Tuesday, December 16, 2008

Buy.com Enters eBay's top 25 in Feedback

I was checking out SellerDome the other day and noticed that GlacierBayDVD had fallen out of the top 25 in feedback all the way down to #28. I guess I couldn't expect to stay there forever since I haven't sold on the site in close to 3 years.

I also noticed that Buy.com had moved into the top 25 at #21 in less than a year on the site. That is an impressive feat since Buy has never used the auction format and Fixed Price items usually don't see the same sales velocity. They are still a long way from Jack Sheng's eForcity, but who knows where they will be a year from now.

Buy is doing exceptionally well (by eBay standards) over the last 30-days, but their sales have been aided by many (loss leader) Daily Deals, so I'm not sure how profitable they are.

Earlier in the year, I was guessing that Buy might be considering leaving the eBay platform after the holiday shopping season, but based on their sales in the last 30 days, I would revise that guess, especially if the Daily Deal is directing a lot of traffic to their other items, which when I look at the numbers seems to be happening.

BTW, many eBay sellers are doing very well selling on Buy.com as an additional marketplace this holiday season (I plan to next year as well), so all-in-all it looks like Buy.com is having a pretty good year even in this bad economy.

Just my 15%

40 comments:

2009 or Bust! said...

New feedback, listing and selling metrics, DSRs or any of the other stuff thrown at us in the last year scares me much less than how eBay will let a Diamond Seller (in name or potential) break all sorts of rules (VeRO, etc.) and look the other way, while policing the rest of the sellers like naughty children. Hardly the level playing field they have promised.

Anyone who could say with any honesty that Buy would be suspended arbitrarily and without notice after 3 violations has got to be crazy. And here is where the playing field changes.

When they can operate without a worry and the rest of the sellers dance on pins and needles in fear, then it is all over. eBay is simply using you to cover their transition with your fees and noise.

eBay management believes in a Caste system and they have made it well known. They do not want you around, they just need you there to cut the lawn until they can figure out a way to do it cheaper with less riff-raff around.

Adapt or die!

Rich said...

"scares me much less than how eBay will let a Diamond Seller (in name or potential) break all sorts of rules"

Where were you when they told you "rules were made to be broken?" Out with the flu that day? ;0}

nadine said...

They do not want you around, they just need you there to cut the lawn until they can figure out a way to do it cheaper with less riff-raff around.

@2009 or Bust! Cheaper for whom? When most of the riff-raff has gone, who needs who more, eBay or the Diamonds? For the Diamond, eBay is just one more selling channel among many. For eBay, its the marketplace's existence and the even more important Paypal tie-in. When the Diamonds come back to renegociate their contracts cheaper, will eBay be in any position to say no? Surely we can expect the mother of all margin squeezes? Maybe some more flip-flops in policy to go with it?

Len said...

I subscribe to terrapeak, and an interesting thing about it is that you can research sellers, all the way back to 90 days. I researched BUY, and this is what I found.

For the last 90 days (Don't forget this is the holiday season)

Total Sales $14,073,163
Total Listings 1,394,806
Successful Listings 123,005
Items Offered 9,201,580
Sell Through Rate 8.82%


With a sell through rate or 8.82%, and what has to be a small profit margin, all the work, employees to list all of those items, cost of goods at the wholesale level, and expensive cost of shipping (which they offer for free in many cases), space, in house expenses, ebay fees, and the other costs of running a business, I suspect they may not be doing as well as they seem to be.

Randy Smythe said...

Len,

Most of those sales have happened in that last 30 days. Remember that sell-thru has no meaning when you don't pay listing fees.

Buy.com effectively pays 6% of sales for eBay fees and probably 2.5% of sales for PayPal fees. which is comparable to an affiliate program.

They certainly aren't at double digit profit margins but they are making money, whether it is worth the hassle is up for debate.

nadine said...

