To say that I am disappointed would be an understatement. I was hoping after all this time that it would be possible for me to write something positive about the latest changes that Ebay has made but it seems that the more I dig, the more disappointed I become. This latest post will focus on Ebay store ownership, the April 2010 new fee structure changes and the Detailed Seller Ratings(DSRs) system’s way at which it continues now more than ever to unfairly penalize honest hard working sellers. I’m going to go about explaining all this by first getting you familiar with the way things were and also an understanding of how these things all work. Then I will slowly put it all together so you can gain a clear picture of exactly why Ebay continues building a negative name for itself. And for those of you who enjoy charts and credible references, I’ve got a real treat for you! Keep reading, you’ll see. 😉 And I probably should apologize for having what will be a long post this time but there is so much to explain that it’s kind of difficult to put into a minimal amount of words. So grab your most comfortable chair because if you’re not sitting down by the end of this, you may wind up falling down.

First a general overview of what Ebay stores is all about. Ebay stores started in 2001 as a way for sellers to house hundreds or thousands of products on the Internet for fees of as little as 2 Cents per item per month. The minimum listing fee later went up to 3 cents. The downside to having your items in an Ebay store initially was that the visibility of those items did not gain the exposure that auction items did. But still, this was a great way for many different types of people with lots of items to sell to expand the basic idea to more than just simply listing their items in an Ebay auction. With the store, you could bridge the two together and get your buyers to visit the store to see the other items that you had available. So with this idea Ebay gave the opportunity for many people to start small businesses on their own. Elderly and retired people could supplement their government income to help with medication expenses. Stay-at-home parents could help with the income they made to raise their families and disabled people could find a way to earn extra cash without leaving their homes by offering unique items just lying around the house that buyers would not be able to find anywhere else. But businesses also used it as a way to further expand by offering their products for sale as well. And expand they did. And of course Ebay benefited greatly from all of this. But the important thing to remember was that right up until March 30th 2010, you paid $15.95 for rent and listing fees of as little as 3 cents per item per month with no limit on the quantity of items you could list. They gave sellers 9 years to build their Ebay stores and then told them that they had 3 months to conform to the changes carried out on April 1st, 2010.

Next, I want to talk about the buy structure called “Fixed Price” listings and how it compares to the other set price listings that Ebay is and were offering. Simply put, “Fixed Price” listings are a way to buy an item on the site at a set price without the need to wait for an auction to end. There were always “Fixed Price” listings available if you consider the “Buy It Now” feature which was introduced into auction listings very early on in the company’s history. But as the idea grew, so did Ebay’s thoughts of how this could be used as a tool to generate more wealth. By creating a buy structure apart from “Buy It Now” which in itself was linked to auctions and therefore limited in nature, this new “Fixed Price” buy structure could be created specifically for this purpose. But Ebay had to consider store listings too which were also items set to sell at a fixed price. So by manipulating the search functionality of the way items could be found on the site, “Store Price” listings would be placed lower in search results creating a basic tier, if you will, while “Fixed Price” listings would give a seller more visibility of their items creating a greater audience for selling. And so naturally the “Fixed Price” listing feature could be used as a vehicle to generate more income for Ebay by raising the cost for listing an item when that pricing structure was applied. And for years sellers had the option of choosing between the two pricing structures to be able to either get less or more visibility for their items. The latest fees that Ebay was charging sellers up until March 30th 2010 for “Fixed Price” listings were set at 35 cents per listing while their much longer running counterpart “Store Price” listings were mostly set at between 3 to 5 cents per listing.

But very important to keep in mind is that by now, “Store Price” listings had already took hold for many years with thousands of sellers having created entire businesses around the idea. Serious sellers had invested a lifetime of expense in tons of inventory and in many cases were spending money to house it. Very serious investments in time and money were on the line. Ebay knew this and they have now chosen an unfair way to take advantage of it. As you continue to read, you’ll see what I mean.

