eBay: Friend or Foe - Part 1
Nick Ross, Alex Kidman, Zara Baxter, Stuart Turton, Drew Turney
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Mar 26, 2008 11:16 AM
How did a vibrant palace of bargains and trust turn into a standoff between buyers and sellers? Part one of our major feature.
It used to be that eBay was the darling of the dotcoms, banking on odd auctions and a great concept. eBay's unique feedback system, the opportunities to grab astounding bargains and the excitement of watching bids escalate made eBay different from all the other buying and selling going on. Of the big dotcoms, Amazon was offering goods for sale, but eBay offered the world’s sellers at your fingertips. eBay capitalised, acquiring PayPal and Skype, among other website purchases.
But ten years later, online shopping is slick and simple, and eBay is now looking a little ordinary. It looks more like the marketplace it wants to be. Buying from stores, rather than going through the bidding process, using "buy it now", gives a sinking feeling that there are no bargains left to be had. That feeling is heightened by the overall importance of shopping rather than bidding. There are more and more brand-name retailers and ordinary businesses using eBay as a shop front. Auctions are now 60% of eBay transactions, down from 80% just a couple of years ago.
Buying with PayPal now seems almost mandatory these days and even the ACCC recommends documenting each step of the purchase process to help avoid scams and counterfeits. Something is broken.
Recent changes mean that even the vital trust engendered by the feedback system now resembles an average shop: to the outside observer watching eBay, the customer is always right. Sellers are unhappy and buyers aren’t coming back as frequently as they used to, as our reader's letters illustrate. Does eBay have a plan to retain buyers and provide an experience to set it apart from online retailers or has it lost its way?
In a recent article in Fast Company magazine, eBay CEO Meg Whitman claimed that the site's biggest problem was that it was too big, with too much on sale and that it was too difficult to find what you wanted – a victim of its own brilliance.
This conflicted almost entirely with what we've been hearing from our readers over the years and so we teamed up with Today Tonight to find out what their viewers and our readers thought. We sifted through viewers' and readers' experiences with eBay, both positive and negative to identify what you think the problems are. As with most other companies, continued good experiences keep people coming back, but many people only need one bad experience to sour their views of eBay for good.
Here are just a few of the many responses, we’ve received, selected to illustrate the experiences we’ve heard again and again.
Bad feedback
Marc Carter bought a ‘buy it now’ scooter from an eBay store for his daughter’s birthday, after he was unable to find it in retailers. Despite assurances from the store, his daughter’s birthday came and went with no scooter. The company didn’t respond to emails until a couple of weeks later; Marc was finally given a full refund.
But it didn’t end there; Marc got an invoice saying he hadn’t paid for the scooter, then increasingly irate emails chasing payment, and finally, a complaint from eBay saying that he hadn’t paid for the goods. “I filled out the forms saying what had happened, and eBay said it was resolved. Then – the icing on the cake – I got negative feedback and a complaint as a non-payer,” says Marc, “As it was done as a complaint I had no right to reply and leave feedback myself!” The ongoing problems meant that Marc's bids were cancelled by sellers when he tried to buy Christmas presents on eBay.
Marc says he could register a new account but can’t be bothered: "eBay has had its day and is now so full of scams and bad sellers that it will drown in its own mess, and good riddance."
Mickey Mouse Tickets
Jodi Hansen purchased Mickey’s Toon Town Madness tickets for Disneyland on eBay prior to flying to the US in November 2007. “The tickets were from a seller in the US and I knew that they wouldn’t arrive in time, so I asked for them to be sent to a friend in the US,” says Jodi.
“With 2 weeks to go until to my Disneyland visit, I discovered that my friend had refused an unidentified parcel that did not cover the correct postage,” Jodi told us, “The post office told him it was a parcel and he was expecting my tickets to be a simple letter." Jodi had to take a one hour bus ride out from her holiday so that she could get online and contact the seller. The seller reposted the tickets to the Disneyland Hotel where Jodi and her family would be staying.
“We arrived at Disneyland to find the tickets still had not arrived. Finally, we had only one day left to use the tickets, and still no sign of them. I was disappointed and felt annoyed at myself for having spent $60 on nothing.”