Buy is already set up to sell with warehouses and employees and websites, so the relevant question is, how do the ebay-related marginal costs stack up against the ebay-related profits? And how do those costs compare to other existing & potential sales channels? It's hard to estimate that, looking from the outside.

But I know this much. If it turns out that Buy is paying Ebay/Paypal 8.5% of sales in transaction fees, while netting only 5% or 8% in profits, unlike the little guy, they don't have to just take it or leave it. They can renegotiate.

I am still continually amazed that eBay gutted its pre-existing business model, the one where eBay had 35% margins and all the leverage, for the sake of deals like this. Was it really just greed to make the numbers at quarter end? Can so much be explained so simply?

Randy Smythe said...

Nadine,

I think the reason they gutted the old business model is two-fold. First Donahoe thinks that is what "disruptive innovation" is and they are in search of growth for the marketplace biz and didn't trust that growth to come from existing sellers.

Why give the regulars deals when they can subsidize the Diamond Deals.

nadine said...

Randy,

Reminds me of those Democrats who think they can hike the capital gains tax and investors will just keep investing & pay up, rather than change their investing behavior to avoid the taxes.

Randy Smythe said...

Yep. strangely similar. They just don't get it.

ms.pat said...

Randy - I kind of disagree with you. Its still costing Buy in manpower to list all those items and to wrap and ship them too. That's added into their regular business but still is an expense that has to be paid. I feel diamond sellers like Buy will stick around only because it ends up being cheap exposure and advertising for their own websites. I think we'll see the record turn over and an entirely different tune will be played after the first quarter of the new year. All the warm fuzzies about buying for Christmas will be behind us and Ebay will be looking at the cold cold light of a real recession! Buy and others may not think so highly of Ebay than and will leave because they have no loyalty to Ebay and would leave at the drop of a hat "its only business afterall" :-)

As to pinning this on the dems...nope, Ebay's actions are classic republican "trickle down" voodoo economics where they feed the wealthy with all kinds of benefits saying the wealth will trickle down to the poor - while in reality the poor pay the way for rich! That's exactly what's happening on Ebay today. JMHO

Randy Smythe said...

Pat,

Actually in Buy's case they don't ship anything themselves. It all comes from their vendors and they have the benefit of scale where their costs to pick pack and ship are much less than the average seller.

I felt that Buy.com would walk away after seeing that their eBay sales were poor in Sept and Oct. but they are doing much better on the sales side right now and unless that sales increase is attributed to the Daily Deals they are making money at least since the end of Nov.

As Nadine has said, Buy.com and these other Diamond sellers have all of the leverage with eBay. If they feel the economics don't work they can renegotiate their fee structure or some other aspect of doing business on eBay.

The Diamonds will be in driver's seat. eBay doesn't want them to leave because then the only ones left would be the sellers they have pissed off for the last few years.

ms.pat said...

Randy - Ebay is already dreading the end of the holiday season. I think they full well know what's coming and its not going to be pretty. Griff is already working on trying to patch up things a bit between sellers and ebay - read his interview on auctionbytes. No, they won't recapitulate right off the bat but they sure will be in a giving mood as the year wears down and the sales wear down. People are being fooled by the buying going on now. Most companies will start their laying off and downsizing after the holiday season and then things are really going to go downhill for awhile. I'm plenty old enough to have been thru this a few times but this time the analysts are warning its going to be really bad. This is just about the worst time for ebay to be smugly burning their bridges behind them. I'm going to enjoy watching what happens to them next year ;-) ....and I still say somebody has to pay for the bad sell thru rate the diamond sellers are getting.

ms.pat said...

PS: calling an 8+ percent sell thru rate okay is so pitiful its not to be believed. What was the sell-thru rate for all of you this time last year? I doubt it was under 40 percent...mine was well above that.

Mike said...

Some more interesting "Buy" statistics.

They have received;

360 negatives in the last 30 days.
300 Neutrals in the last 30 days.

As we all know, a neutral is a negative because it isn't a positive.

