Skip to comments.EBay Sellers' Rebellion: The Aftermath
Posted on 01/24/2010 8:43:24 AM PST by khnyny
NEW YORK (CNNMoney.com) -- As one of his first moves upon becoming CEO, eBay chief John Donahoe unveiled a slew of changes to the online marketplace, kicking off an uproar among sellers and sparking boycotts. Two years later, eBay is finally starting to see signs of success on its turnaround plan.
The San Jose, Calif., e-commerce giant on Wednesday reported 2009 sales of $8.7 billion, up from $8.5 billion in 2008. That's a 14% increase from the $7.7 billion in revenue eBay had in 2007, the year before Donahoe's overhaul.
EBay's profits, though, haven't kept pace with its sales growth. Net income dropped 8% from last year, to $2 billion -- putting eBay's earnings below where they stood two years ago. Gross merchandise volume, a closely watched metric tracking the value of items sold on eBay (EBAY, Fortune 500), was essentially flat from last year and down slightly from 2007.
"These turnaround efforts are paying off," Donahoe said Wednesday on a conference call with analysts.
That's a sharp change from the tone he adopted last year, as the company struggled through its changes.
"This business has continued to fall short of our expectations and customers' expectations," Donahoe told analysts at a meeting in March. "That's not acceptable. EBay has a storied past. But it's a past that we held onto for too long."
The firestorm: In February 2008, then brand-new CEO Donahoe announced a major revamp of eBay's fee structure and feedback policy. The goal was to make the site more buyer-friendly.
The move inflamed eBay's core community of active sellers, which numbers in the millions. They raised virtual pitchforks and organized protests, including a week-long boycott. Amid a flurry of scathing blog posts and online messages, many jumped ship entirely and migrated their online storefront to other sites.
(Excerpt) Read more at money.cnn.com ...
“EBay’s complex set of updates reduced some upfront costs but raised the back-end commission the site takes on completed sales. For small-time businesses already subsisting on meager profit margins, the fee hike was painful.
But what most irritated veteran eBay merchants was the site’s decision to block sellers from leaving negative feedback about buyers.
EBay’s feedback system, the innovation that helped it stand out from a pack of e-commerce pioneers in the Web’s early days, had always been a two-way street. Buyers want to be sure they’ll get what they ordered; sellers want to guarantee they’ll be paid. Feedback helped both sides reduce the risk of online transactions with strangers.
EBay’s move to silence those on one side of the street made sellers feel like second-class citizens. Donahoe brushed aside their concerns....”
I found this comment on CNN particularly interesting:
“While CEO of eBay in 2008, John J. Donahoe earned a total compensation of $22,462,893” — http://en.wikipedia.org/wiki/John_Donahoe
This looks like another case of a hotshot MBA (yes, Mr. Donahoe holds an MBA from Stanford) wrecking a company without knowing or caring anything about its business. These folks’ primary competency seems to be convincing boards of directors to award them grotesquely bloated compensation packages. Once the company is thoroughly looted, they blithely move on to the next.
It remindes me of the way John Sculley destroyed Apple Computer and Paul Lego deep-sixed Westinghouse Electric. Each of these Wunderkinder worked his magic while pulling down the big bucks. Meanwhile, the little people (remember Ms. Helmsley, y’all?) who actually produce something useful are toiling away in the shadows for peanuts.
I guess the right thing to do is to recognize these characters early on and avoid investing in companies that hire them. Easier said than done.
Since the changes went in eBay has become a paradise for buy side scammers ,, eBay has forgotten that it is the sellers that have always paid their bills. There is a huge opportunity for a parallel payment system to replace PayPal .. eBay and PayPal together are deadly in allowing and encouraging fraud against sellers.
Good points, I’m sure they can find folks who’d wreck the company for a lot less money!
The root of this problem lies in the wrong-headed thinking that elite education and the “right” experiences equip a person to be a great CEO. Or President, Senator, Governor, Federal Reserve chairman, etc.
I have been a buyer and seller on eBay for many years, too. I have eBay seller clients who have been screwed by eBay’s new policies, and have ceased to use eBay. Over time, the marketplace will respond to eBay’s moves. For every MySpace, there is a FaceBook that can come along later and do them one better.
