Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sat Aug 18 2018 14:23:25

An Insider Dishes the Dirt on eBay Valet

By: Ina Steiner

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Eight years after the movie "40 Year Old Virgin" introduced the concept of independently-run eBay drop-off stores to the general public, former eBay CEO John Donahoe decided the company should start its own consignment program and launched eBay Valet in 2013. eBay hired two companies - ModusLink and Ingram Micro Logistics - to power the program, blindsiding its army of independent consignment businesses by discontinuing the Trading Assistants program that same year. 

A self-described former employee of one of the contractors operating eBay Valet reached out to EcommerceBytes this week to describe his experience and what he thinks of the now defunct program.

John (a pseudonym) said one of the biggest problems with the program was that people would send in worthless junk, hoping to get a few bucks in exchange. It was free to send items to eBay Valet and was risk-free. If it sold, it was easy money, and if it didn't sell, eBay would return the item. 

But for eBay, it cost money whether the item sold or not. eBay had to foot the incoming shipping bill - and the return shipping if the items were unsellable. One person sent in a 4-drawer filing cabinet, John noted with bemusement. "People freight shipped stuff in without asking," he said.

And manually processing all of the incoming items was time and labor intensive.

Employees at the contractor John worked rejected 50% of the items received from consumers "on a good day," he said. It could be as high as 80%, but the boxes still had to be opened and cataloged to make that determination. 

People sent in fakes, "flea market crap," and even some items he presumed came from hoarder houses - he saw boxes come in containing garbage - literally. 
Another big problem, according to John: the eBay contractor hired temps with little screening. The company tried to "stupid-proof" the process of dealing with the influx of eBay Valet items. One person would open a box and document it (always in view of a video camera). One person would write a title. Another person would write a description and item specifics. Another person would take pictures of the item. Someone would then QA the listing before storing the item in the warehouse. If the item sold, one person would pick it from the warehouse shelves, another would pack it. And if it didn't sell, back it would go to the consumer who had sent it.

John believes that even if they had been able to sell 100% of the goods at 100% of the asking price, it still wouldn't cover the cost of labor and overhead costs. He said (in less polite terms) that he couldn't understand why eBay kept the program going so long given its unprofitability. 

Before settling on eBay Valet with an official launch in 2014, eBay had run several pilot programs to test the consignment model. In May of 2013, we spoke to a user who was selling on consignment as an independent seller under the eBay Trading Assistant. She participated in eBay's "Selling Assistant" pilot program that year and detailed the many challenges of the program she had encountered before ending her participation, which you can read about in this article.

John stopped working for the contractor in 2016, the same year eBay launched a drop-off component to eBay Valet, leveraging the over 1,600 FedEx Office retail locations in the US.

The program lasted another year until eBay shut it down earlier this year, 2018. But it didn't quite die,...eBay is now using one of the eBay Valet contractors to run its eBay Authenticate program under the direction of some of the same eBay managers who had worked on the eBay Valet program.

eBay Authenticate is the marketplace's latest attempt to offer a consignment service, this time, focusing on high-end goods, starting with luxury handbags, though it has come under criticism by some handbag aficionados who are skeptical about its ability to spot fakes, including a report from a reader that came in as we were working on this story. 

When eBay started the program, it said it would use a "network of professional authenticators." Today, eBay describes them as "independent experts, including authenticators and sellers." 

You can find eBay Authenticate items listed for sale on the EastvaleLuxe eBay Store, run by Ingram Micro Commerce's Eastvale Store LLC unit - one of contractors that had operated eBay Valet.



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Readers Comments

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by: eBay Shill Buster This user has validated their user name.

Sat Aug 18 14:38:54 2018

eBay is nothing but institutionalized ineptitude with fraudulent pie in the sky platforms and facades for their Wall Street promises, they never work, but they have worked at destroying the once great core marketplace itself.

You can never find success with programs built upon lies, fraud and delusion, this is what Donahoe and Devin specialize in, all lawyers are professional liars by trade.

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by: extremetm This user has validated their user name.

Sat Aug 18 15:29:35 2018

Hey, in all fairness, ebay has only had 23 years to get things right. Be patient, they'll get there.

When the product based shopping scheme is fully rolled out, watch in awe how fast sellers race to join in the anonymous abyss of Chinese salmagundi and related mishmash.