Now l’ll talk about the most recent changes in fees for April 2010. The fact is that April 1st, the date’s significance in and of itself could not have been more indicative of what sellers should have expected. The basic “Store Price” listing fee was to be abandoned and replaced with the “Fixed Price” listing format. The promise was that store fees would be as low as 3 cents each with full “CORE” search capability further claiming that the “Fixed Price” fees will be the lowest in Ebay’s history! This meant that your items would be placed up front for buyers to see rather than be suppressed in search results. I for one was fairly excited to hear this. I’m thinking to myself that this is going to be great! Ebay is finally going to give the sellers a break on fees and or more for their money. Of course as most of you already know, these statements should be taken at face value with what we have come to expect about the way Ebay gives false promises, so I was still a bit apprehensive. But they had my attention, so I dug deeper…

Ebay would be offering store subscriptions in 3 tiers, Basic, Premium and Anchor. The Basic subscription level would cost $15.95 per month with individual listing fees set at 20 cents each. So now I’m thinking to myself, Yeah, and so where is the 3 cent listing fee?  Then I read that the Premium store subscription will be $49.95 per month with listing fees set at 5 cents each. And with further concern kind of like the deer looking at the headlights of the Kenworth heading right for him, I repeated the words in my mind… Yeah, so where is the 3 cent listing fee?! Finally, I read that the new subscription called Anchor will be offered at $299.95 per month with listing fees set at 3 cents each. I have to admit, I was still feeling quite numb even some time after the rear wheels of that Kenworth rolled over my legs as I was thinking, that’s it?! That’s the great deal for sellers? That’s the lowest fees in Ebay history? Well, yeah, right? When compared to the “Fixed Price” listing fees that were just 35 cents each on March 30th 2010, the Basic store subscription fees are now just 20 cents. But what makes Ebay think that the sellers who couldn’t afford to list items at the 35 cent “Fixed Price” are going to be able to afford this 15 cent reduction when many of them for the last 9 years were only paying 3 to 5 cents per listing for “Store Price” fees? It’s not like Ebay is giving anyone a choice here! Years of very hard work went into building those stores for these types of sellers maintaining hundreds or thousands of products. Those sellers, and there must have been hundreds if not thousands of them, were paying 15 to 17 cents  lower fees per item each month! Many have been forced into yet again taking less of a profit from there sales by upgrading into a Premium or Anchor store subscription. This, by the way would explain the inflated numbers of reported so called new store subscriptions as well. These were not all truly new subscriptions, but upgrades! But while upgrading to a Premium or Anchor store subscription may be a possible option, that doesn’t change the fact that a subscription upgrade is costing $33 and $283 more per month! And as I said, the upgrade may be a possible option as it is not even guaranteed that you will be able to attain one, and I’ll get to that in a minute. Because if you like what you’re hearing so far, then you’re going to love what I have to say about four paragraphs down!

The minute Ebay mentioned that the “Store Price” listing format was to be done away with, all you heard about was “Fixed Price” listings. They wanted to talk about “Fixed Price” like it had been the only thing around effectively burying the idea of what was the much longer resident “Store Price” format. Not all sellers who owned stores could afford the 35 cent “Fixed Price” listing fees and were having enough of success with paying the 3 to 5 cent “Store Price” listing fees, even with less visibility in search. But now that option has been taken away and these sellers are being asked to pay what amounts to a substantial fee increase either for a subscription upgrade, individual listing fee listing increases or both! There is no other way that this can be seen for those sellers except as a fee increase! I guess Ebay needs to find ways to pay for the also newly implemented “Buyer Protection” program. This is a new heavily promoted system that hands out refunds like candy, even when the seller has not been found guilty and wins the case! But who do you suppose is going to pay for all these free handouts? I don’t think I need to answer that, do I? This is just what the seller didn’t need, another target placed on their foreheads so that if that Kenworth didn’t get you on the road, they’ll bring open season to your doorstep!