As luck would have it, Jodi was offered three tickets to Mickey’s Toon Town Madness by someone who was going home early the next morning. “It was amazing that the very thing that I had purchased and not received actually ended up coming my way in the end. We had a great time at Toon Town, and wouldn’t you know it, the eBay tickets arrived that day, too late to use.”
Wholesale prices
Rob Kettle contacted us to let us know about scammers, “I can’t remember the last time I listed an electrical item and didn’t get contacted multiple times per item from fake scammers wanting to sell me electrical goods at supposed ‘wholesale’ prices.”
Rob has also found that as a seller, eBay’s ability to suspend users accounts instantaneously has been a problem. “I’ve had a couple of buyers win an auction, then find that eBay has suspended their account,” he told us. Unsure what to do, his emails to eBay asking if he could receive payment and send the item out received no response. It left Rob in limbo: “All I could do was just wait and see whether the users account became active again. Luckily both users become active and they honoured the sale by sending payment.”
Police to the rescue
Steve Rackley purchased a laptop on eBay and paid by direct deposit. When he found himself at the receiving end of a scam, he was fortunate to have the seller's home phone number, mobile number and a home address, which the seller had included in his bank details for payment. After establishing that the numbers belonged to the seller, Steve reported it to the Queensland Police. The case went to court, where Steve won a refund while the scammer ended up paying thousands. But that left Steve in a different kind of dilemma. He had been refunded by eBay, and by the scammer, and now wanted to pay eBay back: “It took months for eBay to answer emails to give me a way to send them a cheque made out by his lawyers.”
No phone
“I used to buy eBay items all the time, until I won a massager that didn’t work for $1,” reported one anonymous respondent. The dud massager wasn’t as much of a problem as the other aspects of the deal, though: “The postage was $18 even though the seller only lived a few kilometers from me.” When our reader tried to contact eBay with complaints, he again ran into problems.“It would take a week for them to get back to me and every time I would get an email from someone different, and I would have to explain all over again, and eBay won't let you phone them. I was like a dog chasing a tail.” It was enough to turn him off buying from auction sites altogether.
No dummy
Brenda Knapsley told us of her experience with dummy bidding and how grateful she is that eBay deals with shill bidding quickly. “Once we were bidding on a mobile phone and it was at a really low price. It went up to a fairly high price – just above the highest price we were willing to pay,” says Brenda.
That might have been the end of it, but the seller removed the highest bid, dropping the bidding down to the inital low price. “The seller emailed us, telling us that when she removed the bidder it was meant to go to the next highest bid, not remove all bids. She expected us to pay the highest price,”
But Brenda had seen dummy bidding before – in this case, the seller had persuaded a friend to bid, not realising that removing a bidder would drop the price all the way down. Brenda forwarded the sellers details to eBay and the seller and dummy bidder were both deregistered within 24 hours.
A nice surprise
We also had some heartwarmingly positive feedback about eBay. “I bid on a Diablo steering Wheel/pedals for a PlayStation, and won the item at surprisingly low cost,” Terry Cain told PC Authority. But it was an even better deal than he realised. “When I was unpacking the parcel, I noticed the postage franking and cost involved ($36 from Moree to Darwin),” Terry told us, “I paid less than $36 for it!” Terry felt bad and did the right thing, offering the seller compensation, but the seller declined: “No thanks, I am treating that one as a learning exercise.”
Another case of generosity from sellers came from David Stemberger. “We have an old Nintendo 64 and ours packed up,” David says. “My 4yr old was so upset that my wife went hunting and found heaps on eBay.” Not only did they end up with three good deals, but one seller gave them a portion of their payment as a refund because the postage was cheaper than expected.
Our scorecard
From what we've seen, it's clear that users don't discriminate between the auction house and the seller. Good and bad transactions will often be blamed on eBay itself. It's also clear that eBay's unresponsiveness to communications – except for sending form responses – is a real bugbear, and few people feel they have recourse if treated unfairly by a summarily short eBay judgement.
