Looking at eBays DSR (Detailed Seller Rating), part 2

written by Steve Grossberg, IMA President

Back in September 2007 I posted to this blog, a piece titled “Looking at eBay’s DSR (Detailed Seller Ratings), Click Here to Read Part 1.

Yesterday I did a podcast interview with Ina Steiner from AuctionBytes, Click Here to Listen To Interview Some of the points and more I am going to be talking about below are covered in the interview. I encourage everyone to listen to the interview.

Okay for starters ebay says 15% of sellers currently qualify for the 4.8 DSR bonus. My question is what percent of the ebay listings or GMV does that represent. This has yet to be answered by my best guess is somewhere less then 2%. Of the top 100 seller date as referenced in post 1, there is only 1 of the top 100 USA based sellers according to the Nortica 500 that has a 4.8 DSR is shipping and handling. There was another 19 who had 4.6 or better. Ebay stated over and over how 66% of sellers have a 4.6 or better but again what percent of listings and GMV is this? Certainly it is not 66%, so always do you own due diligence. As the old saying goes trust but confirm.

A few days back I posted my own personal math on reviewing the situation now confronting sellers, and if it made sense to go after the 4.8 DSR.

I caution everyone to look at your own economics. Remember if you obtain the 4.8 DSR on all 4 you get back 15% of your FVF. Look at me for example.

Items listed 40,000
Items Sold = 8,000
ASP = $14

So $14 x 1.23 FVF x 8000 items = $9800 FVF paid

$9800 FVF paid x 15% discount = $1470

$1470 savings divided by 8000 items = 19 cents per item

So in essence I have to say to myself will a 19 cent reduction in my shipping and handling move my DSR from 4.4 to 4.8? The answer is heck no it will not. Even if it did the ebay discount is not guaranteed as it is a 30 day rolling average and some months I may get it and some not.

However I could simply raise my shipping and handling by 19 cents and guarantee my bonus that is equal to eBay’s bonus offered for obtaining all 4.8’s. I am not suggesting sellers raise shipping and handling fees and I am not indicating I am raising my own because I am not. However I am point out that ebay is not providing enough incentives to sellers here and putting the entire burden of fixing the problem on sellers. So in summary I would think most sellers would be best doing the math as I showed above for their own sales and evaluating whether it makes sense to lower your shipping and handling to strive for a 4.8.

I do not think anyone knows what the affect these changes will have including ebay themselves. My inclination here is to say run your business the way you always did and let the DSR’s fall where they may. We as sellers have very little control over DSR’s but we do have control over others aspects of our business such as

Describing items accurately

Providing good communications

Shipping items out timely

And charging what we as sellers feel is a fair shipping and handling

Remember ebay talked about other sites on the internet offering free shipping and handling etc. However they failed to talk about the ebay buyer mentality and the fact merchants here must offer their products much cheaper then anywhere else on the internet as buyers expect bargains on ebay. They also mentioned how buyers complain about shipping and handling after the fact. But are they complaining about total cost? I doubt it very much. I know when I sell a pokemon diamond nintendo DS game for $24.99 on ebay that I paid $28.50 for wholesale nobody is complaining about product price or even total cost. So the ebay buyer wants items at or below wholesale cost and want to be charged exact postage. Amazon offers prime members free shipping and handling and sells this same game for $35.00. My price on ebay with shipping and handling is $33.00. I cannot sell it lower and now ebay took another 83 cents of profit away from me leaving me with a whopping 2 cent profit per game if I had 100% sell through.

Ebay also made it clear if a seller is accurate in the description and sets clear expectations of what is being offered, then that is what is expected. So if your shipping and handling is clearly stated who cares what buyers think after the fact? I did all I could do and clearly stated what is being offered and for how much. I did not click the mouse on the other end and place their bid or hit the buy it now.

Now let’s talk about non paying bidders here for a minute. Ebay spokesperson Usher Lieberman has confirmed to the associated press recently some date I provided and that is 6% of ebay listings end up with NPB. Several times during the recent ebay e-eomm forum ebay folks stated 7 million items were listed to the site daily. So let’s do some math here.