And so now we come to the DSRs and how they play such a crucial role in making sure that Donohoe’s jet is fully fueled. As if the fairy tales of fee reductions weren’t enough for the month of April, and by the way, I’m not finished with that subject just yet so stay tuned, so too has the “Seller Performance” bar been lowered like an ever tightening noose around their necks! As Ebay now counts only the lowest stars of DSR ratings against a seller’s performance level, 1s and 2s out of maximum of 5 stars, they now only allow 1% and 2% room for buyer dissatisfaction, lowered from what just was 2% and 4% prior to April 1st. In other words, you need to have an Ebay account with not more than 1% of low 1 and 2 star instances for Item description and not more than 2% for Communication, Shipping time and Shipping costs categories to retain Ebay’s good graces. Boy was I off with the assessment I had in my last post when I said that the new low 1s and 2s DSR rating system idea was a step in the right direction. It has become evident that the old DSR rating system was actually less damaging to a seller than this new one! With the old system, an average seller’s DSRs level needed to be below 4.3 in order to negatively affect their account with the imposition of limited selling privileges. But now, it only takes an estimated 4.6! And it’s no more just a restriction with how you’re hit. It’s a serious fee increase! They don’t want to take away your ability to sell, just your money! You see, Ebay thought they’d be smart by using this system to generate wealth rather then limit it by restricting sellers. So in affect, they now have a system preventing anyone from proving anything. And they use that system to raise fees while justifying the increases on poor customer service on the seller’s part while simultaneously protecting the buyer. Sound’s great, doesn’t it?!

Ebay seems to like to use explanations that relate to the “Majority” and how that is what they base their decisions on when creating policy. In other words, it’s the “Majority” that is able to do well with the percentages for the standards that they come up with. It’s the “Majority” that wants to see a particular change for the better and so that is why a change is made. If that’s the case, then I need to ask is it the “Majority” that causes a top rated seller to fall from receiving discounts for being less than 99% near perfect? Or, on the opposite end of the spectrum of good sellers, if a seller has an overall percentage rating of 4.6 out of 5 stars, was it the “Majority” that forced the seller to be placed into a “Basic” store subscription that ultimately wound up costing them hundreds or thousands of dollars extra per month in listing fees? Oh, I’m sorry. Didn’t you read about that? You may be asking yourself how it’s possible for a seller to be hit with such additional fees like that. Well, I will answer that in just a second but my final point here is that the “Majority” rules only when it’s a benefit to Ebay’s bottom line! Because make no mistake, it’s a minority that is causing the greatest headache to the sellers with the system that is presently in place. And when I say “minority”, I’m referring to the policy makers at Ebay, not the buyers and sellers!

Now to elaborate on what I said just a few moments ago about how a seller could be hit with a financial knockout when it comes to store listing fees. This in my opinion is such a ridiculously underhand way to generate income for this company that it needs to be brought into a white hot spotlight. Now potentially extremely damaging to sellers is the fact that Ebay has just rewritten the “Terms Of Service” agreement additionally giving themselves the power to alter a seller’s store subscription tier. A seller is not allowed to dip much below the mid 90s percentage wise on his or her DSR scores or they will loose their status as a Premium or Anchor store subscriber. Ebay will automatically push those sellers down into a Basic store subscription and force them to pay the increased fees as explained above of no less than 300% if their numbers do not improve! You heard me right! That’s because with a Premium store you were listing items at only 5 cents each, and with an Anchor store, only 3 cents each. But by being put into a Basic store, you will now pay 20 cents per item in listing fees! And if you’ve got hundreds or thousands of items sitting in that store, you’re screwed, plain and simple! That is, unless of course you immediately withdraw all of your listings from Ebay effectively placing you out of business. Just imagine after all the labor invested in setting up your Premium or Anchor store with 3 or 5 cent listings that Ebay decides to pull that plush rug out from under you and replace it with 20 cent indoor/outdoor carpet! Then add to that the very real probability of also being lowered in search standings to boot which is an added penalty for having DSR numbers that don’t measure up to their ridiculously high standards. Mind you, we’re talking about a good seller who may have gotten a temporary bad luck streak bringing down their DSR stars to say around 4.6 instead of 5 creating an average positive percentage in the low to mid 90s. This is not a bad seller. And when compared to the way the old DSR system was, this is actually considered a very good seller! And let’s face it! In actuality, this is a very good seller. Even when considering the lower Basic store monthly fee being less than what you would have paid in a Premium or Anchor store, the high probability exists that the increased expense for the number of listings in your store will more than surpass the difference. As an example for what would wind up being a very common occurrence, if you list 1,000 items in your Premium store and you were forced into a Basic store, your added fees for the month would total $117.00. So for every 1,000 items in this case scenario, add another $117 to the total for fee increases for each month. For sellers with thousands of items in their stores, it could mean hundreds or even thousands of dollars in fee increases each month with no way to stop the bleeding unless as I said, you decide to shut down your business on Ebay. Otherwise, you are at the mercy of whenever those low DSRs fall off the 12 month chart in order to bring your numbers back to where Ebay wants them.