Today - ebay is striving for a leaner and meaner Amazon

Tomorrow - epic fail

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by: lancecorp This user has validated their user name.

Sat Aug 18 15:30:24 2018

Please - it's been around for 20 yrs. Back in the day - the boards crucified Meg and now they act like she did everything perfect. There are plenty of other platforms to sell on. Why not take your anger and put it into one of these other venues and sell something there is Ebay is so bad.

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This user has validated their user name. by: The End

Sat Aug 18 15:36:00 2018

PIERRE O. WHERE ARE YOU ? ! ? ! ?

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by: ebayout This user has validated their user name.

Sat Aug 18 16:24:15 2018

The words of my old boss from 50 years ago still ring in my head:

"If you can't find time to do it right the 1st time...
...how can you find time (and nowadays the money) to do it OVER?"

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by: comments This user has validated their user name.

Sat Aug 18 16:26:44 2018

So basically ebay couldn't meet its own standards or run a profitable business? Just to think they didn't even have to buy inventory, only choose what was worth listing.

Selling on ebay is hard work for anyone and that is exactly why ebay should appreciate its sellers more then it does.

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by: comments This user has validated their user name.

Sat Aug 18 16:35:14 2018

@lancecorp

Meg's ebay was the greatest company in the world before JD came and destroyed it. Sell thru rate was nearly 100% and many auctions gave everyone a chance at a great deal. I used to buy absolutely everything on ebay. Service was way better back then too. Today only the knockoff and junk sellers are left. The premium products are now all priced off the site leaving just amazon/walmart/sams drop ships. Nothing unique or premium is not way over priced. The only thing that is actually better today is that they have customer service rather then the " instant message chat with an indian" they had back then. The only growth ebay has shown since 2008 is thanks to fee increases and not innovation.

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This user has validated their user name. by: Rexford

Sat Aug 18 17:10:36 2018

"Why not take your anger and put it into one of these other venues and sell something there is Ebay is so bad."

It is so bad, and that is actually what we have done.  Other venues are pretty much stress free and with minimal returns and without the "high maintenance" buyers and thieves that eBay created.  

You actually can turn your anger into profit.

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by: extremetm This user has validated their user name.

Sat Aug 18 17:24:31 2018

"Please - it's been around for 20 yrs."

My bad. Even the best of companies haven't found their identity in that short period of time. Please is right. 20 years is nothing. Apologies for the timeline error.

"Why not take your anger and put it into one of these other venues and sell something there is Ebay is so bad."

The question really should be 'who hasn't left for other venues' because ebay is in fact 'so bad.'

ebay and the executive branch are a collective cess pool of backward thinking, stale copy-cats who haven't had an original thought since 1998 and who have been launching a continuous assault on small sellers for over a decade all the while trying to reinvent themselves on the backs of other companies.

This latest round of changesglitchesmoney grabsassaults will have crossed the line for even their biggest cheerleaders.  

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This user has validated their user name. by: Number 6

Sat Aug 18 17:34:40 2018

eBay Shill Buster

"...all lawyers are professional liars by trade."

Yep, but as Willy the Shake suggested in Henry VI, Part 2, Act IV, Scene 2; "The first thing we do, let's kill all the lawyers", it seems lawyers are with us to stay now.

And they all run companies like eBay.





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This user has validated their user name. by: iBuyers

Sat Aug 18 18:48:18 2018

This was also a facade for eBays self purchasing program used to auto purchase underpriced hot BIN items before the general public could.

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This user has validated their user name. by: RKTOYS

Sat Aug 18 19:22:42 2018

Eh, bad as eBay is, and it really has gotten bad, it still has orders of magnitude more traffic for toys than any of the also-rans.  The real issue is how unbelievably cheap the market has become.  When nobody will pay retail price for anything (forget MSRP), it's mathematically impossible to turn a profit at the wholesale prices being offered, even if the hefty commission fees were slashed.  Almost all of them have the same stupid pitch -  "stop paying eBay's high fees!  pay our equally high fees instead!"  (I know, I know, eCrater, not worth the effort for what I sell/sold)

The way to make it selling toys on any of these venues is to be one of those vultures that feed on failed businesses, scooping up their inventory for pennies on the dollar (AKA "we pay TOP DOLLAR for your stuff!1one").  Well I would rather be out of business than a vulture making embarrassing offers to folks in dire straits.

