Friday, December 05, 2008

Beating a Dead Horse! Antitrust and eBay!

A while back, I was beginning to wonder if I was running out of things to blog about, at least things that interested me, then I participated in a conference call with Tod Cohen, eBay's VP of Government relations on Tuesday. Now I have all kinds of interesting things to write about; of course they may only be interesting to me and I should thank eBay for the invitation to the conference call.

I've already written a couple of posts on the subject of "price fixing" and that eBay is working with the American Antitrust Institute to fight against manufacturers who use MAP (minimum advertised price) to protect their brands and the value of their products. 

My position is that manufacturers have the right to do this as long as they don't abuse it and that MAP actually helps small sellers compete with the large retailers who would "discount" them out of business. I agree the consumer needs to be protected from actual "price fixing" but repealing the ruling on MAP doesn't seem the proper approach.

Then of course I saw this video as part of a press release (please play the video) on the subject, basically saying that eBay was in danger of getting shut down by the Big Box retailers. They should have just said Wal-Mart is trying to shut us down. 

Well if you watch the video it will blow you away that eBay is claiming to be the victim under the guise of helping the small seller. Okay stop laughing, its true watch the video. 

True Irony!

eBay, a company that invites Big Box retailers to sell on their site, in effect driving the small seller off the marketplace and a company that reduces payment choice for the consumer on their worldwide marketplaces via PayPal "only" is working with the American Antitrust Institute. Isn't that rich?

I had to ask AAI about there association with eBay and their efforts in regards to a repeal of MAP rather than use the Supreme Court's ruling that "rule of reason" should be used to fight abuses. I received the following reply from Albert Foer, President of the organization;
"Contrary to the WSJ report, a coalition has not yet been formed and no decisions have been made. Among the matters that will be discussed, if a coalition goes forward, is whether to support re-institution via legislation of per se illegality or whether some other approach that will structure a rule of reason using rebuttable presumptions and shifting of burdens may be better. The problem today is that Leegin has unleashed a variety of strategies that are hurting consumers and some serious effort needs to be made if a free market is to operate in areas that are now price-fixed." [hyper-links are mine]
For your benefit, I've included a link to the AAI Press conference, in case you would like to get some context and listen to the audio.

So there no coalition and eBay and for that matter AAI are using this as a PR opportunity. I do agree with Mr. Foer's final statement "Leegin has unleashed a variety of strategies that are hurting consumers and some serious effort needs to be made if a free market is to operate in areas that are now price-fixed."

My advice to Mr. Foer is to reevaluate his organizations association with eBay on Antitrust matters.

In my view, the small seller must be part of this discussion or the whole process will be a farce. Small business is the backbone of America and it is time we had a voice. It isn't strictly about the consumer, it involves so much more.

Just my 15%

20 comments:

2009 or Bust! said...

I know this is a little off topic, but I think important.

An interesting trend we have seen over the last couple weeks: Many buyers on eBay (new from what we can tell based on reg date and FB) have no idea on how to pay for an item purchased on eBay.

eBay, Unlike, oh say, all the other eCommerce sites in the entire world, operates without a standardized checkout flow with payment options. We are finding dozens of customers each week that think they have paid for items, when what they did was select that they wished to pay with a Credit Card and assumed the card they had on file with eBay or Pay Pal would be used. Like when you have a payment method on file with a company like Amazon.

Amazing! Millions in radio ads bringing in new customers, lobbyist, dragnets killing innocent sellers, feedback revisions, blundered platforms and new search methodologies and still not standardized way for someone to choose a size, color and know that they have actually paid of an ordered item.

Wow! Wow....wow!

Maken' money and scared. 2 more weeks and then we retool this thing -- for the first time ever we had more Google driven orders than eBay yesterday. Glad...and sad!

Hey eBay -- are you listening??

Ginny said...

Does this American Antitrust Institute have a clue about ebay's imposition of ebay-owned Paypal on sellers and buyers to the almost exclusion of other payment options?

Randy Smythe said...