What makes things worse with the DSRs is that they do absolutely nothing for a seller! They serve no purpose other than to give Ebay a tool to take money away from the sellers. Think about that for a minute… The ratings that sellers are given are hidden so you cannot see what buyer left you what rating. So what purpose do Detailed Seller Ratings really serve? You could try to say they are a way for the seller to see what he is doing wrong and use them as a tool to correct bad selling practices. But you’d be wrong in thinking that because there is no reasonable way to gauge ratings when their roots are kept under wraps. How is it possible to know who is complaining about what if the source of the ratings are hidden? Especially when Ebay allows the buyer to openly give you glowing positive verbal feedback while simultaneously nailing you in the back with low DSRs! You could try to say that DSRs act as a deterrent system keeping the seller in check to be more careful with the way they handle their selling practices. But you’d be wrong again because there is no way that you can deter against anything using a system that’s end results come without references. Not to mention the fact that there will always be a certain number of buyers that will complain no matter what you do. And with a system having such a low tolerance for error, the likelihood will always exist for many sellers to be placed in a vulnerable position for no good reason. And you can add to that the way in which the DSR system can be bogusly used by competitors to eliminate their competition. You could even try to say that DSRs force a seller to work harder to gain discounts for doing better by his or her buyers. But then why on the flip side of that idea should Ebay be “punishing” the sellers that are incapable of reaching such strict overall percentage ratings in the upper 90s?

Ebay uses much too broad a stroke to paint a picture that groups smaller sellers in with larger corporations. Not to mention that you’ve got so many variables such as the types of basic standardized products being matched up against used collectibles that many times will be more critically scrutinized. You’ve got a singly owned and operated business that may not be able to do things the way larger more adept companies can but is still able to offer very good rather than perfect customer service. It is critical to keep in mind that while the buyers on the Ebay site are important and should be offered great customer service, it should not be at the expense of less than perfect, yet reputable sellers that are paying for a service here. And by that I mean that there is an enormous difference between a truly bad seller that is deserved of the severity of penalty that Ebay doles out now and one that is merely a good seller that’s ratings don’t measure up to perfection! However, on this site, if you don’t measure up to what even Ebay cannot themselves achieve in customer satisfaction ratings as I will prove in my next paragraph, you will assuredly be punished to an extent that far exceeds what is deserved. But interestingly enough, the punishment doesn’t rear its ugly head in the form of simple restrictions or lowered search standings anymore. It comes in the form of extremely exorbitant fees and or the loss of critical bonus incentives! As if to suggest that this is how Ebay is going to get through to the sellers to improve their customer service. You see, Ebay has created a self fulfilling prophecy that goes like this… You may not be a bad seller, but if Ebay treats you like one then you become one. But with this prophecy comes the increasing opinion that “Buyer Satisfaction” is a term that is being loosely used by Ebay as an excuse to overcharge the seller. And in the end, all this is going to do is build animosity towards the Ebay corporation and force the users, buyers and sellers alike, to move to greener pastures. Now, when I say “greener pastures”, of course that doesn’t mean that your sales will be higher, at least not right now since it does still seem that Ebay holds the “traffic” trump card. But keep in mind that Ebay was once in this same situation. Companies similar in nature that rest in those “greener pastures” offering no or very little listing fees, more fair feedback systems and generally much less in the way of headaches overall are benefiting enormously by learning from Ebay’s mistakes. Smart sellers would best benefit from doing the same by taking advantage of this opportunity, ultimately getting a stronger foothold for themselves elsewhere in the very likely event that Ebay’s trump card turns into a joker.

