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EcommerceBytes-NewsFlash, Number 1719 - February 04, 2008 - ISSN 1539-5065    1 of 3

Internet Merchant Association Speaks out on eBay Changes

By Ina Steiner
EcommerceBytes.com
February 04, 2008




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The President of the Internet Merchants Association, Steve Grossberg, spoke with AuctionBytes by phone over recently announced changes to the eBay site. Grossberg, an eBay PowerSeller, attended the Ecommerce Forum where eBay made its announcements. Grossberg talks about changes to fees and feedback policies, what they mean for eBay sellers, and the challenges ahead. The interview can be heard on the AuctionBytes Podcast, and a full transcript of the interview follows (http://podcast.auctionbytes.com/cgi-bin/podcast/pod.pl?/pl/2008/2/1202006972.html).

AUCTIONBYTES: Steve Grossberg is an eBay PowerSeller and the head of the Internet Merchants Association. Steve was at the recent Eommerce Forum where eBay announced enormous changes it would be making to the site. Steve is with us to talk about those changes. Thanks for joining us, Steve.

STEVE GROSSBERG: Thank you for having me on Ina and we appreciate the opportunity to speak here.

AUCTIONBYTES: Okay, John Donahoe is replacing eBay CEO Meg Whitman. He's taking credit for Tuesday's announcements. You've talked to John Donahoe a lot. If you had one word to describe him, what would it be?

STEVE GROSSBERG: Well one word - I believe he is sincere.

AUCTIONBYTES: Okay and so you are saying sincere about the motivations behind these changes that are rolling out?

STEVE GROSSBERG: Yes, absolutely, I believe his intent is good, I mean he is sincere in what he's saying

AUCTIONBYTES: Do you think he listens to eBay sellers?

STEVE GROSSBERG: Yes I do believe he listens to eBay sellers.

AUCTIONBYTES: What do you think is the most significant change?

STEVE GROSSBERG: The most significant change I believe is probably the feedback, when you look at it as a whole, the package as a whole.

AUCTIONBYTES: Now are there any positive changes being rolled in terms of feedback?

STEVE GROSSBERG: Well on the surface, the change on the surface is where the sellers cannot leave negative feedback on the buyers, I believe the intent is good there. Because I am with eBay that, the fact is that if a buyer receives negative feedback it can have the potential of driving them from the site. However when you look at eBay alone, there's more to it than that. There's other things that eBay does not do well so this may be problematic in terms of the eBay.

AUCTIONBYTES: In terms of communication in terms of reporting bad sellers, because that's what I'm hearing.

STEVE GROSSBERG: Well I'll give you an example. I was just looking at my feedback today and somebody left me a neutral feedback, Ina, and God only knows what they gave me for DSRs because that's invisible to us. But they left me a neutral feedback because they said that the item says it was a two player game, and I sell video games, and it was a one player game. Now that information they were reading from is coming from Muze's database, which Muze and eBay have a relationship with when you list by UPC. Now of course eBay puts in there that the 1BusyMan assumes all responsibility. However at the same token eBay tells you at the conference that if you're in an item that has catalog, encourage you to use catalog because that's how search is going to work.

AUCTIONBYTES: Now was that a mistake in the catalog?

STEVE GROSSBERG: Yes and the whole catalog has got a bunch of flaws in it. So there's a lot of holes in this that are going to come back and be problematic.

AUCTIONBYTES: Now as a seller, why would you not have seen that mistake in the catalog when you listed the item?

STEVE GROSSBERG: Well is a large seller, Ina, we just put in the UPC code and let it go. There's just too many items it's just like me micromanaging when somebody pays me, I don't see it, it's all invisible to me.

AUCTIONBYTES: Well let me ask you, why do you think that buyer didn't contact you rather than leaving a neutral?

STEVE GROSSBERG: Because eBay does not educate their buyers on how to use the site. They do a very poor job when it comes to educating the buyers on how to use the site and they've always being dependent on placing the burden on sellers and here we go again with these changes that eBay made. Once again they put a tremendous burden on the seller to fix eBay's issues.

AUCTIONBYTES: Well let me ask you, in this particular case that you're talking about, is it worth your while to reach out to the customer and say, you know - apology, refund? Can you get that neutral turned into a positive? What is your solution in that case?

STEVE GROSSBERG: Absolutely not worth the time for me to reach out Ina, because you know, I could be selling 10,000 items in a month and time is money. And this is why I say, eBay places the entire burden on us. To me it's just not worth it. I accept the neutral and move on. If you're worried about every little thing like that, your business is going to come to a halt especially with eBay buyers. As it is eBay has high maintenance buyers to begin with, and I think you heard that many a times before. So this would just add more maintenance on for us to worry about - our feedback and our DSRs, just an issue that I personally cannot be involved and I don't think it's worth anybody's time to be involved in it, not when you are a large seller.

AUCTIONBYTES: Now I've been hearing in terms of that feedback issue that you raised, which is, right now buyers and sellers can leave each other positive, negative or a neutral rating. Now with these changes, eBay's taking away the ability for the seller to leave a neutral or negative for a buyer. Tell me how that will play out because I thought you had said that overall these changes were positive.

