eBay reportedly admitted to throttling sales of certain sellers beginning in April, according to a company in Israel. SaleFreaks, which provides software to help eBay sellers source goods from other marketplaces, claims eBay deliberately set out to throttle sales of certain types of companies in Best Match search, which resulted in a decline in sales for those sellers, though it isn't clear how SaleFreaks made that determination.
SaleFreaks claims that after being unsuccessful in talks with eBay about problems its clients were having, it joined with large clients to initiate a legal case against eBay and met with the company before an Israeli judge on May 10th.
In a post on Facebook
, SaleFreaks CEO Adi Reiss wrote, "EBay admitted that they indeed manipulated the "best match" search results against "dropshippers" relative to sellers not "dropshipping" from online sites in order to "preserve eBay's integrity" and "protect purchasers."
It also wrote, "Ebay's lawyer focused their argument on "dropshipping" practices that are problematic such as, manipulations of seller metrics in their favour such as falsely using the "cancellation at the buyer's request" option and "frustrated buyers" who bought items at too high a price. He also called dropshippers "crooks"."
We reached out to eBay on Friday to ask about the allegations. It has not responded.
If you aren't familiar with SaleFreaks, you might wonder why eBay would penalize "drop shippers," but its sellers aren't using the traditional drop-ship model. The company caters to sellers who copy listings from sites like Amazon and post them to eBay at higher prices - on the SaleFreaks home page, it calls its service an "all-in-one retail online Amazon to eBay arbitrage tool."
In the US, eBay has given its blessing to drop-shipping practices. But it describes the *traditional* drop shipping method, not *arbitrage* drop shipping: "Drop shipping is typically used by sellers who buy stock in bulk from their supplier. After the seller receives an eBay order, they work with the supplier to have the item sent directly to the buyer," eBay writes.
In 2012, EcommerceBytes reported
on the practice of Amazon eBay arbitrage. We purchased a sampling of items from one seller to learn more about the arbitrage model; we found the prices of the items we ordered were between 15% and 37% higher on eBay than on Amazon.com, which included free 2-day shipping to the eBay buyer. Another appeal to arbitrage sellers: little risk and virtually no upfront costs since they don't procure inventory, nor must they store inventory or ship orders themselves.
Since then, the process has become far more easy thanks to automated software. Paul J Lipsky, who runs webinars about "eBay drop shipping," published a video
where he explains the concept and walks viewers through the process with live examples from a software program he uses.
Regular sellers may be astounded as he demonstrates how easy it is to copy an entire Amazon product offer to eBay - including title, description, images, and product attributes - directly into his eBay Store. And when the item sells, he has the software automatically order it from Amazon, providing Amazon with the eBay buyer's shipping address.
In November, a seller who lists unique items on both Amazon and eBay complained about the practice of sellers who use eBay drop-shipping software to copy his items from Amazon and mark them up at higher prices on eBay without his permission. "Ebay support tells me it is an acceptable ecommerce selling method. Ebay won't remove the listings even though they clearly violate the listing policy using images and text without consent. Vero program is not removing them."
He said the practice makes him appear as though he is "scamming my own customers," and notes that eBay buyers who receive such an order via Amazon will receive a packing slip showing the lower Amazon price.
eBay drop shipping aside, the idea of eBay "throttling" the sales of some sellers sounds egregious. However, many marketplaces and search engine companies employ algorithms that use various factors to determine the default sort order of search results.
In its User Agreement under "Listing Conditions
," eBay states that the appearance or placement of listings in search and browse results will depend on a variety of factors. Included in its list of criteria: "seller's history, including listing practices, Detailed Seller Ratings, eBay policy compliance, Feedback, and defect rate."
eBay doesn't even have to show your listing at all, according to the following provision in its User Agreement: "To drive a positive user experience, a listing may not appear in some search and browse results regardless of the sort order chosen by the buyer."
There's plenty to digest in this post, including the issue of eBay search throttling; the practice of "Amazon to eBay arbitrage"; the practice of wholesale copying other sellers' listings; and of course the quality of the buyer experience. And some sellers may wonder if they were inadvertently caught in the net of eBay's alleged crackdown.
The battle of wits between marketplaces, sellers, and those seeking to exploit systems for easy gain is likely to increase, especially as artificial intelligence, machine learning, and behavioral targeting technologies become more accessible.