So "Buy" has served up 660 NON "excellent buying experiences" in the last 30 days which seems to contradict eBay's reasoning for all the changes.

Things that make you go "Hmmmmm?" No, more like, "Things that make you go WTF?"

nadine said...

ms. pat,

Just to set the record straight:

In 1979 the top 20% paid 64.9% of all federal income taxes and since that time this share has been increased so that in 2005 the top 20% paid 86.3% of all federal income taxes. ... The bottom 40% of households by income pay a negative share of the income tax, i.e., people in these income quintiles receive payments.

http://economicsandliberty.blogspot.com/2008/10/who-pays-federal-government-taxes.html

So the rich aren't getting paid for by the poor at all. On the other hand, they aren't giving away all their money either (except involuntarily in this financial crisis).

I was comparing eBay's counterproductive moves to President-Elect Obama's intention to raise capital gains taxes even though we KNOW from experience that raising the tax would LOWER the revenues it produced.

People don't wait around to be fleeced, rich or poor. They react. Just like the eBay sellers are doing now.

ms.pat said...

@Nadine - just to set your record straight. I've been watching politics for over 50 years now...long as I've been voting. That's longer then most people have been alive. So, I'm not talking off the top of my head. The past 8 years has left us a debtor nation - frankly - because voodoo economics doesn't work and hasn't really worked since Reagan set it in motion. The resultant global recession is directly tied to these same economic policies.

As for Ebay - they are so republican its not even funny...even supporting the republican campaigns. Don't forget even Meg worked for Romney and then for McCain. Liking them to democrats is pure bunk...pardon my straight talk.

Now, if you disagree - then we will have to agree to disagree because I'm not about to turn this thread into a political one. If find the back and forth tit-for-tat to be tiresome and nobody changes anybody's mind.ines

Anonymous said...

I'm just glad McCain didn't win, because he would have put Meg in there. Ebay would have gotten away with just about anything.

Anonymous said...

Sell-thru rate means nothing if you pay no ebay insertion listing fees. I think Randy has already stated that to the same people 10 or so times now.

People are grossly underestimating the success of Buy's deal on ebay.
I agree with Randy, economies of scale are at play here. The smaller seller isn't aware of the Six Sigma principles inherent in this kind of large operation.

nadine said...

@anon, it's very hard to estimate the success or failure of Buy's eBay venture just by looking. For instance, I should imagine one important variable they will keep track of is whether their more expensive eBay sales are canabalizing their less expensive website sales, or whether these are true new sales they wouldn't have gotten otherwise. I have no idea.

@pat, I was not assigning eBay to any political party. I was only commenting on the futility of making policy according to wishful thinking. In reality you cannot arbitrarily change one variable in a complex system, whether a tax rate or the level playing field, and not have the entire system react to the new parameters, with unintended consequences.

2009 or Bust said...

Nadine, federal income taxes are a lot different than federal income taxes and payroll taxes combined at which point the middle class really gets hammered and lower income people pay the highest overall percentages. Add in sales taxes for just the life-basics (food, gas, utilities) and the picture for the non-rich gets pretty bleak.

Warren Buffet often tells of how his secretary pays more in taxes as a percentage of income than he does.

The good news -- there is no capital to be gained in the current economy, so no worries.

Anyway, let's solve it all and elect Randy President -- Flat taxes and free listing fees for all! Vive in libertate aut morere!

Randy Smythe said...

How did this thread get turned into a political thread? :)

2009 being President is not high on my wish list.

Nadine, up until the holiday season I wasn't sure Buy.com would continue and even now I'm not 100% sure they will continue even after what appears to be a good holiday season on eBay.

I can say that the eBay sales are additive and sales they would not have had they not done a deal with eBay. I have that info on good authority.

2009 or Bust said...

Wow - can you imagine the spin if Buy left eBay? Get Usher Lieberman some Pepto Bismal.

ms.pat said...

@2009 - that's what I should have explained but after a whole year of political debates I'm all tuckered out on them.