I used to sell a few things at Ebay but their changes pissed me off. Commissions went through the roof. I was forced into accepting PayPal and subsequently paying the 4% surcharges instead of accepting money orders and me keeping more money.
they changed the ability to leave negative feedback, or recover from bogus transactions.
they forced people to provide generic shipping quotes which increased the overall cost of shipping.
I admit I still use Ebay but very rarely to sell, just to buy. There are other sites that allow me to sell for much lower transaction fees.
A lot of new outlets are spinning the news of EBAY’s uptick on their stock price...
The only problem is this increase in their stock price is not reflective, imho, of what is really going on. If you read closely and dig a little, it’s quite obvious this company has problems.
Agreed. Before the changes I was both an active buyer and seller, but afterward, the Ebay fees became so crushing that I could not make a profit on anything I sold, and often took losses, before I finally quit.
Also, I got sick and tired of the mass marketing of cheap Made in Asia goods that all but defeated any dearch attempts for decent quality items.
If you are POSITIVELY sick of ebay’s feedback ideas ebay thread ...
It’s pretty much the “big boy” though. Where else would you go? Amazon has a market place and I’ve gotten some great deals on used books from quite a few vendors but as an “average” web user, ebay’s the one everyone hears about and knows.
I do some minor peddling in Amazon and like it better. Ebay is still used off and on. Ebay used to fun, friendly, and flexible. When those features went away, I pretty much stopped using it for a year or two. I am slowly getting back into Ebay.
“Since the changes went in eBay has become a paradise for buy side scammers ,, eBay has forgotten that it is the sellers that have always paid their bills. There is a huge opportunity for a parallel payment system to replace PayPal .. eBay and PayPal together are deadly in allowing and encouraging fraud against sellers.”
That’s the same logic that says you can tax corporate income. The people that make that site run are the BUYERS. Sure, the sellers are Ebay’s direct clients. But if buyers don’t think they are getting a fair shake on the site, guess what? Sellers won’t make money and Ebay won’t make money. Pretty simple.
As to encouraging fraud against sellers—what about collusive sales that are fraud on buyers? What about the inherent ability of sellers to torpedo buyers that existed under the previous regime? I don’t fault sellers for wanting their rates to remain flat, or have the last say about buyers, but geez, think as a buyer for once and ask yourself if, as a customer, you’d rather know that you’ll get the burger you pay for or whether the seller thinks the darn bitchy burger buyer is smelly?
I know I don’t care about prior buyers—I just want to get what I paid for, be it burger, cd, or whatever.
I buy and sell ,, it’s the sellers who take it in the shorts with forced refunds to scammers , high fees and no recourse.
Me too. And Amazon has reaped the fallout:
A changing market: The strategy didn't play out as Donahoe envisioned. EBay is struggling to keep pace with its competitors, especially Amazon.com,
Amazon's network of sites overtook eBay in monthly unique viewers for the first time in October, according Web traffic research firm ComScore. By eBay's own count, its active user base has grown 8% over the past two years, to 90.1 million.
More worryingly, eBay's reputation with sellers is suffering. JPMorgan Chase recently surveyed a handful of "PowerSellers," eBay's designation for its most active merchants. More than half of those polled had a negative opinion of eBay. While a majority called Amazon an "excellent" channel to drive sales, only 23% felt the same way about eBay.
It's sad what has happened. I've been a eBay member since it began, and always operated under the "caveat emptor" principle when purchasing -- and 99% of the time, my purchases were satisfactory. I never bothered to slam that 1% that screwed up. Under the new rules for sellers, though, you might get a low rating from customers, not for failure of prompt delivery, or value for price paid, but for such nonsense as "I smelled a dog on this merchandise, and my cat objected."
I rarely use Ebay anymore because first it turned into a scammer magnet then it turned into an extension of commercial storefronts. There aren’t many decent bargains anymore, I’d rather use Craigslist. As far as the feedback chages went that is something the sellers did to themselves. For every 1 negative feedback for a lousy buyer there were hundreds of negative feedbacks that were nothing more than retaliation from sellers for getting a neg themselves.
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