The ratings that Ebay sets for these types of smaller sellers are just too strict. I’m not saying that it’s impossible for these sellers to reach these goals even though for some, it may be. I’m saying that this is not the way to treat a paying customer who is still able to offer good customer service to their buyers. Who ever heard that getting less service for more money makes sense?! That is how these sellers are being treated. And while it is possible that a majority of all sellers may be able to attain these higher customer satisfaction levels, that doesn’t make it right to so severely penalize the ones that don’t or have a guillotine hanging over all seller’s heads as a reminder of what might happen if they accidentally slip up or are unfairly rated. It may sound crazy, but this system is kind of terrorizing sellers. Really, it’s a form of financial terrorism! And how ironic is it that the ones being terrorized are the ones that are footing the bill! You call that customer service, because I sure don’t. But now let’s take a closer look at “customer service” and put Ebay themselves under the spotlight a little bit. Ebay’s policy makers in the department of DSRs are thoroughly hypocritical. They want to give buyers the freedom of being able to show their dissatisfaction against sellers without the fear of feedback reprisal. But simultaneously, they’ve been known to take action against sellers for voicing their opinions with their dissatisfaction of Ebay in the forums. They want to force sellers to consistently achieve a high 90s percentage of customer satisfaction ratings, but are unable to “walk the walk” as was evident for the last 10 years running according to ACSI, the “American Customer Satisfaction Index”. In fact when rated against six other competing Internet retailers in 2009, Ebay was rated dead last at only 79%! Now, what kind of an example are they setting for their sellers with that? Or is that the seller’s fault too?! Amazon came in tied for 3rd at 86%. Maybe one reason why is because Amazon doesn’t feel the need to unnecessarily force their sellers to follow such strict goals that they themselves cannot achieve. Not to mention punish the seller for offering what any normal person would see as good customer service as opposed to perfect customer service.

One of the fundamental problems with the DSR rating system is that Ebay gives the seller a set of rules to follow on one hand and then punishes the seller for doing what they allow on the other! Or they give you benefits for doing better on the site, and then take them away by counteracting that with what is more than seemingly unfair policy. There are many ways to show this. For example, why allow a seller to set a specific number of days that it takes to get a buyer’s item in the mail and then give the ability for the buyer to poorly rate on “Shipping time” after a seller can prove that he shipped the buyer’s item according to the terms that were set based on Ebay policy? Not to mention the great lack of evidence to prove that the carrier was not at fault to boot! And if you like you can consider that this situation will not be made any less difficult if the United States Post Master General gets his bid to close doors on Saturday mail delivery. But even more ridiculous is the ability for a buyer to be able to rate the “Shipping costs” category at all if the seller honored “Free Shipping” never even having taken a dime from the buyer to ship the item to begin with! There was a recent Talk Radio Town Hall meeting where Ebay took calls and emails their users. When a couple of Ebayers called in expressing their concerns with the obvious unfair nature of some of these policies, the Ebay panel suggested using additional methods to prevent the buyer from giving low ratings on shipping costs. Callers were calling in with serious concerns and solutions with what should have been ideas that had already been in place such as automatically giving a 5 star rating in the shipping costs category for sellers that honor “Free Shipping.” In response, Ebay was giving the impression that these things were not possible, as if to say that their system couldn’t handle it. If that’s the case, then I ask how is it possible for the system to give sellers a boost in their search rankings for offering “Free Shipping”, but yet not be able to allow nothing short of 5 stars as a parallel result? It was like sellers were crying out explaining how they were drowning and all the Ebay panel members could do was to offer a description of the water they were in! Solutions to these problems are possible without further harming a seller when it comes to things like “Free” shipping, but Ebay doesn’t want to do that because there are still ways that a seller can offer free shipping and not make good on it after the sale becomes binding. The real clear answer is that Ebay has micro managed themselves into a corner! Their policies have become their own worst nightmare. They’ve created their own problems by not thinking through the end results of their changes before time. And now, rather than correct what is wrong with this company, they chose to sweep these problems along with proper respect for a seller right under a rug. This is evident with responses such as the actual response from the Ebay panel that suggested that all systems have flaws and that the users should take some comfort in knowing that all users are treated with the same level of “unfairness”. If you can believe that is what was actually said in their meeting!

