world stupid.

This is how foolish their actions are:

  • They want the Amazon buyer experience, at eBay's traditional profit margins. Hello McFly! Amazon controls price, seller behavior, product selection, merchandising, fulfillment and search because they have skin in the game. Sellers have to fall in line because they compete with Amazon.

    eBay has no skin in this game -- they have traffic and "addicted" sellers. Amazon knows online retail like no other company in the world. eBay knows "jack"
  • It is a "crack pipe" dream, to believe eBay can get close to the Amazon experience without compressing margins by giving real incentives to sellers and advertising to reinvigorate the brand. These fake FVF discounts for higher DSRs and "Free Shipping" are too funny to take seriously.
  • Amazon is a technology company that sells product, while eBay is a bunch of brilliant marketers and consultants who think they are a technology company. Please name one technological innovation eBay ever came up with that worked or that wasn't copied from some other company. All of their success has come from acquisition. Why they didn't outsource Finding 2.0 to Google I will never know.

So, I am on record as saying, that unless eBay managers have a "Come to Jesus" moment in the very near future, they will have it forced on them in Q1 of 2009. There will be no need for a boycott because the power of eBay will be gone by then.

My suggestion for sellers right now: Begin to wean yourselves off of eBay beginning today, because the changes they are making will ultimately fail and you don't want to be dependent on the "New eBay" for your livelihood.

Just my 12%

17 comments:

Crabby Patty said...

Preach it, brother! Bear with me here for a few moments, but I've been reading a lot lately about the French Revolution (last week, it was Sue Grafton, and the week before that gluten-free cooking) ..... anyway, the aristocracy could NOT comprehend the depth of anger that the common folks felt for the monarchy, and while people were starving for bread (The Flour Wars), the rich were using flour to powder their wigs. By the time they "woke up" and realized the state of the country, it was too late. NOTHING they could have done would have prevented the people from rising up.

So, has eBay had their "Let Them Eat Cake" moment? IMHO, definitely. The cavalier manner in which they have dismissed the very real concerns of their sellers, the constant ill-advised poorly-thought out "improvements", the sky-high fees, the moronic sales like the 15% off FVF "free shipping" sale, the paranoid controlling of just around everything the seller does, the list could go on and on.

ms.pat said...

Randy - Love your "Fire & Brimstone" sermon...RIGHT ON! I've been posting for months that sellers need to diversify AND take as many of their buyers with them as they possibly can. That alone is the key to the success of other sites and an even quicker downfall for the callous crew at Ebay. There will come a day when Ebay will be on its knees begging sellers to return...we deserve to be in places where we can sell and we deserve NOT to be selling on ebay!

For myself, I presently have only 6 small listings on ebay and use that only as an outlet to spread the word about my own website. Hope everyone visits my new ACEO section... www.aceoart.net

Great good luck to all honest sellers - we deserve a break because its been a nightmare since Jan. 2008!

Steve said...

It seems eBay is driving the smaller sellers away. But welcoming the big sellers, like Buy.com.

Which group needs eBay more? When those big sellers go away, and they will, eBay will be empty.

eBay is courting the wrong group. They're turning down the loyal, long-term seller, for the fickle, short-term deal.

David said...

The problem is eBay has so many sellers that they could probably get rid of 25% of them and it would have no effect.

Until Amazon.com comes out with a site that specializes in items such as collectibles I think eBay can contiue to raise fees and sellers won't get off the "crack" until it's too late.

It's not impossible but for eBay to fail, they'd really have to screw things up on purpose.

permacrisis said...

@ david: I believe amazon owns collectibles.com, but I think promotes it very poorly.

@RKS: "Why they didn't outsource Finding 2.0 to Google I will never know."

My guess: because at around the time ebay mgt were to show Google the DSR system and said "Here, plug it into THIS", then Google would reply back with "No. Provide us with some VALID data on seller reliability please."

heh heh

Randy Smythe said...

@PC (pun intended Permacrisis)
Collectibles.com looks to be just an Amazon webstore not owned by Amazon.

@david, Amazon has no desire to get into auctions again. They concentrate on categories where they can source product and then use 3P merchants to fill in selection.

Collectibles will have to be included in the Everything Else category for the near future.

@steve, eBay does want the small seller because they fill out the selection on the site but all of their growth will come from the large sellers so they are making changes to address that.

ms.pat Amen on diversification. eBay Store sellers have an option with eCrater but they have to learn to be marketers.

Take all of the money you spend on eBay and spend that driving traffic to your eCrater store and within 6 months you will be doing much better sales on eCrater than you are on eBay.

@crabby.patty,

Thay have already said "Let them eat cake" there is no turning back at this point I'm afraid.

rich said...

Good article, but make that "wean" in the last paragraph.

Randy Smythe said...

Rich, it looks like spell check didn't catch that. I made the change. Thanks

Anonymous said...

Start emailing eBay executives directly and share with them how your business has been impacted. eBay has set up their site so that are knocking themselves out along with the seller base. No sellers = no innovation. Do you think Buy.com cares about eBay? They would happily let them sink to the ground and then take all the merchandise and customers back to buy.com.

