Ebay ’08’ & 3 Stages of Major Change! Will Your Business Survive?

This week Ebay announced several major changes to their platform that will go into effect over the next 5 months. The first change starts February 20th and will affect Ebay fees. The second change comes in March 08 when ebay makes “best match” the default search, which I beleive includes “finding 2.0″. The third change is planned for May 08 when Ebay will restrict sellers mutual feedback privileges.

It is impossible to tell how the overall combination of changes will have affected the majority of Ebay sellers 6 months from now, but some guesses can be made about the impact of each individual change and anyone who is concerned will find many more discussions on the topics on the IMA member forum. The initial opinion of some IMA members is that the fee increases will cause a 0-25% increase in fees. Twelve members have stated their overall fees will decrease. The sellers who estimate a decrease are those with a lower sell through rate (10-40% sell through), and a typical selling price between $1.00 to $25.00. Those hardest hit on fee increases typically have a high sell through rate, and higher average sale price. The Auctionbytes blog has a very good article where numbers show everyone’s fees will increase.

The second major Ebay change will occur in March 08 when all categories default search will be changed to “best match” or “finding 2.0″. Some sellers with low DSRs and a high level of buyer dissatisfaction will begin to place lower in search starting in February. It is impossible to tell how best match will affect sales. I personally saw a drop in sell through from a high of 40% to a low of 5% during the weeks when Ebay was testing the best match algorithm in unrelated categories. I suspect it was due to buyers confusion with the new search, and possible glitches with the overall finding mechanism on Ebay during these tests. My sell through would increase as soon as the search returned to normal. The “best match” algorithm is below:


The third major phase of changes is scheduled to begin in May 08 when Ebay takes away seller’s right to participate fully in “mutual feedback”. Sellers will only have the option to leave positive feedback while buyers will still be able to give negative feedback. This dynamic creates an “Amazon” like atmosphere for feedback. Sellers who sell on both Ebay and Amazon have reported that their feedback on Ebay is 100% positive, but their feedback on Amazon is anywhere from 78% to 98% positive feedback. So the future of 100% positive feedback on ebay looks bleak. Unfortunately, there have been no announcements about whether the powerseller requirement of 98% positive feedback will be changed accordingly, but there are rumours that Ebay will be watching closely and change the requirement if they think it is “needed”.

I tried to find some Amazon sellers feedback to compare, but I couldn’t find the seller feedback displayed anywhere. There is apparently very little emphasis put on feedback for Amazon sellers. Which is unfortunately not true for Ebay. The sellers most susceptible to having this change hurt their business would be those who sell luxury items where buyers need to be able to trust the seller’s reputation before they buy a gold watch, or vintage diamond ring. The sellers least hurt will be those selling a large amount of items with lower selling prices. Buyers don’t care about negatives if the price is right on low dollar items.

There are a multitude of perks being given to powersellers if they keep their 30 day average Detailed Seller Ratings (DSRs) up, but none of those will matter if their overall positive feedback dips below 98%. So it isn’t worth spending the time discussing.

The reason Ebay gives for taking away sellers participation in “mutual feedback” is an increase in sellers leaving buyers negatives after the implementation of DSRs in combination with the buyer dissatisfaction suspensions in April 07. Many sellers suddenly found out that if 5% of their buyers left them negatives/neutrals their selling privileges would be revoked (I say suddenly because it was overnight for many). Ebay representatives told them to approach the buyers and ask for a mutual withdrawal. Unfortunately, most buyers won’t consider a mutual withdrawal unless they also have a negative to remove. Ebay also made neutrals count as negatives without giving sellers any warning. So, a lot of Ebay sellers desparate to save their livelihoods starting leaving negatives for buyers who left negatives/neutrals. Ebay says the number of buyers leaving the site because they got a negative has increased 4x since Apr 07.

Oddly enough, I went through my feedback for the last 90 days and found that the buyers who are no longer registered either were non-paying low feedback buyers with multiple negatives for not paying, and/or buyers with 100% positive feedback whose accounts had been highjacked so many times they felt safer closing their account until they decided to buy again.

Whatever you sell on Ebay, one of the changes listed above is going to affect you. A very good description of the affect on different selling styles is given by Scot Wingo on his blog with comments from some ebay sellers. And another great interview by Ina Steiner can be found on the Auctionbytes blog. Pay particular attention to the question Ina asks at the end about whether Ebay is going to begin offering the same type of customer service Amazon does since the fees charged are now very close.

Jennie

Comments

  1. says

    When I first began with e-bay as a buyer, I read that you should always contact the buyer prior to purchase; being provided instances of real life purchasing – I would not purchase from the man on the street without asking questions or knowing who I was purchasing from. Having just “suffered” through my first erroneous negative feedback I contacted the person via telephone and e-mail and they removed the negative but their notes remain within my feedback history with no apparent comment from me. Their notes stated “false advertising” but after calling them,when they read the description at top and within, they realized they were wrong. This person obviously had to go through a process which asked them if hey had communicated with me; which they did not. Only if e-bay establishes a system where the buyer is FORCED to communicate prior to continuing their negative will this plan of e-bay work. In this was a resolution can be made between buyer and seller.

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