This company’s motto has adopted an ideal utilizing the lack of transparency thinking that this is the right way to go. From the way they communicate with the users to the way they charge the seller fees in seemingly very unfair ways, Ebay allow themselves and the buyers to take action that continues to have an adverse effect on a seller without revealing not only the individual responsible, but also the genuine and or specific reasons or justification as to why the seller should be. They use this type of system to mask the responsibility for what they do that can and many times does wind up ruining people’s lives and businesses. And they do this by financially draining them effectively putting them out of business. The result leaves the seller very vulnerable to foul play with no evidence to prove otherwise. At least that’s what Ebay’s executives think. A system set up in this way will very often wind up placing blame on everyone but the party responsible. And it winds up many times forcing innocent sellers who in many cases happen to be good buyers as well to leave the Ebay site after years of hard work had been invested. As Ebay has not been known to take the blame for anything that they do wrong, they in effect further place the buyers and sellers at each other’s throats while still standing behind the idea of being “just a venue”. Case in point calls attention to a buyer who was recently sued in a Florida court by a seller for leaving negative feedback. This sort of activity will surely be on the rise. While it is critical that buyers should be factual about the feedback they leave, that doesn’t stop a seller from creating a lawsuit. And Ebay while trying to prevent lawsuits against buyers by making their comments and ratings hidden while labeling the results they give to sellers as “poor customer service” have now conveniently focused on using these results to financially benefit themselves. But the truth is that if they were rated by the system they’ve installed, based on ASCI reports as mentioned above, Ebay would have been suspended from their own site years ago! It will only be a matter of time before all this masked activity takes its toll on this company. And for many sellers, that couldn’t happen soon enough.

Ebay makes money from the seller, not the buyer. We’re talking about the money generated through the elaborate system of listing, selling, store and Paypal fees. In addition with every change that Ebay makes, it is the seller that is getting slammed harder and harder in the end with increases in those fees. Especially the seller that sells lower volume and ones that cannot afford to pay the $299 per month fee for owning an “Anchor” store. In order for a monthly fee of $299 for an “Anchor” store subscription with 3 cent listings to be worth paying for over a “Premium” store with 5 cent listings, you would need to list not less than 12,500 items in “Anchor” to make up the 2 cent savings. So I think that it may be safe to say that most sellers in this category are owners of businesses that have a much greater advantage of resources to operate over the rest. For this reason, I am going to focus on the “Basic” and “Premium” store subscribers on the two charts below.

Ebay’s latest change as always was promoted as a fees “reduction” but for most sellers, it was obviously not. The table below helps to provide an understanding for both non-store and store owners as to just what these changes meant when compared to the fees just prior to April 1st 2010. But I’ve taken additional steps towards showing different comparisons than normal. Rather than just show Listing fee or Final value fee differences, I combined the two to give you a better idea of the total decrease or increase for the entire transaction, less Paypal and other promotional feature fees of course. I felt that this was the more fair way to figure it. The second price chart further shows just how hard hit sellers were that had stores using the old “Store Fee” system as opposed to ones using the “Fixed Price” format because now those sellers have no choice. If they want a store, they will pay much higher fees. But you’ll also see what it meant for the sellers that used “Fixed Price” listings as well. Numbers in red show the fee increases including non-store owners showing the percentage of the increase. Green shows the savings you’d get when comparing the previous year’s listing & final value fees. Of course if your item doesn’t sell, you gain nothing.

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*2010 final value fees are based on 12% of the initial $50+6% of the next $950+2% of remaining sale. Electronics fees are charged at 8%+5%+2%. Books, DVDs & Video Games are charged at 15%+5%+2%.

Some additional important things to note…
As the chart above indicates, as an auction seller without a store subscription, you need to be selling items at $1,800 or more to realize any savings on the closing fees and even then when you compare the dollar value of the listing, those savings are really not much at all. Otherwise, the fee increases are substantial. One thing I do not show on the chart above is that if you do have a store subscription, your final value fees for auction style listings are slightly less but not by much. They are a flat 9% with a cap of $50 without a store subscription and 8.75% on the first $50 + 4% on the next $950 + 2% of the remainder above $1000.00 with a store subscription. But keep in mind that with a store subscription you also pay a monthly fee, so your savings are not “true” as they are watered down there too.

