Monday, June 30, 2008

What Happens When Your Core Customers Hate You!

Most people would have a problem with the title of this post -- honestly, what customer would still do business with a company they hated? I mean come on, really!

eBay used to have 1.3 million evangelists (sellers) singing their praises, now they have half that many villagers with pitch forks hoping they fail miserably.

And its not just dislike or distrust anymore, for many it is outright hatred, yet they still sell on the site.

Here are some quotes I've heard recently, from sellers who are upset but don't leave the site:
  • "Unfortunately I am in a shitty situation and its going to be hard to get away from eBay.. ugh"
  • "I still have a year left of Law School"
  • "Where do you go to replace $500k a month in cash flow, without laying off everybody and starting over again."
  • "I have my family and 6 other families counting on me. I can't just leave."

These are just a few of the things that I've been hearing. Many of these sellers can't find a way to get off of eBay, or the fear of leaving is worse than the pain of staying. So what happens when they feel they can't leave but they dread staying; they begin to hate eBay for putting them in this position. Now instead of a once loyal customer they have a customer that actually hates them.

Companies re-organize all the time, so the fact that eBay is re-organizing doesn't surprise anyone, but normally a re-organization affects only a small percentage of employees via layoffs, it rarely includes systematically removing customers, in eBay's case 10s of thousands of customers -- real people who use eBay to make ends meet or real businesses that have grown to a size that requires the revenue that eBay generates for them even if it is not profitable any longer.

I've written about this before, with my post Sellers and eBay in a Bad Marriage - Where's Dr. Phil? It is simple for me to say "get out", but not easy for any of them to do.

So what happens when your customers hate you?

  • The levers you once were able to pull to manipulate behaviour, no longer work.
  • The changes you make, regardless of how much sense they make, are protested.
  • When you lose a lawsuit, your customers cheer.
  • Nobody beleives anything you say, no matter how sincere.
  • Your customers are actually hoping the company share price will sink like a rock.
  • Bloggers like me get a lot of attention and now you can't even control the message.
  • Instead of spreading the "good news" of eBay these customers bad mouth the company every chance they get.
  • There isn't an avalanche of sellers leaving, but there is a slow leak in the dam that may soon be too difficult to fix.
  • Sellers who are profitable start making exit plans just in case.
  • I could go on and on ...

My suggestion for every seller on eBay is to start making your plans to leave eBay, even sellers who are still successfully selling on the site. You have 6 months left in the year, make your plans now to be off eBay, at least get enough of your business elsewhere so eBay's problems can't hurt your business any longer. Don't delay in the hope it will get better, if you don't act quickly you won't have anybody to blame but yourself.

Just my 12%

13 comments:

Anonymous said...

Great post. Lots of good points.

I agree with you that we need to get ourselves on other marketplaces. We've been establishing a presence on Amazon and adding ecommerce to an existing website. But with the new policy of not having an email address in a listing, We'll be spending a large part of the next two months modifying 2600 + listings. What a pain! If we weren't profitable, we'd just let it go, but it is profitable. All the more reason to have our own store.

While I don't agree with the choices eBay is making, it is their ball and bat, and as long as it's profitable, we'll be there. We're not into this for anything but to run a profitable business.

Thanks for keeping us up on things.

The Whirlpool Bath Shop said...

Nice article, thanks Randy.

Jim S. said...

"Where do you go to replace $500k a month in cash flow, without laying off everybody and starting over again." ???

If I had that kind of cash flow I'd think it wouldn't be that difficult to establish an off-eBay presence, given the eBay fees he/she must be paying.

nadine said...

Spot on, Randy. Your advice is so right - even sellers whose businesses haven't been damaged by Ebay's actions to date, who are selling profitably now and can see no reason why they shouldn't continue to sell profitably - even those sellers cannot count on the situation continuing even through Christmas. The way Ebay has been flailing about, nobody's business is safe.

Isn't that the saddest comment of all?

Randy Smythe said...

Jim S.

I think in that quote cash-flow was the same as revenue - not profit.

It is just hard to get a website going and generating enough revenue to ween you from the less profitable eBay.

Anonymous said...

Glad to see my law school comment made it in.. lol

Anonymous said...

God help ebay when you graduate. You WILL go to bat for us... right?

Anonymous said...

Jim S.

the rule changes and the shakeout to pave the way for the large companies like Buy.com are affecting most if not all sellers.

it is impossible for us to achieve the same volume elsewhere all the sudden, even with strong cash flow and profits to pay the way. it will still be 6-9 months and if we are finally disadvantaged due to low dsr's on ebay (a true death spiral) we will have no choice but to severely downsize and start the build-up and ramp up all over again. To fail to act in this manner, bankruptcy would be just months away.

this is what is happening or will happen to many sellers just on their own scale of severity, the end result, is unemployment and ruined livilihoods.

google base, yahoo storefront, amazon, overstock, ubid, ebid, ecrater,OLA,etsy here we come.....

paypal, ebay, adios enemigo

Anonymous said...

This downhill trend started years ago. First, the import of millions of overseas sellers flooding the markets with cheap, underpriced items with unreasonable shipping costs, then making stores invisible in search while simultaneously raising the cost of running an eBay store, the introduction of "eBay Math" where 6% = 100% or more and the expectation that sellers are too stupid to know better, the introduction of a fee decrease that was actually a fee increase, the changes to FB that open honest sellers to extortion and deadbeat buyers, and it's just getting worse and worse.

Some people saw the way things were going and got out and are now happily established elsewhere.

And while I do feel for those who feel trapped on eBay, unable to leave, I have to wonder how many of those people just ignored the signs years ago and stayed anyway, and are now finding out that all the "doomsayers" from years ago were actually right all along...

We are watching the demise of eBay. I have doubts as to their ability to rise from the ashes, personally, but I'm NOT making any predictions. I do think they've damaged their brand significantly enough that it's going to be pretty hard to pull off the "Crappy Amazon Lite Mark II" site they seem to have in mind...

bonni said...

"$500k a month in cash flow"

Wow. Take the fees you're feeding to eBay for just one month and invest them in a professionally designed e-Commerce site. Then take the fees you're paying to eBay for another month and invest them in advertising. This doesn't seem like brain science here.

Anonymous said...

Bonni,

I wish it were that simple. Spending that $50,000 (our monthly fees) for several months wont create the volume. It will take 6-9 months. The return on investment takes longer then we would have by abruptly quitting ebay. we are stuck unless we are ready to layoff 80% etc...

bonni said...

Well, my comment was mostly just flippant, which is why I said "brain science" instead of "brain surgery" or "rocket science".

That being said, I do actually understand that there's a hell of a lot of "gear shifting" involved in a move of that magnitude, but I think it's fairly clear that eBay is NOT a stable platform and they're not a trustworthy business partner.

I am of the opinion that any business that is NOT making clear and definite plans for becoming eBay-free (or at least ebay-independent) and who are not taking clear steps toward fulfilling those plans are sitting on the deck of a sinking ship. Personally, I don't want the honest and profitable businesses who use eBay to go down with the ship, but those businesses that don't plan for the sinking of eBay are going to get caught in it, unfortunately.

So, apologies if my original post was too flip, it was just a throwaway comment based on the amount of fees that eBay must be sucking in. I do understand it's not as simple as that. Nothing is EVER "as simple as that".

For what it's worth, I was once an eBay PowerSeller, myself. I no longer do business on eBay, other than to very occasionally buy something, but the sellers I used to use are all leaving, so there's a lot less for me to buy there now... (That's another discussion ;))

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