Free listing and an 8 percent sell thru rate isn't going to get Ebay anywhere. I still don't see these big shots staying next year. I guess we'll just have to wait and see.

nadine said...

@2009, add in the payroll taxes, and the top quintile still pays 70% of Federal taxes. The notion that the rich are getting away without paying is a false one. You can see the effective tax rates 1979-2005 here http://home.att.net/~rdavis2/efftax05.html which don't show the middle quintiles "getting hammered" relative to the top quintile, and which show that the Bush years cut taxes about equally for all quintiles.

Furthermore, from 2001 to 2007 Federal revenue rose about 40% because of the tax cuts.

I just make this point because it's impossible to make rational arguments about anything, either taxes or ebay, if you don't argue from the actual facts where they are obtainable. If Obama hikes the capital gains tax for "fairness", he will lower Federal revenue. Is this what you really want him to do?

@Randy, sorry, you know how these things are once they get started.

nadine said...

Randy, if as you say eBay feels fairly sure none of the new Diamonds will jump ship, then I predict a few sops thrown to the small seller in January.

After all, if the small sellers are to fund the transition, gotta keep them as long as possible, right? All eBay needs to do is make a minor course correction & remove one or two of the absolutely stupidest and most harmful policies. For instance, they could adjust the Seller Non-Performance rules to take some account of volume - base them on the last 100 sales if there are fewer than 100 sales per month, so that one awkward customer could no longer NARU a good small seller. This would cost them nothing.

See, it's an advantage to be making egregiously stupid policy decisions left and right. You have so much choice which stupidity you want to take back. You can pick one that is low cost and doesn't force any embarrassing climbdowns in policy.

As for the overall Diamond policy, I think it's set in stone now, unless the Diamonds force eBay's hand by leaving and/or getting aggressive. eBay will just make more abortive attempts to have their cake and eat it too.

I truly get the impression that eBay did not understand (until now?) that they couldn't make over the site for the Diamond sellers and retain their pre-existing seller and buyer base.

ms.pat said...

@Nadine,

YES! I want Obama to raise the capital gains tax AND go thru with his promise to raise taxes on everyone making over 250,000. I can't put it any clearer then that. Giving the rich a tax break for the past 8 years has done nothing but make them even wealthier. We desperately need to give middle class and poor families a break. As it is I fear it will be hard enough just to keep the middle class at the status quo because of the huge recession tipped off by all the fat cats stuffing their pockets and getting even fatter! Obama was voted in by the middle class and the poor - they voted with their massive donations to him on the order of 750,000,000. Its unprecidented and its a clear mandate from the people who sweat and labor in the country that things must change. So...that's my take on it and you can argue points as much as you want because it won't change my mind. This is why I said we must agree to disagree.

2009 or Bust! said...

Sorry, didn't really want to get into politics and tax rates. That is a slippery slope. Hugs all around.

But, I have to tell you a great story. I had to take off for 3 hours to my daughter's Christmas show at school and now that we are doing over half of our business (and growing) on channels outside eBay, I didn't have an anxiety attack!!

I didn't rush to check my Feedback or DSRs of to see if a competitor had tried to file a false VeRO claim. I didn't freak out that we were low on stock with a couple items (hey, new FP eBay policy makes it a sin to run out of stock on anything....ever!).

Found out a product we are selling had one component that was not up to standards, emailed our customers and explained that we could either cancel, ship a partial order or wait for the new parts to ship fully -- all without the fear of being extorted by teenagers who know how to game FB.

See, what I have come to realize, and I understand this may really depend on what you sell, is that the real problem has not been eBay's Sellers, it has been eBay itself.

People are not afraid to shop on my stand alone site. The love the fact that there is a shopping cart with a checkout and multiple payment options, including mailing in a money order or Google Checkout! The can choose sizes, colors and models.

And I am not afraid to follow up with these customers before 60 days with specials and offers. On eBay if we do that we fear getting a negative from a customer who after 59 days has decided he/she really doesn't like the color of the item they bought two months ago….