7 million listings daily x 6% NPB = 420,000 NPB daily.

420,000 x average list price 70 cents (my guess here) = 294,000 dollars made DAILY on NPB. Multiply this out for a year and ebay brings in over 100 MILLION DOLLARS IN REVENUE FROM NON PAYING BIDDERS. That equates to nearly 2.5% of the total ebay company profits .

Forget about the re-listing credit ebay offers on NPB re-lists, as it means nothing unless you have a 100 %sell through rate (would that be nice, even a 30% would be nice)

So where is there an incentive on eBay’s part to stop these non paying bidders? How much does amazon or wlamart.com make on NPB? What is extremely disturbing here is that ebay also allows these same NPB leave us negative feedback and give us all 1’s on DSR. But wait, ebay says if a buyer does not respond to UPI or is suspended feedback will be removed. So then I ask does ebay back retroactively and re-calculate our DSRs from a time in history to see if we would have qualified for the bonus discount based on DSR rating after removals, and then provide us the discount?

What I mean here is let’s say in June you have a 4.5 shipping and handling DSR. In August, say you get 30 feedbacks removed because of suspended buyers. The feedbacks that were removed were left in June. So once the feedbacks are removed if ebay went back in time and looked again at the DSR for that June 30 day period your DSR would have been 4.6 on shipping and handling, does ebay now pay you the would have been June discount? I sincerely doubt it. So I see this as more spin. In essence the feedback removals will never help your current 30 day roiling DSR period so what good is it?

Now let’s look at eBay’s broken dispute console. Ebay says they will remove feedback if buyer does not respond. Okay almost everyone responds though. Quite often they select a standard response ebay offers via a check mark which reads “buyer indicates they will pay for item”

Well the buyer indicated that 15 days ago when they won the auction. Fool me once shame on you, but fool me twice shame on you. I immediately close these disputes and get my FVF back (not listing fees). Guess what no feedback removal because buyer responded.

Here is yet another issue, at least for media and some other sellers who list via catalogue. Lets frame this part by saying during the e-comm as the finding 2.0 break out sessions ebay folks hammered home the fact if cataloged listing (UPC) is available it is essential we use it.

So a few days ago I received a neutral feedback on item number 140201873682. God only knows what DSR I got because they are invisible to us. The feedback left reads as follows, “product is new, but only 1 person can play. It said 2 can play, huh” Well in the media category you list items for items specifics using UPC code. Ebay then has a data provider called Muze who provides detailed information about the item.

Additional Information about Fishermans Bass Club; Portions of this page Copyright 2001 – 2008 Muze Inc. All rights reserved. Players: 1-2 Players

Now even though this content is totally controlled by eBay and Muze, they cleverly attach a sellers user name to the bottom as follows: The seller, 1busyman, assumes full responsibility for the content of this listing and the item offered.

Also there is no way to even know the data ebay is providing via Muze is flawed as sellers cannot possibly go verify all eBay’s data. Additionally the only way to report bad data is in the SYI form and who uses the SYI form? I have not for 10 years now. So once again ebay is placing all the burden of fixing their issues onto the sellers.

Yet another issue in International shipping. Yesterday my ebay sales were analyzed and 30% of my items ship were to International destinations and it represented over 15 different countries. With 15 different countries customs and duties policies buyers have to deal with how can I control shipping time? Also if shipping time is long rest assured buyer will ding you on shipping and handling fees because any item taking a long time to receive will surely not be worth the price paid to ship in buyers minds.

In summary while eBay’s intentions appear be good with the recent changes announced, it will never work in my opinion. The only way to get sellers to lower shipping and handling fees would be for ebay to drastically lower the cost structure for sellers to sell on the site and bring back the buyers from yester-year. The fee changes only offered fee relief to about half the sellers at best. Fee relief would be needed to nearly 100% of the sellers and meaningful fee relief like a 20-30% reduction.

The next step would be for ebay to collect payments on behalf of sellers. But wait if ebay did this they would lose the 100 million in NPB revenue.