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by: oldcoins This user has validated their user name.

Sun Aug 19 00:42:12 2018

@RYTOYS.

What a great post, spot on.
We can all pine for the golden years of eBay selling, but for many, they are gone, for all sorts of reasons.
I have sold on eBay since 1999 and the best time was 2000 to 2010.
After that, a steady decline, not just because of all the changes to eBay, but many other factors as well, including:
1) The effect of the GFC in 2008
2) Vastly increased competition, both in selling and particularly, in TRYING TO BUY stock at a price you can make a reasonable profit on.

The trick as a seller, is to be able to buy stuff that people WANT TO BUY at a price you can secure a decent profit. That has got a lot harder as more and more people use the internet and compete. It has driven the selling price down so much for many items that it becomes more difficult to buy them for less and sell them for more.

So much hatred towards eBay on this site. Some of it is warranted, but really, the decline of eBay from a sellers point of view was inevitable, they are a victim of their own success. Look at the increase in competition from other sites since 2005. Look at the increase of information available on prices of things now, most people use the internet and this information is available to them with a basic search.

The modern versions of eBay and Amazon are really becoming a form of corporate gig economy slave labour, sellers becoming the expendable slaves of these huge corporations.

This is why for virtually any selling business, a well stocked website of your own is essential, if you wish to have any form of independence from the corporate machine.
I still sell on eBay (1300 items listed) and have my own website and would list stuff on eBay in a heartbeat, if I thought it was a good chance to sell at a reasonable profit.

It is the art of finding the right stock at the right price that is the key for sellers and that has got a lot, lot harder in recent years, particularly in collectables.

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by: Snapped This user has validated their user name.

Sun Aug 19 04:24:25 2018

"...blindsiding its army of independent consignment businesses by discontinuing the Trading Assistants program..."

"...2016, the same year eBay launched a drop-off component to eBay Valet,..."

"We partner, but do not compete with, our sellers to enable their success on eBay’s platforms."
- eBay SEC FY2016 Form 10K, Part 1, Item1, Business Model and Pricing paragraph 1, pg. 5





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This user has validated their user name. by: RKTOYS

Sun Aug 19 04:30:43 2018

Just as one example, take the very popular Marvel Legends line.  They've sold for $19.99 most places and $18.84 at Walmart since 2014.  Hasbro, in that time, has raised MSRP from $19.99 to $24.99 and wholesale from $14 to $18 (plus another buck to ship).  If you could get non-Walmart retail, $1 is about a 5% margin.  That won't even cut it on eCrater.

That's a big IF too.  It's an incredible line of figures on many fronts but I frequently read collectors say they're only worth $10 and they won't pay a cent over $15 for all but the hottest ones.  There's a show I do just over the border in NJ where dealers can't move even the store exclusives, where you'd have to buy from said store(s) and pay sales tax, for what it costs to get them.  Yet "scalpers" are to blame for supply problems.  Who the hell is scalping anything that you can't even get your money back on?

And this is a popular line.  The DC equivalents are radioactive in comparison.

Needless to say, I haven't made a distributor order since about the middle of 2016.  There was just nothing that I could get enough margin on, in any volume, to pay the fees at eBay or, before their robbery attempt, Amazon.  Just as every marketplace wants about 15%, every distributor I would open an account with tops out below 10% these days.  Retailer discounts (sales, coupons, clearances, etc) beat anything the distributors offer.

And that's not even taking into account any of the other issues (late delivery, non-delivery, surprise product/assortment changes, etc) that have become epidemics in their own right.  I had never seen so many supply chain problems in all of the years leading up to the 2008 bankster crash as I've seen in the decade following it.

Being told "get your stuff cheaper" is almost insulting.  I would have if I could have!  Aside from my distaste at needing somebody else to fail for me to succeed, I don't see picking at the carcasses of competitors as plausible for keeping current.  The vultures attempting to pick at my carcass certainly aren't getting fresh product.

On a macro scale, I think what's happening is that Chinese labor isn't so cheap anymore and the middlemen (such as Hasbro, distributors, and Walmart) that grew fat on the wide disparity won't budge on the largesse they feel entitled to even as the disparity the provided it starts to buckle.  They can keep hopping all over the globe for cheaper slaves and cutting budgets for everything else but at some point there has to be a realization that they're starving out their own customers.