From the feedback we've received, we know that many users, like Jodi Hansen, don't even consider trying to get a refund when things go wrong – they just give up. Others, like Rob Kettle, know enough to avoid scammers, but can't find help when they need it. Steve Rackley's case takes the problems to an extreme – even when you want to give eBay money, they're hard to get hold of.
But even when eBay does communicate, it's no panacea. In Marc's case it just compounded miscommunication with a store, leaving him no recourse to fix his reputation. It's hard to imagine how it's acceptable to be blacklisted by one store just because another store delivers late.
Our scorecard - (continued)
However, if a problem involves shill bidding, as with Brenda Knapsley, it's more likely to be fixed very quickly.
Once the police are involved, it's possible to obtain information that can lead to satisfactory resolutions in cases of fraud, but police resources are limited. The Queensland police have a special department to handle online fraud, and their site is a great starting point to walk you through reporting it if you've been the victim of a scam.
Your experiences with eBay cover the gamut from typical fair trading issues to retaliatory feedback problems. It's worth pointing out that we didn't receive one complaint regarding how difficult it was to find what they were looking for on eBay. PC Authority's research, and long term experience, tells us that the overriding reason people are put off eBay is because they feel honest people are being ripped off by scammers associated with the site and feel eBay offers sub-standard customer service. Winning buyers and sellers back to the site will mean taking a good look at the real problems.How did it get so bad?
How a tiny startup became the giant marketplace of today and what it's doing to keep everyone happy.
eBay started when a California-based, French/Iranian-born programmer wanted to sell his girlfriend’s broken desktop printer online. Just over a decade later it’s a behemoth that turned over more than $59bn worth of goods in 2007. In the last quarter it made $1.5bn: more than Apple, Amazon and Nike combined.
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| Humble beginnings: eBay started as a tiny site called Auctionweb in 1995. |
The total number of active users – those who have made a purchase or sale in the last 12 months – is more than the population of the UK and Australia combined.
eBay is now historical lore, its name synonymous with online auctions and massive turnover. No wonder every move the company makes is scrutinised by everyone from stock markets to the 276,000,000 eBay users worldwide – almost the population of the US.
But few observers predicted it would become a global economy. According to the World Bank, its annual turnover rivals countries in the world's top 60 – it's on a par with Vietnam's GDP. eBay is also a huge employer in itself, with 52,700 people in Australia alone using it as either a primary or secondary source of income.
That means every small tweak in eBay's interface, pricing or product placement affects millions of people. It's no wonder every change eBay makes provokes fury from vast numbers of disgruntled users and is covered across the media.
More than just an auction house
eBay’s Wikipedia entry lists over 20 major acquisitions. Many were competitors, but two in particular grabbed the headlines. In what now looks like a bargain (it didn't then) eBay paid US$1.5bn in stock for Paypal in July 2002. eBay is now doing its darnedest to become the world's number one online payment system, acting as a middleman between consumers, banks and credit providers. eBay Australia spokesman Daniel Feiler considers bank deposits ‘not the safest option’, citing payment dispute issues as a reason to use Paypal instead.
Spin to push eBay’s own system? Perhaps, but Paypal was immensely popular with eBay buyers and sellers before eBay bought it and bringing the dedicated online payments system in-house was a natural fit. While not pervasive enough to pose a threat to credit card companies, Paypal is still their biggest competitor online.
eBay's US$2.6bn purchase of VOIP provider Skype in September 2005 made less sense. There’s a possible place for real-time VoIP bidding in the future, but despite eBay's CEO Meg Whitman saying that Skype would form part of an "unparalleled e-commerce and communications engine" that would "create an extraordinarily powerful environment for business on the net", so far eBay hasn’t done anything much with Skype except own it, and questions linger about the idea’s merit.
Neighbourhood watch
eBay’s lynchpin has always been the self-policing feedback system. Unlike real-world selling, buyers and sellers have the power to see each other coming and adjust their conduct based on a person’s buying and selling history. eBay has worked to improve the feedback system, introducing detailed seller ratings that allow buyers to check out post costs, star ratings and feedback before purchasing.