Henrietta said...

John Donahoe says; "With sellers, there's nowhere else to get this volume."

He is probably right, however, and it is a very BIG however, volume alone does not cut it. If I make no profit per transaction all volume gives me is a higher loss.

Add to that the stress levels, NPB, chargebacks from those who do pay, complete vulnerability to extortion, having to rethink my business plan every month plus redo every listing about every other day.

No.

Call it a boycott or not just as you please. I am not selling on eBay and I am not buying on eBay. I am just one small insignificant old woman but I am not unique and it is my demographic group that has the time and the money to buy gifts for our children and grandchildren, collectibles, electronics, music, art, clothes, fabric etc. etc. etc. If JD wants us and our flea market off eBay he may well get his wish.

I want to live long enough to enjoy my grandchildren & that will not happen with the stress level generated by eBay's Innovative Disruption or whatever they call it. I would rather sell less elsewhere.

Sorry for the rant. I had my Come to Jesus Moment back in January when the full realization of what JD planned sunk in, and I AM STILL madder than a wet hen.

Anonymous said...

Here's the game plan. Lets kick off the bottom 25% of the sellers and take the hit in the 2nd quarter which isn't going to be any good anyway since the boat is taking water and the easiest solution is throw some passengers (sellers) overboard. We didn't care for them anyway since they weren't paying us enough. Then lets require PayPal only in the USA. If anyone claims monopoly, we can just point to all the other small venues that are making headway with the overboard passengers. Australia is the setup and by the 4th quarter we will be in a better position.

David said...

Like I said. They can piss off the sellers all they want. eBay has a monopoly.

I think the reason they implemented "category specific" pricing on media is because they realized that media sellers have other venues to go to.

If you sell collectibles, or antiques you are stuck and nobody is ever going to be able to challenge eBay.

Anonymous said...

David, ebay is already just another venue in the media category. The quality medium sized sellers in that area have left in droves. I am talking about green star long time ebay sellers of quality hard to find merchandise. The core of the ebay middle class is being destroyed.

They just don't need the "volume" of hassle that ebay is giving them when they have other "venues".

Tony P. said...

"Like I said. They can piss off the sellers all they want. eBay has a monopoly." ~ David


David, you're partly correct. To the sellers that have nowhere else to go, ebay is a monopoly. For the sellers with their own websites, ebay is not a monopoly.

Your own website is DAMNED difficult. A hair-pulling, stress-inducing PITA that is in need of constant attention, from the moment it seems you'll never get it online, to the hourly / daily tweaks and monitoring.

Your own website easily registers a 9 on the Frustration Factor Scale of 1-to-10. Then you make your first sale on it, which gives you the feeling it's now at an 8.

A marketing campaign brings in more business, and your little website is easing down that scale towards a 7, then a 6 and finally you get the Hang of it.

Ebay is a monopoly and it is also registering a 9 of the Frustration Factor Scale. I suspect many folks would offer a 9.5, a 10 or even an 11.

Ebay, however, isn't going downward on that scale and it doesn't look like anyone is going to get the Hang of it, anytime soon. Disruptive Innovation is hard to get the Hang of - impossible, actually.

Some of the oldest, diehard ebay sellers that would never consider starting a website in the past, have now done just that. Ain't that right, Randy?


My own website does a smattering of business, but that doesn't induce me to give my stuff away on ebay. It (my goods) can frickin' rot first! I will put some things on ebay, but not the level I used to do.

In 2005, I did over $48,000 on ebay - I am NOT big and I know that - in 2007 I did a little over $5,000. The other collectibles / antiques sellers I speak with tell me they have downsized along those same lines.

No, ebay won't crumble without me. But I am legion. That particular Noise that is droning in the background is our Roar. We stand like The 300, waiting for the PeSA's to join us. But, join us or not, we are off the pipe.

Anonymous said...

Randy-Great Stuff! I believe you could run Ebay impressively.

Do you know of any site for selling used name brand and designer clothes. Currently, that's what I sell; it's a fairly lucrative business if you know what to sell. But I can't stay with Ebay. I don't make enough money to take their crap.

Anonymous said...

"eBay managers are very intelligent and the senior execs all have advanced degrees, but they don't live in the real world. They have no real world experience, nor do they care about real world experience -- they've always viewed the marketplace from their ivory tower."

Randy-Just curious about your take. Is the rebellion or "noise" as big as we sellers thinks. Is Ebay aware of the huge rebellion going on (or is there really just not enough of unhappy folks)? And also, what do you think Ebay Live will be like this year? Will people behave themselves?

Anonymous said...

Your description of eBay managment is spot on, and it reminds me of this quote:

"It's so much easier to suggest solutions when you don't know too much about the problem." - Malcolm Forbes

eBay management don't really know what problems sellers are facing, and they don't seem to care. They're just going to "solve" problems that maybe don't even exist, or that exist only on paper, or in their own imaginations...