See eBay challenged all of its Sellers to up the ante, but the problem is eBay itself can not stand the scrutiny. They have tens of thousands of tough minded, honest and hard working small business people who see through their “noise” and laugh at them when they say the “hear us” and know that none of them could do for one day what we do every day, year in and year out.

We are on to you eBay. We love you like a pain in the a—friend, but we are on to you. You dared us to walk out the door and we did. And all those stock options you have are not worth the paper they are printed on because forgot the basic rule – take care of the customers you already have!

Working 20+ hours a day here in the home-stretch and just happy to have a place to vent and share the good news. Happy Holidays to you all!

nadine said...

@2009, Bravo, well said, and happy holidays to you & all who post here! and to Randy Smythe, our host!

John said...

Randy if you haven't had a chance, I think the part duex of my interview with Ron really wraps up the great things about Buy.com on eBay. He makes some really good observations on Buy.com coming to eBay IN HIS PRODUCT platform as a direct competitor and took lemons to tasty, yummy lemon aid.

Check it out if you get some time on the ColderICE.com blog under the Powerseller audio interview.

http://3rdpoblogs.com/colderice/2008/12/18/part-duex-major-ebay-powerseller-gives-up-the-goodies-and-speaks-to-the-masses-or-mad-asses/

Sweeeeet...
John (colderICE)

nadine said...

This is so good I had to share it. I just got an email from eBay thanking me for "my accomplishments as a valued Powerseller" and promising me "some holiday fun" in appreciation. They gave a website to go to:

www.ebay.com/powersellerthankyou

The result?

Network Timeout

The server at ebay.promotionexpert.com is taking too long to respond.

I tried three times to load the page. No dice. Priceless.

The shift in tone is noticeable, however. Looks like the inhabitants of the ivory tower are looking to unburn some bridges with the sellers they've been dissing all year.

Well, good luck with that one, fellas. You're just one marketplace among many now. Though still the biggest one for collectibles and antiques. Unfortunately.

nadine said...

I finally got into the site, and it's offering me the chance to create a cartoon avatar of myself:


"Now that we've enjoyed another successful year together, it's time to brr-ing on some holiday fun! Create your very own PolarSeller, a virtual-snowman likeness of you. After you're done, your PolarSeller will join more snowmen created by other PowerSellers. Before long, PolarSellers will cover the mountain, so come back often to see who's joining the holiday fun. Make your PolarSeller now."

Of course when I tried to do it, the network timed out again.

Pathetically lame. But the first attempt at "fun" I've seen for a long time.

They must be worried. Bigtime.

Now, could they aim some "fun" at the buyers? And could they fix Search while they're at it?

I wonder what this says about Q4 numbers?

ms.pat said...

2009 - I love your post and I agree that Ebay just doesn't get the fact that we can see right thru them and we don't like the view! their attitude is very immature for a business of its size. I'm certain they will not be able to hide or manipulate the next quarter - they might skim by on this quarter if you don't look too deeply into it but after Christmas people will have to tighten their belts and business will begin layoffs in earnest. I'm afraid for the whole country in the next quarter.

My own website does well...heck far from what I made on Ebay last year but, as a small seller, those days are behind me for now. A Paypal shopping cart does seem to make customers feel more comfortable and the oldtime customers I have could care less what payment form I have. They're just plain good people. On my website I'm free to negotiate and to cater to customer's special needs - something Ebay needs to look into more closely. Also Paypal seems to work differently for my website business then it does on Ebay. Its more seller oriented then buyer oriented - at least that has been my experience with them. I'm lucky in that the type of product I sell (my own artwork) seems to attract good people and I've only had a problem with a couple of customers in the past 10 years - and those customers were on Ebay and not my website.

I think we're going to see a far far different Ebay next year and the new model will not be nearly as arrogant or as smug because the new model is going to be scrounging for revenue right along with everyone else!

