EcommerceBytes-NewsFlash, Number 1087 - August 17, 2005     2 of 5

eBay Looking for 'Least Impactful' Way to Stop Ethical's Extender Tool

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eBay has told Ethical Technologies to stop marketing its Extender tool, but has yet to stop Ethical from providing the service to sellers. The question of whether eBay will pull the plug on Ethical Technologies' Extender tool and when remains the center of a controversy being fiercely debated by eBay members in industry discussion boards. There are also questions about why eBay let Ethical, who was going through eBay's developer program, use the tool for the last 8 months if it "violates the spirit of its search manipulation rules," as an eBay spokesperson told AuctionBytes almost two weeks ago (http://auctionbytes.com/cab/abn/y05/m08/i09/s02).

The Extender tool (marketed as the Sell-Through Tool) automatically extends eBay auctions if the listings receive no bids, letting the listings appear on eBay's highly-trafficked "Ending Soonest" pages four times in a 7-day period instead of once. Ethical pitched the tools to high volume sellers, saying the increased exposure led to increases in sales of anywhere from 10-20 percent to 40-50 percent.

But the tool, launched last fall, came to the attention of members of the OTWA discussion board (http://www.otwa.com/community/showthread.php?t=32120), who debated the fairness of the tool.

On August 4, eBay spokersperson Hani Durzy told AuctionBytes that eBay was in discussions with Ethical, and that eBay "didn't want the tool out there." Durzy said in a follow-up phone call on August 9 that eBay was still talking to Ethical. Durzy said, "We don't want it being used going forward, but they have a number of customers using it currently. It's not right to immediately pull the plug on this thing. We want to figure out the best way to have users stop using it while being the least impactful."

Durzy added, "Are we assigning blame on the people using the tool? The answer to that is no."

On August 14, the Internet radio program eAuctionAir aired a segment on the controversy (http://www.eauctionair.com). The program's host, Michael Donahue, said a volume seller posted on a discussion board on August 13 that "Ethical has increased their service base to allow more users for the tool, and two, eBay has cleared the tool for continued use and confirmed the tool does not violate eBay rules."

eBay spokesperson Elizabeth Steed could not confirm or deny the accuracy of the information contained in the post by press time Tuesday evening, nor could she give an update on the discussions with Ethical.

Ethical Technologies founder Scott Samuel told AuctionBytes on Tuesday, "We are increasing technology, putting in new servers in anticipation that we will get approval." When asked when he expected to hear from eBay, he said, "As soon as people stop playing phone tag." He also said, "We view eBay in a positive fashion. In the eyes of Ethical, eBay is not an enemy."

According to Samuel, Ethical Technologies currently has 100 users of the extender tool. Fees vary for using the tool, but the ballpark fee was 10 percent of their increase. For example, if a seller's sales increased $10,000 in a month using the tool, Ethical would receive $1,000.

AuctionBytes asked for confirmation from a 12-percent membership owner in the company, who said the fees did vary but said the average fee was closer to 5 percent than 10 percent and depended on a lot of variables. He confirmed that when he left Ethical 2 months ago, there were 100 users signed up, though not all were necessarily paying for it at that point. He said they had planned to sign up as many customers as they could, though he said when he left, eBay's servers were at times unable to process all of their API calls.

Samuel said they had chosen from the beginning to limit the tool to 250 users for server-capacity reasons. He said there were 11 users of the tool in January, and they pulled in $135,000 in monthly GMV. "It astounded eBay, it's the most awkward pause I ever heard them make," Samuel said.

http://www.ethicaltools.com


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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