Ginny,

They do now. I forwarded the link to this post to the President of AAI.

Ginny said...

New buyers probably don't know how to pay because ebay is afraid to be the one breaking the news that they want them to use Paypal, Paypal, and only Paypal. After all ebay owns Paypal. If they actually admitted how they wanted buyers to pay, at some point they might sound like they don't want anyone to use anything except ebay-owned Paypal. And that would be ::::::::::::gasp::::::::::: sort of like something a company would do that was violating anti-trust laws.

So they're just kind of hoping that sellers will give buyers the news and save ebay the bother and embarrassment and potential legal repercussions of having to tell the truth!

Ginny said...

One thing that impresses me about ebay's involvement with trying to get the Supreme Court Leegin ruling overturned is that it is a clue that ebay is having some difficulty that they are hoping will get solved by getting that ruling overturned. As they say, "No s*** Sherlock!" but I always like to imagine what it would be like to be a fly on the wall and know what is REALLY happening and not take at face value what the company wants everyone to believe.

I am fascinated by what you're writing on this subject, Randy. It is not boring at all! I think it is an indication of what is behind the curtain. That not all is well in Oz.

permacrisis said...

Yeah! What if Donahoe concentrated all his firepower on small sellers, only to discover in the end that his grand plan were foiled by some UNFORESEEN CONSEQUENCE!!!

Went thru 2 buckets of popcorn watching this sad sideshow of a business transformation, but the 64oz fountain soda is holding up OK.

I'm with 2009inchBust. Put Randy on the board of directors!

Mike said...

The nerve.

The gall.

The absolute shamelessness of this pack of fools.

Ebay promotes big box eBay seller Buy over small sellers.

Buy averages hundreds of negative feedbacks a month. That translates to hundreds of non "excellent buying experiences" a month.

Ebay will suspend a small seller for one or two negative feedbacks in a month but not suspend seller Buy for hundreds.

So is eBay supporting the small seller?

The nerve.

The gall.

The absolute shamelessness that is Donahoe and Norrington.

2009 or Bust! said...

I have been saying this for about a year, but now have come to finally accept it -- small and mid-sized eBay sellers: eBay doesn't want you. You are the red-headed step-child they just kind of wish wouldn't bother to come over during the Holidays.

They will never say it directly, but actions speak louder than words (or noise). You don't fit in so stop breathing on the windows while they try to eat in peace.

But there is hope, I tell ya. Our eBay sales are about 1/2 of what they were a year ago. Bad sellers with bad feedback have listings appear ahead of us in best match. But let me testify to the power of Google Adwords and Yahoo Admarketing where you can sell on your own site without fear.

The first thing I do when I log onto eBay is check my feedback and then my DSRs. Last night my business partner asked me what the eBay fees were over the last week and I laughed -- depends on whether some 12 year old gets a hold of his parents' eBay password and decides to ding our feedback or if someone who is trying to extort us so we give a partial refund follows through on their threats against us and leaves a negative. That 12 year old can change our fees by 5, 15 or 20 percent.

When I log onto the back end of our web site all I do is count the orders


Last year two days before Christmas we had a customer who was unaware that she had not paid for an auction -- her only child's only Christmas present while her father was in Iraq.

At our own expense we over-nighted her the item. She called in tears, thankful for this little Holiday gesture. We did it because we were humbled by our success and happy to give a little something back.

This year, I just check my DSRs. The eBay of pre 1/29/08 is gone, ruined by a management team that can not handle their jobs.

We are metrics and obstacles to them. eBay works not because, but despite them.

I am going to go check my web site and feel good again. Then I will take a look at my near perfect DSRs and my 10.000+ feedbacks with almost 100% positive and I will, for some reason, just feel bad.

The contract of adhesion is over, eBay has showed us all the door and the smart ones will get out fast. Soon, eBay will be just like Amazon -- without the shopping cart, customer service, innovative back-end platforms, consistent fee structure and traffic. Hmmmm......

Anonymous said...

It's strictly inertia at this point. Even if you took the wheels off, this trains still gonna grind along for awhile longer.

