Saturday, June 21, 2008

Disconnect at eBay! Captain We Have a Problem!

Ina Steiner has a great post on her Auctionbytes blog called Disconnect at eBay as It Moves toward Amazonification. I think this quote sums it up well;

"As far as execs, I have a feeling they either don't get it, or get it and
won't admit it. And what I mean by don't get it is that they don't recognize
sellers' are upset to the point of leaving. The official spin on unrest is
"change is hard," which is a big part of it, but the (sometimes nasty)
desperation I'm seeing is from sellers who feel they don't have control of their
businesses, don't know what eBay might throw at them next, and some of whom are pulling out their hair stuck between poor customer service from eBay and abusive buyers, others who fear encountering bad buyers and how it will affect their businesses."

"They don't get it!" is the phrase I hear over and over again from sellers. IMO, eBay Execs really don't "get it". eBay management looks at the metrics and sees that 10% of sellers are affected by a change or are experiencing a problem as a result of a change and 10% is a low number so that becomes an acceptable change for them, but 10% of a site the reportedly has 1.3 million sellers is 130 thousand "real people" (and only 5-6k were at eBay live) whose lives have been turned upside down and many of those sellers have employees that are also affected.

Here's where the disconnect happens; each change affects a completely different set of sellers, so ultimately all of these changes in the aggregate are affecting 30 to 40% of sellers; well now we have a problem, now the changes are affecting 390K to 520K sellers and their employees.

eBay managers are driven by the metrics and are buried in the aggregate data, but the real formula for success should be this: Metrics plus Logic, plus Willingness to Invest, times Common Sense, divided by Perception, equals the result. (now don't grade me on the actual calculation, I'm just trying to make a point)

I'm of the belief that the business can be turned around, but it has to happen today. If they wait until Q1 of 2009, too much damage will have been done to save eBay from being just another marketplace.

eBay was the single best "personal empowerment" story ever written, but it was edited to death.

Just my 12%

27 comments:

ms.pat said...

"10% of a site the reportedly has 1.3 million sellers is 130 thousand "real people"

...and don't forget those 130 thousand BUY as well as sell and have customers who BUY from them and will follow them when they leave. Plus the word of mouth from a damaged seller is more than enough to put off future potential sellers!

No, they don't get it - it took a management team like this one to bring ebay down....and down its coming. They can't pad listings and manipulate numbers indefinitely. One of these quarters is going to rock their stockholders' world...and I'm patiently waiting for it. I, and many other sellers, want to see Ebay suffer the same business damage they've inflicted on us...and its coming! I'm still waiting to get my photo of Donahoe on the unemployment line!

www.ACEOart.net

Anonymous said...

to destroy and alienate such a large number of your own customers (ebays sellers) and not give a hoot, can only mean one thing: they dont or wont need us. with the amazonfication, ebay plans to bring in the big guns (walmart,best buy, etc...) so all DSR's can look like buy.com's and offer a truly improved buyer experience. even with 3 staff members just for customer service, our DSR's continue to fall. We ship the same day, answer every call, answer every email, even on the weekends, ( we pay one of our cs employees each weekend (at time and a a half: $21/hour) to answer questions. yet , our ship cost DSR is dropping as well as ship times DSR. we charge exact cost, and ship same day if order is in and paid before 4pm. Why am I being disciplined, demoted, defrauded, dissed, disadvantaged, and disgusted because the buyer is rating my business and future on a shipping cost I can't change and shipping time which is also 100% out of my control??? My items weigh 28-38 pounds, so looks like I and my 13 employees are done for.

We will be told we are bad sellers and need improvement and be in the red all over the dashboard.

After working so hard, and doing the absolute best we can, only to be told it wasn't good enough and its time to fire all of your dedicated employees and file for bankruptcy. This is currently where we find ourselves. Our fees to ebay and paypal in May were just under $50,000 and yes, a Titanium Powerseller is also on the brink of failure.

Anonymous said...

Ebay seems totally obliviously to the fact that they are losing the very sellers they need the MOST which is the "middle class". Folks who sell 100-500 items/ $3,000-$10,000 a month. These people are experienced enough to find other marketplaces. These are sellers that list the unusual items that drive buyers to ebay.

Buyers come to ebay to either get a deal or find something unusual. Why is that so hard for ebay management to understand that?

Anonymous said...

Same thing here, I have 3 employees and was doing $280k a month gross on eBay alone. That's down to $90k now and continues to fall. These guys are freakin' nuts and ruining lives all over the country.

John Donahoe should be ashamed to have his parents see what he's doing to people. Lots of us are veterans or have family members at war.