A note about the “Free” 99 cent listings if I may… Any savings you may have had from Ebay’s offer of 100 “Free” 99 cent listings when you consider the intensity of the final value fee increases are quickly absorbed because even if you wanted to take them up on the offer, the most you could possibly save would be $15 for all 100 listings. It wouldn’t take more than a few sold items to erase that savings in an instant with the increases shown in this comparison! But also understand that sellers do not make money listing highly valuable rare and sought after items at 99 cents. It is not practical to expect a seller to take a chance on their inventory not realizing its full potential value just for the sake of getting a “Free” insertion fee of only 15 cents. Therefore, the sales pitch that Ebay throws at the sellers about “Free” insertion fees will only be appealing to those dollar store type outlets that will now of course take full advantage of this opportunity to flood the Ebay market with more crap than ever before! In fact, Donahoe’s great plan here gives these types of sellers’ terrific incentive to have everyone and their uncles open up a hundred seller IDs with stores and list the first 100 listings for free! So how will that help buyers or sellers when it comes to overworking the “Core” search engine and liquefying the result? I got an answer for that too. Based on the well known auction analytics website, “sellebrity”, which is a tool designed with Ebay in mind and allows sellers to track traffic to their listings and the site in general, one such seller pointed out that as soon as the new “core” search engine was started, the result was astounding! Below is a before and after chart from their website that shows what happened. I think it speaks for itself.

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But to be fair, lets look at a much wider spectrum. John Donohoe’s plan was to turn Ebay around within 3 years from the time he took over in 2008. How do you suppose he’ll explain to the shareholders the chart below taken from Nielsen ratings for unique visitors that clearly show a drop of 18% since his arrival? This is the lowest rating in six years for Ebay with the drop having started when he took over. Do you think this is just a coincidence? Do you think it’s still the economy? Or is something else happening here? I’ll leave that for you to decide. But while you’re thinking about it, keep in mind that Amazon, Ebay’s largest competitor has had a 17% increase in traffic over that same period. Interesting isn’t the word.

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But if you want even more confirmation, then how about hearing from the sellers themselves? Check out the following link right from the Ebay site in their own community boards… http://forums.ebay.com/db2/topic/Seller-Central/5-Days-Straight/520194234&start=0 I cannot tell you how long this link will be active because it must surely be an embarrassment for the company to read as are the increasing number of threads just like it, but I can assure you that the last time I looked at this link, there were more than 2200 posts, many if not most of which were complaining about the dramatic sales drop since the start of the month. My opinion is that Ebay will not increase traffic by simply placing tons more items in the “Core” search. And the amount of money that individual buyers have to spend does not increase by Ebay raising the amount of money that they force their sellers to pay for listing their items. In fact, I believe that this will all have an exact opposite effect! Sellers, if they don’t leave the site taking their buyers with them, will be forced to raise the costs of their items and services to survive and in doing so, just turn Ebay into a larger and ever faster snowball into hell.

But getting back to the fees chart above for a minute, another thing to keep in mind is not to let that chart mislead you into thinking that store owners will save a ton of money on listing fees. Remember, the item has to sell before you realize the gains shown in green. And just because your items are now in “Core” search doesn’t mean that with the millions of other items that are also now in the “Core”, that it will allow your items to be seen any better than they were before. But you see herein lies the problem because if they’re not, then what exactly are sellers paying more for? Because that’s the whole Ebay sales pitch right there, more visibility equaling more sales. It sure as hell can’t be the offering of free photos! It’s the only way that Ebay can sensibly resemble any sort of justification for such a hugely inflated fee structure. And no matter how you look at the fees chart or what the result ultimately becomes, if you were using the “Store Price” listings prior to April 1st 2010, you loose big time! Because your fees just went from an average of 3 cents to not less than 5 cents with a “Premium” store along with an additional increase of $34 per month for rent OR 20 cents per item with a “Basic” store on every one of your listings. This even further stresses the importance of a positive result on the new “Core” search idea now. It had better do what Ebay projected it to do or your guess is as good as mine as to how negative things will really get with this company down the road especially after sellers start to see their credit card statements next month and beyond.