Cheerleaders & trolls point to this as proof. They say, "See? We didn't need you!"

Ebays biggest threat hasn't even been mentioned on this blog. It's not MAP and it's not Amazon. It is decentralization- you install a tiny program on your computer, search for an item description hosted on someone else's computer, and work the deal out privately. There is no central server. Whoever is on gets the sale, so best match or other centralized tampering is impossible.

For a time starting in about 2005, peer-to-peer auctions run from individual's home computers were being designed using things like Peer Name Resolution Protocol. Ebay sensed the threat and STOMPED this wildfire from spreading with heavy censorship and sponsoring whitepapers saying how insecure (!!!??) it was. Also heavy dialup use discouraged its adoption.

But Peer-to-Peer Auction is making a comeback. Ironically it is not ebays heavy handedness but the IRS'es which has re-invigorated the Peer-To-Peer Auctions movement. Even docile obedient homemakers distrust the government at this point.

Now with heavier broadband penetration, the prospect of a zero-fee zero-administration auction can really happen- still online, but without a controlling bastard centralized website.

Randy Smythe said...

Anonymous, while P2P auctions or transactions is a threat it will still need to benefit from the network effect to gain prominence. It will be interesting to watch.

I think "death by a thousand cuts" will be the title of the Harvard case study done on the eBay story.

eBay benefited by the network effect on the way up and got hammered by it on the way down.

Anonymous said...

http://forums.ebay.com/db2/thread.jspa?forumID=21&threadID=520052163&anticache=1228582791230

Jerry said...

What shouldn't a company/mfg that doesn't want their products to be on Ebay have to be on Ebay?

Ebay thinks it's about them!

Ever wonder why the companies involved in changing the law were not invited to speak?

Randy Smythe said...

Jerry,

I think you can read from my posts on this subject that I agree manufacturers should be able to protect their brands (within reason) which is what the Supreme Court said in your case.

I would love to speak with you or at least communicate via email if you are willing.

rksmythe at yahoo

ms.pat said...

I never thought a CEO could be as naive as Donahoe. He riled up small sellers and still has not heard the end of the "noise". With this outrageous and phony plea that is supposed to help and protect their precious small sellers - they will suffer by hearing even more "noise"!! This is far from over. The fact that most articles and threads have some ebay cheerleaders shows that the "noise" from sellers is working to inform the public at large as to just what Donahoe is doing at Ebay. I'm convinced that in the present economy the path Donahoe has chosen is sure death for the company. I'm sure other business smart people can see it too. I'll just sit back and wait for the grovelling to begin. Sooner or later Ebay will be desperate enough to actually try appealing to small sellers again! In the meantime, I and thousands like me, continue to spread the truth about Ebay so that everyone will be informed ;-)

Chelle said...

I emailed Mr. Foer myself to express my concern the association with eBay and how I believe it will only degrade their effort.

I am against RPM it is anti-competitive and it does force consumers to pay unnecessarily inflated prices. Manufactures have the right to choose who they will sell to, but they don't want to do it that way because they lose business. It is more advantageous for them to oppress retailers than to take the loss in business if they chose not to sell to retailers that will not participate in price gouging.

If a manufacturer wants to protect its product than they need to be prepared to take the loss in business rather than coerce retailers into disadvantageous contracts. In other words just say NO! that is how you should protect your product.

The court ruling is a slippery slope leading to general consumers not being able to sell their own products. The ruling will ultimately undermine the first sales doctrine. The seduction of not having to play the price game is superficial and will cost consumers more in the end. I am a reseller as are I am sure all of you are and it frustrates me to have to do business alongside those selling below wholesale, or worse in the eBay marketplace counterfeit products too. However, we live in the US and under a free market system which means if you can't compete than close the shop. It does not mean oppress competition to preserve your own pocketbook by commanding overinflated pricing.

That said, I find eBay's involvement not only potentially harmful to the essential reversal of RPM, but outrageously self-serving and hypocritical.