Like YouTube, eBay provides the delivery platform but claims little responsibility for the content. Perhaps wary of the legal landscape after Napster vs Dow Jones, where it was deemed that an aggregating system could be held liable for the content, eiler says eBay’s always willing to step in.
“It’s a great place to buy and sell anything, but that doesn’t mean everything,” he says. “We have strict listing policies in line with the law.”
It’s one of eBay’s biggest hurdles: where’s the line between managing the content and being town sheriff, judge, jury, executioner and fair trading authority? As one Power Seller (a term given to highly-rated, regular sellers) says, “the biggest problem with new users is that they consider eBay to be the shop, and it isn’t. It hosts the shops”.
The feedback system runs smoothly for the most part, our seller reporting that ‘9 out of 10’ transactions go through with no problems. But given that there are some six million transactions a day, even a fraction of a percentage of problems leaves a lot of unhappy people. It also requires a great deal of customer support, and eBay's refusal to take much of the responsiblity for this has driven many people away.
The beginning of the end?
With this in mind, it might be hard to understand eBay's next step. Research by the company indicated that ‘retaliatory’ feedback by sellers was rife and discouraged buyers from coming back. Consequently, in May eBay will remove the ability to leave neutral or negative feedback for buyers in an effort to encourage more buying: a move that has sellers up in arms.
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| It wasn't until 1997 that eBay transitioned from its original style to the logo and layout recognisable today. |
“At the moment, a seller has a good idea of a buyer’s intentions by their feedback,” said our Power Seller. Feiler asserts such protection still exists by reporting the buyer to eBay’s in-built arbitration process. He points out that sellers can also choose to simply not leave any positive feedback, or relate their negative experience in the comments section of feedback areas.
“Leaving positive feedback and a horror story in the comments is ridiculous,” the Power Seller responded. “Big sellers use buyer feedback as a tool to expedite action. If a buyer has good feedback, we know to give them the benefit of the doubt and try to settle a dispute decently. If they have bad feedback, we know we’ve probably been scammed and can act accordingly rather than waste more time.”
To many sellers, the feedback issue sounds uncomfortably like the digital equivalent of ethnic cleansing, purging eBay of as many bad buying experiences as possible to make it look better.
Incoming CEO John Donahue, who takes over from Meg Whitman in March, said in November 2006 that the business is “recasting the site to focus on buyers, not sellers”.
To stem the tide of buyers trying eBay once and not returning, eBay has made bidding and buying more compelling. One way is to minimise the technical learning curve that’s still difficult for new Internet users. Another is to present a glowing front of happy buyers and efficient sellers rather than a slipshod flea market full of squabbling.
Will it work?
The concern is that the changes will result in a facade of happiness that masks the real problems. eBay is barely addressing the problems we've gone in to on page 18 which crop up repeatedly. Pointedly, none of the complaints we received from our readers or Today Tonight made reference to any difficulties in site navigation or unfair seller feedback.
The people whose concerns eBay really seems to be addressing are the shareholders. Like the Laramie cigarette salesman said, 'we've annoyed so many of our old customers that now we need new customers to take their place'.
Strange eBay items
You may no longer be able to sell (or buy) a soul on eBay, but that doesn’t stop the site being host to some of the strangest classifieds in the business. You may remember the four boys from Balmain who auctioned their excellent companionship for an entire weekend to the highest bidder, but you might not know about the British woman who auctioned off her virginity.
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| You may not get a piece of toast with the face of the Virgin Mary but you could get Hello Kitty |
On any given day, a quick browse through eBay’s categories might include someone offering to get a tattoo of your choice on his neck (asking $5000 or more, there were no bids when we checked it) or a guide on how to become invisible, boasting that there's “No trouble. You’re either visible or invisible as you need & desire.”
And you’d be amazed at the hot trade in 80’s chocolate bar wrappers (chocolate fortunately not included. Even a Nutrigrain nugget shaped like ET found a buyer.
How about buying one of the last few remaining spell bags of a witch, left behind when she died 112 years ago? Only $9 each! With over 100 previous spell bag auctions from the seller, we’re left wondering quite how the witch had so many leftovers, and whether they might be past their “best before” date.