There are those in defense of Ebay that will say that what they’re merely trying to do here is to change the inventory that the small sellers are offering as opposed to trying to eliminate those sellers. The idea is that Ebay doesn’t want items sitting around collecting “dust” until the right buyer comes along. They want a higher sell though rate. They want to change their image from the garage sale, flea market look to the strip mall look. There home page is indicative of this. And Ebay does offer statements on seller’s listings for those that have long time running items that state and I quote… ”This listing hasn’t had any sales in the last 16 months. Please consider revising it” which would support that idea as well. There’s only one problem with this idea as it’s just another issue that they’ve micromanaged themselves into a corner with. They started out as a garage sale! That’s what got them their name to begin with and how ironic is it that the first item ever sold on Ebay was in fact a broken used laser pointer sold by their founding member, Pierre Omidyar? As history tells us, Pierre even emailed the buyer asking him if he understood that the item was in fact used and broken to which the buyer replied that he was a collector of broken items of that type! I mention this because it is significant in that who can say what will sell and what will not? You know the old cliché, “one man’s trash is another man’s treasure.” The uniqueness that was Ebay allowed both the “trash” and the “treasures.” But it may be that Ebay wants sellers to sell the “trash” more quickly. But now we get into whose decision is that to make? Are the seller’s paying Ebay for a service or aren’t they? Do they deserve to get the same rights as those sellers who sell new items or not? So my question to those defenders of Ebay is, how is it that Ebay’s company is hurt by allowing both types of items if Ebay is in fact getting paid for their service regardless of how long it takes for an item to sell? Or, is it that their technology cannot handle the inventory? Do you see what I’m getting at here? Has Ebay given themselves yet another “catch 22” situation again with this move in “Core” search? And if not, then I only see it fair to allow the seller to offer an item for however long he likes since he or she is paying for the service they get. Or are we also now getting into an area of prejudical treatment?

As a side note, I would like to highlight what I see as an extremely important recent development in the World of on line credit card transactions. This is critical for those of you who invest that are riding the Ebay company thinking that Paypal is going to get you through. My final point will be made in closing below, but the story is this… VISA just agreed to spend 2 billion dollars to buy Cybersource Corporation, a company specializing in on line payment transactions. This was a clear move to expand into Paypal’s territory and while Paypal’s president, Scott Thompson has tried to downplay the significance of the VISA deal, Reuters has reported that he stated it had come as a “surprise”. If this is true, then that statement alone tells me that Paypal’s future may be in serious jeopardy. I have always said that when it comes to customer support, the major credit card companies and banks cannot be beat by any competitor. Not to mention the idea that I don’t believe you would see 21 day holds on people’s money without paying interest like Paypal does. Financially speaking, Ebay owned PayPal is what allows the Ebay company a unique appeal from sinking into the ocean of similar sites, many of which are gaining momentum very quickly now. And that’s only because the banking industry is just waking up to the idea of what Paypal has created a comfortable niche in doing. Paypal is getting noticed now because of their advancing gain on the industry with the market share that they currently hold and are looking to expand on. My guess is that once the sharks smell the blood in the water, you’ll see that Paypal’s shark cage won’t be nearly strong enough to hold them off. If VISA moves as predicted with what will most assuredly be the full support of their bank partners, this will become a breath of fresh air for sellers and once the word gets out, Paypal may wind up becoming what legends are made of.

In closing I would like to ask potential investors as well as those that already own Ebay stock a question… Why would you want to invest money into a company that treats its own life blood the way this company does? If it were not for PayPal, Ebay is no different than any other site out there most if not all of which are less expensive and complicated to do business with. But the next time you get the impression that your investment with Ebay is doing well, ask someone if they can tell you why. See if they understand at what cost Ebay realizes gains and the price that their users pay to make them look good. Finally, I’ll leave you with this last thought… At the time I started posting this series in April of 2008, the price of Ebay stock was at $31 a share while Amazon was at $80. Today, Ebay is at $24 and Amazon is at $138! How much longer can you afford to turn a blind eye to what is happening inside this company? Maybe now is the time for you to look in the mirror and ask yourself why.

Justice for All

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