I implore those who are exploited by eBay to speak, because if you don't they CAN'T hear you. Stop sitting around waiting for someone else to look after your interests, because if you don't no one will. This situation with eBay must have the noise directed to the ear of the authorities, congress.... the blogs alone won't get the job done, neither will one lone voice. We are American's damn it why can't we protect ourselves as actively as the Australians? Australians are still actively fighting eBay in every way they can to free themselves from the same abuses we endure everyday, but we can't manage to do anything beyond B****ing on blogs.

It is time to unite and fight back against John Donahoe's coercive abuses. eBay has that video calling on us to join them- I ask you if they believe in our power as a whole why do we feel powerless and helpless in making a change for ourselves.

Mr. Foer asked me how RPM can be defeated without eBay? What he fails to see, just as we have, is the power of eBay is the power of the eBay community not eBay management. eBay's call on our support is testament to this reality.

Mike said...

The comment from "Mechelle" makes a good point.

The community that once would have risen up to support ebay in something like this has been betrayed. We must now speak truth to power.

Ebay sellers destroyed or damaged by ebay's open Diamond door must contact Mr. Foer and let him know who the real villains are - big box Buy and ebay.

The link to Mr. Foer's site is in Randy's blog post.

Randy Smythe said...

Chelle,

I like your passion. I also believe that AAI needs to open their minds a little and there needs to be a solution that protects all parties.

I agree that their association with eBay will only harm their cause.

If there is to be a unified force to protect sellers it is going to require resources. Americans are fiercely independent and that hurts in this case.

chelle said...

Unfortunately, we are not demonstrating independence we are demonstrating learned helplessness. Or we are simply overwhelmed by the gut feeling eBay is wrong, but lack the knowledge to express exactly how what eBay is doing is wrong. I don't know if that makes sense

Add to the equation the idiots, for lack of a more appropriate descriptor, who are so full of themselves and utterly ignorant that they persistently beat those down who make an attempt to question the policies. Of course the result is these people returning to their corner attempting to ignore that gut feeling telling them this .... isn't right.

To anyone reading:
It's not that hard to write a letter - all you have to do is tell your story. They'll figure out exactly why it is wrong if you can't point to the exact law for them. There are patterns of behavior, strategies ... that are associated with eBay's activity. Your stories will shine the light on eBay's corrupt path, but if you don't tell them they will never have a reason to look.

It doesn't have to be professional or official in tone. Write the same way you do when you tell your story on the discussion boards, blogs, and in the comment section of news articles. You absolutely have to do this to protect yourself. eBay operates exactly like a wife beater - he hit her today she just took so he knows he can hit tomorrow, and he will, and will, and will..... until she forces him to stop by throwing the bastard in jail. Same thing with eBay. If you don't make eBay stop it will keep hitting you.

Yes, we can all go off and struggle trying to build our businesses on our own site or a new site, but why should we have to? I don't want to! I like my store and I prefer to show John Donahoe the door. He is after all the one breaking the law. He needs to leave!

Ginny said...

chelle,

Excellent advice and suggestion! For my part I did write a long letter to the FTC earlier this year which I sent in the traditional paper form as well as by email. I intend to write another one. eBay has been slicker in the U.S. than they were in Australia in how they've set things up here so I think that legally it must be harder to make a case or we would have heard something by now. Unless it is all going on under cover. But I can't imagine that a court case could be kept quiet for a long time.

I too have wished that more people would write and state their issues with how ebay is pressuring them to do things that hurt their businesses and their ability to make a living.

eBay does have the edge in that they have more resources and people whose job it is to make sure that they get to do what they want to do. Unlike most small sellers whose time is split between so many competing demands of life and who do not have those resources. Most people really don't want to have to take the time to fight their battle even if they are in the right and they know they are in the right. It's really hard to find the time, the energy, and then choose that as a priority when you also have to make a living and you have others to whom you owe so many things. It is hard to take that time.

But if even 10% of everyone who is upset and impacted by these changes wrote a letter to the FTC and/or their Attorney General, to anyone who has the power to do something, it might make a difference.

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