Personally, I don't have a problem not negging my buyers, you don't see wal-mart posting photos of their bad buyers.

The real issue is fees and access to Core. If they could get that right we could all be successful.

Current strategy appears to be to give Core to large, off-eBay sellers because eBay believes none of their sellers are up to the task.

In the process, too many sellers are being negatively impacted and will be out of business, unable (or unwilling) to return to the 'New eBay.'

I could do $500k a month in core, but not without a deal on fees. But eBay won't talk to you about fees until you're doing $500k a month.

Why don't they solicit proposals from sellers who think they can do $500k a month and work with them to make it happen? Now that would be improving the marketplace.

Jay Senese said...

Randy, couple of thoughts:

1. Just wanted to compliment you on the quality of the writing you're doing these days. Much improved from the early days of the blog and something I look forward to reading now.

2. I just got back from LIVE myself (I am certainly glad I didn't plan to spend the whole weekend there, I have a feeling that the Chris Isaak concert is going to feel like a wake rather than a party). I want to emphasize the feeling of doom-and-gloom I felt walking around the convention center. It seemed like it has gotten to the Ebay folks as well as the sellers. I haven't found any mention on the blogs yet of Zappo's deal with eBay, has that not yet been announced?

3. It's pretty clear to me that Skype is dust. Virtually no presence at all at LIVE.

4. Specific to this post of yours, I think people complaining about Ebay's recent changes are pointing fingers in the wrong direction. The Ebay Marketplace was already sick, long before DSRs and long before Donahoe took over. The Internet marketplace is changing, and I believe that sellers who complain the loudest are those who already had a business model with problems. There are lots of very very good places to buy stuff on the Internet other than EBay. I think Donahoe is making important changes that have to be made to get competitive somehow with other online venus like Amazon. It's reactive, not proactive. He's doing struggling sellers a favor by forcing the issue with them - either they come up with a business model that works in the Web 2.0 world or they move on with their lives. Remember the old days when EBay's ASPs were higher than other sites? No more. Ebay can no longer be a safe haven for sellers who are not competitive with off-ebay sites like Buy.com, Zappos.com, Amazon.com, etc.

I certainly do not envy small sellers coming to eBay, or to any online business model, for the first time. It's very very tough out here, not just at eBay.

JAY

Randy Smythe said...

I am truly sorry to hear these stories of potential failures. I've been where you are so I can certainly identify.

-----------

Thanks for stopping by Jay, you are 100% correct that these changes are reactive not proactive.

I changed my model in 2004 in reaction to Movie Marz and the other competition. I was still selling alot but I was losing my growth. In retrospect, had I kept my model as it was, with reasonable prices and great S&H deals, I would have remained a profitable business but, I would have had to find any growth outside of eBay -- but hindsight is 20-20.

I admire Jay for sticking to his model and Steve and Crystal of Movie Magic USA for sticking to theirs. I should have stuck to mine.

eBay is making some of the same mistakes I made. They worked so hard to stoke growth on eBay that they broke it.

Classic eBay would once again be a vibrant profitable marketplace and the "New eBay" can be their growth machine. Unfortunately, it may be too late for them to make that happen.

Randy Smythe said...

Jay, one additional thing. I spoke directly with Tony Hsieh the CEO of Zappos and he told me "I don't think we would do it for the Zappos brand, but it might be
something we'd consider for our 6pm.com brand..."

I've been looking and I haven't seen that brand show-up yet on eBay.

Nadine said...

Randy, do you know what percent of Ebay buyers are also Ebay sellers, or have friends and family who have sold on Ebay? When I say "seller", I refer to anybody who has sold anything on Ebay, whether one or two items or thousands of items. Ebay's new "one strike you're out" policy leaves small sellers (esp. if they are buyers with good feedback records) intensely vulnerable to feedback extortion.

Ebay seems unaware that the universe of Ebay buyers overlaps with the universe of Ebay sellers.

It would be very interesting to get the numbers.

Randy Smythe said...

One more thing from eBay Live. Hopefully based on this response from Lorrie, they might be learning something.

From the Power Seller Session at eBay Live:(Chatter Blog)

"The next questioner criticized eBay for being uncommunicative about the slew of changes taking place on the site, and unresponsive to sellers' attempts to seek clarity. "Why does eBay think it knows better than us about what our customers are saying?" Griff stepped in to quell a few boos of agreement that came from some sellers. He talked about how changes in the e-commerce landscape were forcing us to adapt really fast. Talking about an "exodus" of buyers recently, he pointed out that buyers today have more options, have become more sophisticated, and have more demands from their sellers, whether on eBay or elsewhere on the internet.

