Monday, June 30, 2008

A Chink in eBay's Armor! Update

Update: "EBay Inc. was ordered by a French court to pay LVMH Moet Hennessy Louis Vuitton SA 40 million euros ($63 million) in a lawsuit over claims it didn't do enough to stop the sale of counterfeit goods." according to Bloomberg


"Angry eBay sellers labelled the auction site "monolithic and dictatorial" at a conference convened today to help the competition regulator decide whether to allow eBay to force all sellers to use only PayPal for accepting electronic payments." from the Sydney Morning Herald

I added the news above as an update to this earlier post, in an effort to keep score on eBay's many legal and regulatory battles.

News today that the Australian Competition and Consumer Commission (ACCC) has told eBay to hold off their planned implementation of PayPal only on the eBay Australia site, has revealed a chink in eBay's armor. The once mighty eBay is having a tough time in the courts and with regulators of late.

While this announcement does not end this issue completely, it does prevent eBay from making this change as they had planned on June 17th. The ACCC will make their final ruling at a later date.

In the past eBay was the proverbial 800 lb. Gorilla in the courts and with government regulators, but over the past 6 months that has begun to change.

  • First it was the settlement of the BuySafe vs. eBay trademark infringement suit which was filed in Nov. of 2006 and settled early last year.
  • Then there was the decision in Feb of this year to settle the Patent Suit with MercExchange over the Buy it Now feature -In the good old days eBay never settled suits.
  • Next there was the Suit and Counter suit of that has yet to be resolved.
  • Then the loss, in France, of the lawsuit over counterfeit product being sold on eBay, brought by French luxury brand Hermes.
  • And now this move by the ACCC to delay and possibly disallow completely, eBay's proposed implementation of PayPal only on the eBay Australia site.

I wrote a post in late 2006 entitled How Do You Beat eBay? One Category at a Time which dealt with how competitors couldn't beat eBay head on, but over time, they could whittle away at their business one category at a time. It appears the same thing goes for lawsuits and regulatory fights.

The concept is also called "Death by a Thousand Cuts"and as eBay begins to look vulnerable from court and regulatory losses as well as increased competition, the sharks begin to circle.

eBay is fighting battles on multiple fronts right now; in the courts; in government offices; with buyers and sellers and with competition. And they are fighting these battles as they restructure their core Marketplace business. eBay is vulnerable right now and it doesn't look good for the future.

For too many years eBay used their considerable size and position as the top ecommerce marketplace to beat everyone into submission and improve their advantage.; often to the detriment of their own customers (sellers). Now, it appears, they are having to pay for that approach and even investors are starting to get concerned.

How does the saying go? "Karma's a Bitch"

I do believe they can turn around their fortunes but not with the direction they have taken, but who listens to me.

Just my 12%


David said...

Randy, This is a major blow to eBay. It's only a blow though because it hurts their power trip.

Believe me though, they can make it paypal only if they want.

Earlier this year I believe the rule was that you needed to have a feedback of 100 to not use paypal.

All they have to do is make a new policy where you need to have DSR scores of 4.7's across the board and a 99% or 98% rating.

Most people who only accepts checks and money orders do not have 4.7's.

One more step I'd like to see paypal take (although it's highly unlikely they would)

DSR's on shipping time can only be rated for paypal transactions. I think some of the low DSR's are attributed to guys sending personal checks, and having unreasonable expectations concerning delivery time

Henrietta said...

That avoidance tactic will not work in Australia David. They may not even be able to force sellers to offer PayPal, we shall see.

My personal take on the shipping time is that it needs to be rated on the period between notification of payment being cleared and electronic proof of shipment. The speed of delivery after that is controlled by the method (which directly relates to price) chosen and paid for by the buyer, and the carrier. It should be an automatic DSR given by eBay which has all the information needed to do so.

ms.pat said...

Randy - we listen to you and you're absolutely right on! I think everyone is happy about this kick in the pants to ebay - they don't even particularly care if its right or wrong or ebay has our best interests (which we all know they don't). Its more to do with the fact that the big bully who has been treating their sellers like dirt got a swift kick in the pants themselves! Its good to fail once in awhile - keeps your wits about you and keeps you on your toes. Ebay has become so overblown with themselves that they cannot see when they are pushing too darn much!

As for shipping time stars, if they want to emulate Amazon, Amazon gives its sellers a timeframe for delivery and you cannot give them feedback before that time! Ebay did it the cheesy way - which is how they work - just ham-fisted and with no forethought!

Anonymous said...

"Ebay is fighting battles on multiple fronts"

Reminds me of the Reich. Still, they could have won those battles with our help... instead, they tossed sellers into the oven.

Toby said...

Another interesting court battle ebay
is in is ebay Canada vs Canada Revenue Agency. CRA wants all sales records for every Canadian seller who qualified for power seller status at any time in 04 or 05. Ebay has resisted all the way and lost every ruling, now on appeal on appeal. No doubt some Canadian ebay sellers are pretty nervous these days.

Anonymous said...

It's all about the karma, Randy. You do bad things to hurt people and it comes back to you a thousand times fold and vice-versa.

It really seems John Donahoe is heading this charge, but I certainly don't know the big picture. Makes you wonder how he treats people he actually likes. Maybe someday books will be written about the fall of big, bad Ebay and the truth will come out.

Anonymous said...


and I listen to you Randy!!