eBay's Top Sellers Perform Poorly on Feedback 2.0

A study of eBay's top sellers reveals they rank poorly in terms of the detailed ratings left anonymously by their customers, with most falling in the bottom 25 percent of all sellers for such ratings. eBay introduced Detailed Seller Ratings (DSRs) as part of its overhaul of its Feedback system in 2007. With eBay poised to begin favoring higher-rated sellers in search results, it appears many of its highest-volume sellers will soon get reduced exposure on the site.

Most people are familiar with eBay's traditional feedback system: buyers and sellers are allowed to leave their trading partners a positive, negative or neutral feedback rating to indicate their satisfaction with the transaction.

Initiating a campaign focusing on the "buyer experience" last year, eBay said it believed its feedback system could benefit by allowing buyers to leave sellers more detailed ratings and leave them anonymously. With DSRs, buyers can leave feedback for sellers in four categories: item as described; communication; shipping time; and shipping and handling charge. DSRs are not mutual: sellers may not leave detailed ratings for buyers.

In October, eBay released a report showing the average DSR ratings sellers received from buyers. The Item as Described criterion received more favorable ratings than Communication and Shipping Time. Shipping & Handling Charge received the lowest ratings overall.

AuctionBytes computed the average DSR for each criterion for the highest-feedback sellers on eBay and compared it with the averages published by eBay. The top sellers received an average rating of 4.7 for Item as Described, and only 4.3 for Shipping & Handling Charge.

eBay PowerSeller Steve Grossberg, who heads the Internet Merchants Association (IMA), said asking buyers to rate sellers on shipping & handling costs made no sense because buyers already know the cost before purchasing an item. And, according to Grossberg, there's an incentive to rate sellers lower on shipping costs - shoppers may feel it will encourage sellers to lower the costs, so why would they give merchants a perfect score? "Even sellers who provide free shipping are receiving 4.7s," he said.

Grossberg believes that asking shoppers if they would buy again from the seller would be a more appropriate question. Another problem with DSRs, he said, is that deadbeat buyers are leaving ratings of "1" in retaliation for sellers who file Unpaid Item reports. This can have a huge negative impact on sellers' DSRs, he said.

Another eBay PowerSeller who studied the data but wished to remain anonymous said he believed there is an inverse relationship between shipping time and shipping costs. "The better the shipping cost, the worse the shipping time," he said.

Findings
In addition to calculating the average DSR of top-feedback sellers, AuctionBytes determined how many of them fell into each of the 5 percentiles defined by eBay.

Item as Described
AuctionBytes identified the top 446 sellers on eBay in terms of total unique feedback ratings for the month of December. We found that 31 percent of those high-volume sellers fell in the Median percentile of all sellers on eBay in the "Item as Described" criterion. 22 percent were above the median, while 47 percent fell below median; of those 47 percent, 19 percent were in the bottom 10 percent. None of the 446 sellers reached the top 10 percentile.

Communication
Of the top sellers AuctionBytes studied, 79 percent fell below the median percentile for "Communication," 19 percent were in the median, while 2 percent were above median (all 2 percent of them were in the top 10 percent of sellers).

Shipping Time
AuctionBytes found that 64 percent of top sellers fell in the bottom 25% of all sellers for "Shipping Time, 34 percent fell in the median range, and 2 percent placed in the top 25 percent of all sellers.

Shipping & Handling Charge
Finally, AuctionBytes found that 78 percent of top sellers fell in the bottom 25% of all sellers for "Shipping & Handling Charge," 19 percent fell in the median range, 2 percent placed in the top 25 percent of all sellers, with 3 sellers (less than 1 percent) achieving a higher ranking than what eBay called "top 10% of sellers."

Methodology
eBay does not release data on its top sellers. Therefore, AuctionBytes turned to Nortica's list of the top 500 eBay sellers in terms of the number of unique feedback ratings as of December 2007 (http://nortica.net/UserArea/ebay500.asp?mn=56&sf=1). We then eliminated sellers with zero DSR ratings, which indicated those sellers were inactive. (It takes time for high-feedback sellers who stop selling on eBay to scroll off the Nortica list due to the high number of feedback they accumulated while active).

The sellers were then run through ChannelAdvisor's DSRwatch tool to collect their DSR ratings on the four DSR criteria: item as described; communication; shipping time; and shipping and handling charges (http://www.dsrwatch.com).

We then used eBay's published average DSR ratings to compare the top sellers with all eBay sellers on eBay.com. Note that when it released the data in October, eBay said sellers could compare their DSRs with the chart to get a sense of how well they performed compared to the marketplace as a whole (http://www2.ebay.com/aw/core/200710101359442.html).

Conclusions
It's troublesome to see that eBay's top sellers perform poorly with DSRs, and AuctionBytes believes the data indicates eBay needs to reevaluate the new rating system and reconsider its decision to use DSRs to punish and disadvantage sellers. It should also provide much more information about the results - on an ongoing basis - so sellers have a better understanding of how the new system is affecting purchasing decisions and sales.

It's important to note that buyers are also left with inadequate information when presented with a seller's DSR ratings. Seeing a 4.6 DSR rating for Shipping & Handling Charge may sour buyers on a particular seller. Buyers would have no way of knowing that 4.6 was the average rating for all sellers.

Sellers have been debating whether DSRs have a more negative impact on high-volume sellers or low-volume sellers, each group believing they are disadvantaged by the new rating system more than the other. Ratings may also vary by category, information eBay has not released. What is clear is that DSRs will impact all sellers in two ways in the coming year. First, eBay will begin using DSRs to determine how sellers are ranked in search results (http://www.auctionbytes.com/cab/abn/y07/m10/i11/s01). Secondly, eBay will begin using DSRs in its Seller Non Performance policy; low DSRs could conceivably lead to seller limits, loss of PowerSeller status - or even account suspension.

Have you been impacted by eBay's Detailed Seller Ratings? We'd like to hear your experiences. Go to the AuctionBytes blog and give us your feedback.