But Lorrie's response was also emotionally charged. "When data and emotion come together, we need to listen to both." She then asked our Community to give the company "a fair shot," especially considering that much of the company leadership is new in their roles. Lorrie then said, "I don't know what the past was like. I'm sorry for the past, but come join us for the future."

There was a brief pause, and then thunderous applause filled the room."

Let me ask you all a question. If eBay did finally understand this what would it take for you to be willing to work with them?

David said...

As a loyal customer to Jayandmarie I am a bit surprised that they are supportive of the changes.

I would think that the new eBay fee structure charging 8.75% on items under $25 would really impact their business negatively.

I wonder if Jayandmarie raised their shipping & handling with the new USPS rate hike or if they just ate it out of fear that it would hurt their DSR's.

Anyways my point is, with this new fee structure. The people are hurt the most IMO are the people who auction low dollar items at a penny.

The only thing that this fee structure favors is high end products.

Matt - BumbleZine said...

Great article Randy!

For Jay, I say this as carefully as possible because I am very aware of your level of experience. That eBay is very reactive is true. In fact, they usually over-react. And I think it is true that there were problems that needed to be addressed. But I completely disagree with the assessment that sellers are pointing fingers in the wrong place. Some sellers need to update business models. Certainly. There were things to fix. Certainly. But once again, eBay has mis-identified the real issues; they've focused narrowly on very specific problems without looking at how individual issues or changes fit as a whole; and they've created a much bigger set of problems than the ones they fixed. Even limiting a discussion to feedback, the changes don't even come close to fixing the problems that were they. I'm very surprised by your comments. I completely respect your ability to analyze, and of course you are approaching this from a different perspective and set of experiences than I am. But I do think that when we step away and take a look at the the problems and changes as a whole, eBay is creating a disaster for itself. Good luck to you, Jay. You too, Randy. :-)

Anonymous said...

What would it take???

Randy, I'd pay five bucks per item to list on ebay. That's just listing fees. FIVE BUCKS. For the realllly good stuff, I'd go as high as fifteen. Assuming time ending soonest.

With auctions, if your stuff is good, and YOU are good, you can do that. (Naturally that would mean only the best stuff goes up on ebay but in early 2006, paying 5 bucks per item was doable.)

Of course the economics are much different with collectible auctions than what you guys did. You are lucky if you MAKE five bucks. Retailers and ebay, I'll say it to my dying day, are a mismatch.

But dammit, for five bucks those Ess Oh Bees had better display items time ending soonest. Now that they treat pages like real estate, that's the end of auction fun-- they are so Stingey.

This game they're playing now is like the outsourcing of computer jobs. And for the same reasons- We were never ASKED if we would work for less. We were never invited in PARTICIPATION of cost cutting. And, when we dutifully reported those "cube snoozers" who were burning MP3's or doing (yes, ebay) in their cubicles instead of writing code-- they never got fired. Just like ebay and when the good sellers report the bad sellers. Their answer: fire everybody. Here we go again.

Good question, but for auctions anyway, ebay is so over--

Or as my co workers said in 2001, "So Q4 '99".

Anonymous said...

Randy-Were you aware Lorrie didn't state she's an Ebay employee in her listings. This might be a small matter, but it brings ethics and honesty into the issue.

You asked:
"Let me ask you all a question. If eBay did finally understand this what would it take for you to be willing to work with them?"

No. People have auctions pulled everyday for much lesser offenses. I don't believe you can trust these people.

Randy Smythe said...

@Anonymous,

Lorrie, (or her people)should have thought that through before she used that listing as an example.

You know I was thinking this morning that eBay used to get sellers upset every January for maybe a few weeks and then they settled down because they were so busy selling stuff. Since July of 2006, there has been non-stop complaining about eBay.

As many of you can see, I like what Amazon is doing so I can be positive on this blog. At one point I had hoped I could be just as positive about eBay; that doesn't look possible now.

Kustom Kartoons said...

This is all sooooo sad! We are watching our own private Hindenburg!

Randy Smythe said...

Nadine,

I'm sure eBay has the data, though it may difficult to gather unless they tie user IDs together. Most sellers have separate buyer IDs so unless eBay has tied these ids together internally they may not be looking at those numbers. I can't imagine they are not doing that.

They've admitted that buyers are leaving in droves and new buyers are not replacing them (Active user growth is flat)yet their efforts are directed solely at re-engaging innactive users.

This management team is not responsible for a "broken eBay" it was broken before they were in charge and they believe they are working on the best plan available (probably the only workable plan in their minds)

I've written over and over again what I believe is the solution and eBay has never reached out to me to ask my opinion. If I actually saw the numbers I might change some of my opinions but since that data is not available I'm stuck with observing the changes and giving my opinion.