Happy Holidays to our host and all your posters :-) Randy - thanks for putting up with us.

Randy Smythe said...

Hi All!

I wanted to wish all of you a Merry Christmas, Happy Hanukkah and a fantastic holiday season. I haven't blogged much this week because I'm on vacation in Park City UT, but I've been following your comments.

Keep it up! I'm enjoying the back and forth. I'll be back posting again on Monday if I actually get out of the snow.

2009 or Bust! said...

On vacation the week before Christmas? No wonder you Love Fulfillment by Amazon (FBA)!!

Happy everything to everyone!

Anonymous said...

HAPPY HOLIDAYS!!! Randy. Have enjoyed your blog so much. Hope you're having a great vacation!

Your posts are a much needed sense of sanity we sellers certainly didn't get this year. At times, I wanted to pull my hair out. At times, I was so angry at Ebay I cried. Tough year.

You always provide good information, calmness, and best of all you do your upmost to empower sellers.

Thanks so much!

Anonymous said...

I can confirm a notable change in ebays tone towards us, a fairly large seller. Before indifference was the rule, now they have actaully been telling us what a good job we have been doing! It does feel good after a year of severe emotional suffering over every rule change and neg/neutral. It has been quite unhealthy. Hoping for a less stressful 2009 for ourselves and all of you. Happy holidays.

-a small Diamond Powerseller

Anonymous said...

For everyone's info...their was a comment left at auctionbytes "snotty tissue charity" blog today that said ebay removed 26 negatives from BUY sometime recently ALL for one particular item they over sold.

Does anyone besides me question how BUY can maintain a 99.6 customer satisfaction rating on ebay pumpimg out massive volume, YET their lifetime and 6 month ratings at resellerratings.com are absolutely horrid.

According to resellerratings stats.....BUY's customer lifetime customer satisfaction rating is ONLY 42.3 percent (4.23 on a scale of 10 with over 3500 shoppers rating them). BUY's 6 month customer satisfaction rating is even worse with only 30.9 percent satisfied customers leaving ratings.

NOTE: The average customer satisfaction rating for ALL businesses combined at resellerratings is 87 percent.

What the heck am I missing here? How can a company have such a dismall customer satisfaction ratings for websiite sales, yet only have less than 1/2 of 1 percent dissatisfied ebay customers.

nadine said...

Anon: I see two possibilities here, both with interesting implications:

1. eBay is really desperate to keep Buy.com in good standing, and will remove negative feedbacks and recalculate DSRs as needed to accommodate them, or

2. Buy.com has a smart person negotiating the eBay deal, who made it a condition that they were not going to be bothered with that DSR nonsense on eBay.

Either way, can you spell "leverage"?

Anonymous said...

@nadine,

in either plausible senario you mentioned....It still spells online fraud when you purposely decieve the public into believing a company has better customer satisfaction ratings than they actually do by posting articifial, manipulated ratings.

I dont know to what extent ebay manipulates BUYs ratings, BUT 26 negs did disappear overnight....

And, BUYS aweful buyer satisfaction ratings at resellerratings speak volumes in my book, and indicates to me that ebay has been significantly manipulated BUYs feedback and DSR ratings this entire year quietly behind the scenes.

Considering BUY works mostly with through dropship suppliers, and actually carries little to no inventory of their own, that makes it double hard to believe their ebay buyer ratings are remotely genuine.

Randy Smythe said...

Anonymous, the only way you will be able to prove that though is with a whistle blower inside of eBay.

I'm sure that Buy gets the highest level contact within eBay and in the case of the 26 negs going bye-bye they may have said we didn't oversell please remove those negs.

I have no idea if that was the case. It does defy logic to believe that Buy's DSRs are not being manipulated but only actual proof will become a story.

Nadine, you are right that eBay has lost the leverage. eBay needs the Diamonds to accomplish their goal.

If Buy were to decide to back out they could negotiate a number of concessions.