STEVE GROSSBERG: Well what I said was again, I am not upset about the fact that sellers can not leave negative feedback, because I do believe that drives buyers from the site. There was a lot of retaliation feedback going on from sellers. I've personally seen big sellers when they get negative they negative a buyer back and then attempt to mutually withdraw it. So these issues were created by eBay themselves when they are allowed unlimited mutual withdrawal. That set the door open for this to happen.

But if you look at how a site like Amazon works, sellers cannot leave feedback for buyers. And the system works extremely well. I personally have a 98% feedback on Amazon, which is really upper tier for an Amazon media seller. And I cannot leave feedback for my buyers, and I don't get the kind of extortion and demands that eBay buyers… but here's the biggest concern I have with Ina, if I may. And I asked this question at the Eommerce Forum, and I never did get a direct answer on it, is the fact that the nonpaying bidders…and this is really really problematic on eBay, because it is confirmed by eBay, Usher Lieberman did confirm it in an article the other day with Amanda from the Associated Press, that 6% of the transactions on eBay end up in nonpaying bidders.

eBay also mentioned at the conference several times that there is 7 million items listed to the site daily. Okay this is the US site. So if you take that 7 million listings a day times 6% of them ending in nonpaying bidders, it's 420,000 nonpaying bidders a day. If you look at the average listing fee, let's assume that it's $.70, you are talking $300,000 a day, multiply that out by a year, it's over $100 million in revenue for eBay.

AUCTIONBYTES: And your point is that eBay still gets those fees. Even though the buyer doesn't pay, the seller still pays those listing fees.

STEVE GROSSBERG: We are still paying those listing fees, absolutely, and the other thing is you're tying up your inventory for tremendous amounts of time, okay? But let's look at the hundred million dollars in revenue. eBay reported $4.7 billion in gross revenue last year, and that eBay as a company combined with PayPal and everything. This would take a hit of 2 1/2 percent of the revenue. There was no financial incentive for eBay to get rid of these nonpaying bidders. They need to get some more skin in the game and stop putting the burden on sellers to handle their issues.

AUCTIONBYTES: How can eBay make deadbeats pay up?

STEVE GROSSBERG: Simple. Collect payment on behalf of sellers.

AUCTIONBYTES: Through, PayPal?

STEVE GROSSBERG: Through PayPal yes absolutely.

AUCTIONBYTES: What about people who don't want to use PayPal?

STEVE GROSSBERG: Well you could accept credit cards also. PayPal becomes the automatic processor for any transaction.

AUCTIONBYTES: A radical opinion, probably very passionately and controversially received by people listening to this. So let's move on in terms of the fee changes, because eBay lowered listing fees, and they raised final value fees. So if your item sells, you pay more. Overall - good or bad for sellers?

STEVE GROSSBERG: Overall the way I look at it is, it came out pretty much a wash. I believe that you were going to have about half the sellers who have lower listing fees, and I'm talking volume now not sellers - half the volume on eBay with lower listing fees, half the volume will have higher, at the end of the day you accomplish nothing.

AUCTIONBYTES: What changes would you like to have seen?

STEVE GROSSBERG: Well again eBay needs to get more skin in the game. I look at it this way like for me personally, and I'll talk about my numbers personally, I'm going to see over a $30,000 fee increase. I was going to - I just brought on another full-time worker and I was looking at expanding my business. Now I have to look at laying off that worker and not expanding my business.

eBay should be putting more money in all sellers hands. They have a very high take rate, and by putting more money in the seller's hands they can look to grow and expand their business. These are issues that have been plaguing eBay for a long time. I do applaud the executive team for making changes, I have to believe they must be misinterpreting the data here. I don't believe these changes will be effective in accomplishing what they want to do, but you know, to give them some credit, I know they are listening and I know they are observing. I don't believe that this is the final changes. I do believe they are ready to make more changes at a moment's notice, and in fact I did express my concerns with them, and how it affects my category and they did agree to go back and look at it and review it. And possible changes coming very soon, so I do credit them for that, and I want to say this too is, I want to thank Bill (Cobb) and Meg (Whitman) for bringing eBay to where it is today and they did an absolute great job and made a lot of us financially independent. I also want to thank John Donahoe and I'm very encouraged and excited by the new management team he has with him. Because they all seem like they do care and they want to do the right thing. That does not mean that they will not make mistakes. I personally don't think eBay knows how these changes will affect their site.

AUCTIONBYTES: And definitely these things are going to affect sellers differently, depending on which categories they are selling, what kind of sell through they are getting, and what kind of profit margin they have. So your situation isn't really across the board. In your category, though, I think it probably is in terms of media.

STEVE GROSSBERG: I would think the vast majority of media sellers are going to take a big hit. The only exception would be if there was a media seller who was using Gallery on all their items, which are far and few between. So the vast majority of media sellers will take a huge hit here.

AUCTIONBYTES: eBay has made a lot of changes, some of them, specific ones, are actually welcome and considered positive - the feedback one, definitely controversial, and a lot of passion coming from the community about them. We don't have time to get into any more, but I was very happy to get your impressions, and I thank you for joining us, Steve.

STEVE GROSSBERG: Well thank you for having me again, Ina.

AUCTIONBYTES: That was Steve Grossberg, eBay PowerSeller, and head of the Internet Merchants Association (http://www.imamerchant.org).

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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