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This user has validated their user name. by: RKTOYS

Sun Aug 19 05:00:35 2018

As it relates to eBay valet...I think the situation there is that it was non-viable and they _knew_ it was non-viable.  They kept up the charade as long as there were new suckers signing up to replace the old suckers that went under.  It's alot like rent in this area that just keeps going up with no correlation to the success or failure of the businesses paying said rent.  That's a very prolific business model these days.  That's what all of the add-ons these venues pitch are - from sponsored listings to fulfillment services - empty promises paid for upfront that disappear when you go to collect on them.

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by: ThebigR This user has validated their user name.

Sun Aug 19 05:30:15 2018

Funny how ebays valet still has items listed. They used to do everything auction format now in auction format is a couple dollar water bottles the rest is all fixed price merchandise. They never returned the majority of unsold items and now they are collecting on the merchandise they never owned to begin with...

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This user has validated their user name. by: FidoMaster
Web Site

Sun Aug 19 07:29:06 2018

Makes one wonder who greenlights these recycled failed projects at eBay and what type of vetting/approval pipeline do these things go through.

HBR should write an article on the abject failures of Wenig's initiatives.

Ebay seems to not learn from it's mistakes, and like many organizations (again like eBay) that outsource their customer service without a finely-tuned machine and model upon which to base training, policies and procedures on, rehashing a poorly executed consignment program and outsourcing it and introducing new layers of inefficiencies and costs while reintermediating non-value-added services is a clear recipe for failure.

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This user has validated their user name. by: Number 6

Sun Aug 19 10:18:54 2018

RKTOYS

Your comments on MSRP etc. are enlightening, and it is the same in the music retail environment - and 'no returns' to distributors now, not even for defects.  You have to eat them, having paid near-selling price for the privilege of stocking it.  

Manufacturers, in league with the likes of Amazon in particular (eBay's clearly a dying tree, and even eating all its sellers alive isn't going to save it now), they all have it their own way now, dictating dealer and retail prices - they probably only want a few large box stores/online sellers selling their wares at near full-price (in your world they must be really annoyed Toys R Us has gone).

Amazon is the big evil in this respect, because having grown off the backs of third party sellers it has started gating who can sell what on its site, used or new, in areas as lowly as DVDs as well - so you can't even list a used DVD box set you bought new from Amazon to make some money back on it now (perhaps to buy another set to watch, then resell - they offer 'trade-in' which is the most pathetic sum you can imagine, another abuse of monopoly of course, so...guess what...we don't buy them anymore on Amazon - sod 'em, don't 'have' to buy any of these things so just go without) - you have to be an 'authorised' seller of most of these items - which means new with receipts from distributors...to sell at a price you don't, as you point out, even make enough to pay their fees on, let alone a profit for yourself.  Only Wal Mart and the like can make a profit of sorts on 5% margins, even then, the costs of selling something for 5% profit is probably higher than the net in reality.  I mean, how much is the store rent per square foot/heating/air con/lighting/staff, etc for a 20 foot aisle of toy boxes which gross 5% profit?  Way more I am sure.

So much for 'Free Enterprise' in the 21st Century - Corporate controlled racketeering, more like.

Which is where the joke comes in, if you sell on Amazon or eBay, you should sell at less than cost, but make it up in volume.

I fear the small seller online days selling on the likes of ebay, Amazon and so on, are fast disappearing, unless you can specialise in rarer/antique/unusual one-off items, but that's harder to do and find than ever before.

The other issue, I think, has nothing much to do with Amazon or eBay, and that is the cheap mass production of all things in recent decades has flooded the marketplace with more than enough inventory to last for a long time, and no one wants it that much - too many music releases, too many DVDs, too many toys, too much of everything no one has to buy or really wants enough - I guess if you have the latest iPhoney, a streaming service and so on, there's no need or desire to collect or own much anymore.

...If only they'd over-produced useful stuff instead, then things like organic and other quality foods would be cheaper and more affordable...




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This user has validated their user name. by: CanBrit

Sun Aug 19 13:15:44 2018

There are thousands of consignment style businesses out there. Proven to be viable back before there were even platforms. I bought most of my business clothes at them. There are some big names and seem to be doing very well these days.

Go figure, even in that area, Wenig sees easy $$ and ultimately destroys it. Has he ever had a success? Don't think so.

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