IMO, the real "Power of Three" revolves around sellers.

Stores: to give independent sellers a platfrom for growth on the Internet

Auctions: (eBay Classic) a slow growth but highly profitable business and what eBay is known for.

Fixed Price (The New eBay)the growth engine for ebay.

Sellers are the key to the changes at eBay.

dimes said...

John Donahoe has been president of eBay Marketplaces since March 2005.

The only reason Norrington was able to plead for time because of executive "newness" was because Donahoe wasn't present (and BTW, why not?).

From Ina Steiner's live blogging of the Town Hall came a revealing quote from Stephanie Tilenius, the SVP and GM of eBay North America. In response to a question about the contradiction of limiting outside links placed by sellers vs. the outside advertising eBay sells on search pages, Ina paraphrased:

Stephanie: we recognize that advertising is taking biz off the site. We are experimenting, w/ a longterm goal is for you to buy advertising on the site.

There you have it, folks. eBay's long-term goal is to become the internet version of newspaper classifieds, an aggregator of paid advertising.

Yuck.

ms.pat said...

"Stephanie: we recognize that advertising is taking biz off the site. We are experimenting, w/ a longterm goal is for you to buy advertising on the site. "

True in the past but especially true of this new crew...if you have any gold fillings in your teeth...don't open your mouth when you're in their company! ;-)

roo said...

I think Jay has correctly pointed out that eBay may, in fact, be doing some folks a favor by creatively destroying the site. While a multi-channel strategy has been an option for sellers for years and years, many opted to keep the majority if not all of their eggs in eBay's basket.

We heard the call last year, and now 2/3 of our business is coming from Amazon. While saving us from what might have been a fatal year in 2008, it is not a destination strategy. It just demonstrates a "follow the buyer" strategy. Many Fixed Price buyers left eBay for Amazon because of problems with eBay - not with sellers. We have buyers that write to us regularly about how they want to buy from US, but choose the Amazon experience vs. eBay.

The next challenge for us is getting our website on par with Amazon, and we are fairly confident we have chosen wisely in building a site from the ground up that is geared towards SEO and PPC strategies.

If eBay had made the right choices in 2006, we might still be "stuck" on eBay, content with a moderately growing business that had annually seen more and more of it's margins going to eBay.

As for starting an "eBay business", I'd say those days are over and done. I used to recommend this to people of all walks, but no longer. eBay is a good place to test market products and get your feet wet, but eventually the training wheels need to come off.

This is hard to hear when you are looking at thousands of bankruptcies, layoffs, and other painful business choices. eBay should recognize that they will NEVER win back someone whose business they effectively killed in a matter of months. This is not like a fee increase in the past - these are mountains many can't climb.

I think what scares many eBay sellers from pursuing other strategies is that it requires more complex knowledge that is not easy to come by. The guy who put up items on eBay using Turbo Lister, and only needed to know how to market the price of a product is often intimidated by the complexity of creating a safe website with search engine visibility. There are new terms, logic, technical requirements, payment systems, and strategies that require more research than a low-to-high price sort.

So, while there are certainly those who have a more sophisticated set of skills and strategies, it may just be a time when evolutionary destruction of weaker businesses is actually just part of the cycle. What foments such strong emotions are those that rightly contend that eBay forced much of this too quickly for people to have time to react and save their businesses from eBay's demise - even if they were capable and willing to pursue things off-eBay.

The good news is that the community of sellers is still self-supporting, and the information is out there for the taking. Organizations like PeSA, and bloggers like yourself frankly give most sellers the clue they need to move on from eBay.

I think after this weekend, the exodus will soon become a stampede. We, for one, will be turning off all unnecessary expenses related to our eBay business. Until we see stability, there will no new investment into that part of our business. Too much ROI elsewhere.

roo

Tony P. said...

Let me ask you all a question. If eBay did finally understand this what would it take for you to be willing to work with them?


Randy, you asked this question a while back using different wording. At that time, I wondered if there is anything that they could do to make me believe that they have truly Changed.

I couldn't think of anything that would dispel my belief that their every action is based upon BS and Manipulation. To be fair, I do allow the possibility that their actions are based upon Pure Ignorance, rather than BS&M.

To me, the one answer that needs to be stated is whether their actions are driven by BS&M or PI. Since an official answer from any of the Ebay Elite will be tainted by whichever method that drives them, the answer will have to come from an inquisition.

