The Random World

An eBay US Powerseller Wrote:

This year can best be summed up as a year of change. eBay’s (EBAY) top executives left one by one, followed by buyers and sellers who vowed never to return. Shareholders were stunned when the stock plummeted to 10.91. The debt rating was lowered to A minus. The site’s instability grew with each passing day and the number of lawsuits filed against eBay and PayPal increased spectacularly. It hasn’t been a good year.

eBay started the year with about 12M listings give or take a few and ultimately hit a high of approximately 18M towards the end of July. Then a handful of eBay power sellers flooded the site with nearly 10M additional listings (reported to be free) from September to December but I’m not counting these listings because these aren’t paid listings.

2008 was the worst year sellers have experienced since eBay’s conception. At the beginning of the year, eBay’s Customer Satisfaction campaign stripped sellers of their rights and then sellers were told that their customers were now eBay’s customers.

Fees were raised and sales plummeted.
Shipping rates were set below actual costs.
Listings were hidden if they were indexed at all.
PayPal was made mandatory and checks and money orders banned.
Detailed seller ratings (the dreaded DSRs) were introduced. Sellers were suspended and their listings deleted when their DSRs fell below 4.3 because eBay told buyers to rate sellers on a scale of 1 to 5 and that a score of 4 was good. DSRs were also mysteriously lowered immediately preceding billing resulting in no/reduced seller discounts.

Sellers were banned from leaving negative feedback. This opened the floodgates for non-paying buyers and competing sellers to leave negative feedback. Sellers were left with no recourse because the check and balance system that made eBay work was removed.

Seller tools. Shipping calculator and markdown manager were never fixed. The SYI (sell your item form) morphed into something that defies description because it’s so bad.

Site instability. This went from bad to worse. The site was riddled with bad links & bad script. Pages barely loaded if at all for dial up users due to too many bells & whistles (indicative of student programmers) that served no purpose and excessive advertising that sent buyers off site. Cookies also flooded the site.

It was a bad year for buyers too. They couldn’t find IT! Best Match was officially named the worst sort/search engine on the internet. Search results were linked to everything but the kitchen sink and it took divine intervention to find anything. Entire categories of search results are still missing and many sellers reported over a 70% drop in sales which explains the pitiful sell thru rates.

Many lawsuits were filed against both eBay and PayPal this year. Most are as a direct result of policy changes that thrust eBay well over the line of being just a venue.

I found the following pending lawsuits interesting:

On April 2, 2008, Bruce Gordon filed suit against NCO Financial, I.C. Systems Inc, (both collection agencies) and eBay Inc. When eBay shared Mr. Gordon’s personal information with the Defendants Mr. Gordon took it a little personally because the Defendants pursued him endlessly despite his eBay account having a zero balance.
On April 14, 2008, David Mehmet filed suit against PayPal because PayPal originally flagged his funds due to built in false positives, eventually refunded the monies back to the customer, and then told the customer that Mr. Mehmet had committed fraud. Mr. Mehmet took this a little personally too.
On October 29, 2008 David Hendricks filed suit against Dan Spangler, Cathy Davis, Yahoo Inc., and eBay for copyright infringement. He gave all Defendants prior notice that his Works were copyrighted but the notice was apparently disregarded/ Mr. Hendricks was shocked but not surprised when he discovered his copyrighted images being sold on eBay and Yahoo.
eBay security has apparently not improved since I reported a problem last spring because a contest was recently held on eBay and hackers are reported to have won the prizes. eBay offered no explanation and PayPal accounts continue to be hacked.

No opt out! Members’ personal account information was shared with eBay’s entire corporate family and unnamed eBay service providers (fraud investigations, bill collection, affiliate and rewards programs, and co-branded credit cards). I’m not sure when this change in the user agreement occurred but it scares the hell out of me.

Summary. The other night I watched an old movie called Scrooge and it reminded me of eBay’s Donahoe. I wish that all three Christmas ghosts (past, present, and future) would visit John so he can be reminded of eBay’s past success as an auction site, its present failure as a wannabe retail site, and its future which lays in the internet graveyard, a victim of disruptive innovation.

This author is giving new CEO John Donahoe an F on his 1st end of year report card. I’ve never seen an e-commerce site nearly destroyed in such a short period of time.

Many buyers see the cost of postage as the amount on a stamp, rather than the actual costs involved. This blog post aims to help buyers understand all of the elements of a dispatch.

If you take a glass faced wall clock as an example, we always dispatch them in a custom made box, filled with protective loosefill (polystyrene chips), to ensure the clocks gets to the buyer in one piece.

We charge £6 generally for postage, which on the face of it seems relatively high; until you do the sums:

Postage Costs

Most of our boxed wall clocks weigh between 1.5 and 2.5 kilo’s and get dispatched with Royal Mail First Class delivery, using our PacketPost account. Generally postage costs between £3.44 and £4.37.

If the weight is over three kilo’s, the clocks get dispatch using DHL, who charge us £10 per delivery

Material Costs

All of our custom made boxes cost 87 pence and due to the volumes we need to buy them in, require significant storage accomodation. They may also be with us for up to six months.

Every box requires loosefill, which costs around 50p to fill, dependent upon the size of the clock.

We also use a significant amount of tape, fragile stickers, address labels etc, all of which add up to around 20p

Transaction Charges

Each transaction that goes through PayPal, automatically has 3.4% of the transaction value removed. In the case of £6 postage, that would be 20p being taken for PayPal.

If we offer free postage, eBay also take an additional 10% for final value fees. That means we pay an additional 60p in fees, on top of the PayPal transaction fees. eBay is looking for all sellers to offer free P&P, but based on the costs involved, that will reduce already tight profit margins.

VAT

Out of the £6, VAT registered sellers also collect 72 pence for Her Majestys Revenue and Customs.

Losses/Breakages

Many sellers “Self Insure” for losses and breakages by Royal Mail. They do this because going through each of Royal Mail’s hurdles to claim back the costs involved in breakages and losses, requires a signicant amount of effort and time, which often costs more than the actual product. Sellers generally like to add a small amount to each delivery to cover this self insurance.

The Maths

Postage Charged minus delivery minusVAT minus packaging material costs minus transaction charges minus loss/breakages

£6 – £4.37 – 78p – (78p + 50p + £0.20) – 20p

Based on the maths above, this leads sellers to make a £1.33 loss on each product dispatched. If sellers followed eBay’s request for all items to include P&P this loss would be even greater.

Abviously, postage isn’t the only element in any sale, there is also the margin on the product. However out of this marghin, there is also employee costs, overheads such as office/warehouses/staffing/heating/telephone lines/computers/broadband etc all to pay for.

Buyers, please consider this before asking for free P&P!