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Thursday’s eBay and PayPal Outages Prove Costly to Sellers

A power outage at a data center on Thursday evening was able to bring PayPal to its knees and wreak havoc for independent merchants as well as buyers and sellers on eBay and Etsy – and the problem proved quite costly for all involved.

eBay had trouble of its own at the exact same time as the PayPal outage. eBay spokesperson Ryan Moore confirmed that a power outage at one of its data centers impacted the eBay marketplace. The problem occurred at 9:50 pm ET (6:50 pm PT) Thursday night, he said, and it lasted until 11:54 pm ET. (eBay didn’t give the all-clear to users until 12:51 am ET.)

The inability of buyers to shop on eBay for any amount of time is serious, but it can be devastating for sellers who have auctions ending. Without the last-minute bids that boost prices in the final moments of an online auction, a seller can find a valuable piece going for a pittance. That’s why eBay used to extend auctions during outages.

eBay sellers face a dilemma in such cases – do they honor the auction sale and take a significant hit to the pocketbook because bidders were unable to place their “snipe” bids? Or do they cancel the sale and end up with defects from unhappy buyers that can result in the loss of Top Rated Seller fee discounts and even risk the possibility of suspensions or seller limits?

Moore told EcommerceBytes on Friday afternoon that eBay was planning to email sellers who were impacted by the issue and offer some protections. But due to eBay requirements that sellers fulfill their orders quickly, it’s possible the promise of protections may have come too late for some sellers.

For example, on this thread, sellers said they feared the consequences if they didn’t follow through on sales.

At 2:30 pm ET on Friday, a seller who had 100 1-cent auctions ending in the middle of the technical outages wrote that they did not feel comfortable cancelling that number of transactions, fearing the wrath of angry buyers, “so I’m just going to eat the loss and move on with my life. Must be nice to be able to demand increasing perfection from your sellers yet remain free to cost sellers this much $$$ without taking responsibility.”

The seller estimated he lost $1500-$2000 due to the issue. “I’d think a company like eBay would auto-extend auctions to prevent something like this happening to their sellers.”

A post from a buyer on the same thread also describes just how costly the problem was for sellers:

“Hi. I’m not a seller, but I was not able to bid on three things that ended in the span of two hours. They all wound up selling really cheap too. A textbook that I needed worth over $100 sold for $1.25, some designer pants worth $200 sold for $3.75, and a bulk lot sold for like $0.01! I called the business of one of the places and they said that unless eBay does something that retracts the winning bid and re-lists it, they themselves cannot cancel. That is very bad news for buyers, but even worse for sellers.”

eBay did a poor job of communicating with sellers during the power outage, as we documented on the AuctionBytes Blog.

Some sellers said they would have expected PayPal and eBay to have had built-in redundancies that would have made the kind of outage the two companies experienced on Thursday unlikely, and some wondered if the two companies might have been under attack or have been breached.

Compounding problems was the fact that users were unable to reach eBay customer service during the 2 – 3 hour period, according to posts on Twitter and industry boards.

eBay’s Ryan Moore confirmed that the power outage at eBay’s data center caused the customer service outage too, writing in response to our question, “Yes, it did temporarily impact certain CS tools.”

And why were both eBay and PayPal experiencing a power outage at a data center at the same exact time?

Moore said, “Following our corporate separation in July 2015, eBay and PayPal continue to share the physical facility that houses our data centers for a period of transition. PayPal was affected by the same power outage that affected eBay. We do not share data bases as a part of this agreement.”

As for PayPal, it declined to answer our questions, instead supplying us with the following statement:

“Following a temporary service interruption customers can once again pay with PayPal. This interruption was caused by a data center power outage, which we have addressed. We apologize for any inconvenience this may have caused. As always we are committed to giving our customers around the world trusted and reliable ways to manage and move their money.”

Etsy relies heavily on PayPal for payment processing. It kept its users apprised of the problem on its status board. By 10:51 pm ET, it decided to disable the use of PayPal on its website, and it resumed the service at 12:42 am ET on Friday morning.

Fortune took note of the scale of the outage at the payments firm, writing: “The economic impact of a PayPal outage is actually significant for the company’s 173 million users. PayPal processed $235 billion in payment volume in 2014, or $644 million per day on average. For four hours, that would equal $103 million in payments. While these are estimates, that’s a large loss for merchants.”

That article didn’t mention that the same power outage impacted eBay, nor did it address its impact on eBay and sellers’ bottom lines.

Moore said eBay would automatically credit all associated fees for listings that were scheduled to end on Thursday, October 29 between 6:45 PM PT through 9:00 PM PT. The fee credits will apply to the following:

  • Auction-style listings that ended within this window of time (except those that sold for a Buy It Now price).
  • Fixed price listings that ended within this window of time without a sale (with the exception of 30-day and Good ‘Til Cancelled listings).

A seller who received an email from eBay was unclear how to take advantage of the protections, specifically the part of the email that stated, “Any transaction you cancel because of this event will not impact your seller performance rating.” Writing on the eBay discussion board, he said, “Based on the email from eBay below I am wondering if I can cancel this transaction without the winning bidders approval. I am wondering if anyone else has canceled transactions due to this power outage.”

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Ina Steiner
Ina Steiner
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). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.