An inquisition will elicit various answers that will uncover the absolute truth, but that inquisition must be done correctly. It cannot be just a series of un-related questions, where ebay gets to deflect with BS answers that we all know by heart. (sound familiar? it should, this is the Town Hall setup)

The questioner needs to ask about a specific thing, and after ebay offers up the usually BS "company line", a follow-up question points out the flaws with that answer. And so on, and so on, until we get to the meat! For example, take the "4 stars is good, but hurts a seller" issue.

At some point in the questioning, ebay will have to admit to their ignorance of modern English words, or they will have to 'fess-up to rigging the system so that the sellers get disadvantaged. Yep, that's when I will begin to believe that they truly have Changed.

This fantasy inquisition will take place at a 3 hour Town Hall. The questions will come from only 2 Voices members - that will allow time for an exhaustive Q&A period. But wait!, you'd say that the Voices members aren't of the caliber needed, and I'd agree.

That's where my real belief that they have changed would stem from, because they would actually have Voices members that are allowed to ask such probing questions. I would need Voices members that are as much a Sonofabiotch as I could be.

Ebay gives me that and I'd believe them.

Randy Smythe said...

Tony,

At this point I can't even imagine that working. I've asked that question several times and I think I can finally put it away for good.

At this point, sellers are dug in and managment is moving forward with their head down.

At this point there is nothing left but divorce.

Anonymous said...

They can lose 40% of all their current sellers and still come out rich as heck.

New sellers will fill the void lost by that 40%, too. Probably companies as large as Buy.com, but ebay couldn't care less, fees are fees, no matter who is paying them.

This is all the result of truly being one of the worlds largest corporate monopolies in history. I HATE to say it, but they can still make terrible mistakes and be entirely successful.

Sure, it won't last forever , but I guarantee you that Ms. Norington and the like will retire rich, rich, rich and I won't. Believe me, they all start each day knowing that fact, too.

Tony P. said...

New sellers will fill the void lost by that 40%, too.

That's true, to a degree, but the law of diminishing returns has reared its head. The sellers leaving are, for the most part, long-time veterans of ebay and have experience at adapting their business to ebay's antics.

The new sellers are placed at a disadvantage as soon as they list their first item. They must take Paypal, which opens them up to buyer-fraud and, because they are new members, the 21-day hold is on a hair-trigger (if not automatically applied).

The newbie has low FB and DSR numbers that will allow all sorts of punishment if they get anything less than stellar ratings. How long before this noob gets Neg'ed or Dinged? In today's ebay climate, not long.

Two or three years ago, a New Sucker was born every minute. They would be standing in a line 5-across and as far as the eye could see, just waiting to start selling. Sorta like the registration line at Live!, circa 2005-6.

That registration line at this past event was down from the old-style 1-1/2 hour wait, to a several-minutes wait. That's about the same level of enthusiasm that the Noobs are taking to selling on the site. They know what they are getting into, now, more than ever before.

Word Of Mouth is a powerful thing. It built ebay - totally. It will destroy ebay, in the same manner. There is a bit of difference between Word Of Mouth-2008 and what it was in 1997. In 1997, it was personal conversations and emails.

Nowadays it includes blogs, online newspapers and magazines, text messages, social websites' postings and (i really don't know what-all it includes!). That is called Exponential growth and that's something that the 800 pound gorilla dismisses in an offhand manner.

My point is this:
Even if the new sellers are coming at the same rate as the old sellers are leaving (which i seriously doubt), they will not be able to tolerate the harsh climate for very long. That means their level of Supply and Buyer Satisfaction will not approach that of the sellers that they replace. It takes Time to fine-tune a Good Business and they just won't be around that long.

For the past 2-3 years this has been played out, as evidenced by postings on the Stores Board. The newbies were lasting about a year, maybe a little longer, but recently they have been closing their store after a few months.

(this doesn't necessarily apply to Buy.com type sellers coming to ebay, but that scenario ends with just a dozen, or maybe a few hundred, Big Boys on the site and no one else)

Anonymous said...

"eBay is making some of the same mistakes I made. They worked so hard to stoke growth on eBay that they broke it."

An elderly gent who has done $25 million a day in physical gold and silver once told me:

"I've never seen a tree run out of sky."

Randy Smythe said...

Anonymous,

Put that same tree in a building and it will stop growing or grow into the ceiling.

eBay has a ceiling, It isn't an open air business.

Anonymous said...

I think you misunderstood his meaning.

Even the giant redwoods that are thousands of years old didn't grow at the same rate forever. Eventually growth slows way down. That's part of nature.

The folks running ebaY don't seem to understand that simple principle.

Randy Smythe said...

Anonymous, if that is what he meant, I would agree.