It’s not just items of dubious value; prank items are also common. Last year, John Howard’s residence Kirribilli House was put up for auction just before the election, and the Pasha Bulker, a tanker stranded off Newcastle, was also listed. Nothing is sacred to pranksters: New Zealand has been put up for auction. It reached $3000 before being yanked.
There are also several famously weird eBay sales. In 2007, a winning bid worth $3,001,501 earned the purchaser the rights to the actual window and frame from which Lee Harvey Oswald shot President John F Kennedy. Quite what they planned to do with it, we’d rather not know.
An online casino bought a grilled cheese sandwich which appeared to have the face of the Virgin Mary for $28,000, and followed that up with the purchase of a corn chip shaped like the Pope’s Mitre for $1209. The Pope appears to be popular – we’ve also seen Pope John Paul underwear, emblazoned with the former Pontiff’s image, which is presumably not approved by the Cathollic church.
Other odd items have included a ghost in a bottle, a slightly used live cockroach (don’t ask), underground missile bunkers, and the meaning of life (sold for $3.26).
eBay Stores
Drew Turney charts the rise of eBay stores and the problems that resulted.
In the early days, eBay comprised only individual auctions. When someone realised there were people selling enough to make a living, the company introduced eBay Stores, an online presence within the system where sellers could collect their items together and adopt a personality through welcome messages, design control and more.
eBay pushed shops hard, and the advantage for sellers was that visitors who came across their items in searches could then browse the rest of their wares. eBay included great deals on galleries, images and more, and by 2005 the number of stores was over 600,000.
For four years, eBay searches only located auctions; stores were a separate site. But in December 2005, eBay changed the search to call up results from stores as well as auctions. Stores had cheaper listing fees than for auctions, and soon outnumbered them. eBay store operators were cleaning up.
But eBay wasn’t. The stores inventory, although it made up 83% of eBay listings, was only generating 9% of sales revenue by March 2006. eBay rolled back the search changes in March and in August, it followed up by increasing store fees by an average of 6%. An estimated 7000 stores closed as a result.
Following the outcry by sellers, eBay reinstated store items in searches as part of the still-ongoing process of finding a balance everyone was happy with.
eBay stores became a great place to sell and buy niche products. But after that boom came the bust, eBay raised transaction fees again in March 2007, compounding the stores-in-search stumble.
The new feedback changes have sellers up in arms again, but there’s no doubt it’ll make life easier on buyers. eBay says the move is justified because the feedback system was being abused, US spokesman Usher Lieberman told Wired.com that the company had seen a “four-fold increase in unwarranted negative feedback left for buyers in a retaliatory way”.
It fits in perfectly with the new strategy to keep buyers coming back, but it is at the expense of sellers, who cite a buyer’s feedback record as their only line of defence anticipating a problematic transaction.
Two types of shops
There are thousands toiling away in their living rooms making a living on eBay, but plenty more operate dedicated premises, employ staff and run their eBay store like any other retail business.
Of those polled by PC Authority, there are generally two major kinds of eBay store owners. The first experimented with selling their old stuff, loved it, sought out more stuff to sell and found themselves with a business almost before they knew it. One of the respondents to this story – a librarian by training – is this type of seller. She began by selling her old clothes in 2002 and soon became full-time; in 2007 she shipped over 6000 units of specialist apparel, and had almost 10,000 positive feedback ratings.
The other common shopfront owner is an established real-world retailer, such as Roses Only or Peters of Kensington, who have found themselves, courtesy of eBay, with a sudden global market rather than a few surrounding suburbs. It's a retailer's dream come true. Niche products do well, as do goods like computer parts, where the look and feel of the product matters far less than whether it simply works.
The financial lowdown
The main visual distinction between hobbyists selling out of garden sheds and eBay shopfronts sourcing stock to sell on is down to feedback scores in the hundreds or thousands.
That lack of dictinction has twice seen eBay required to turn the earnings of scores of major sellers over to the Australian Tax Office, a measure agreed to by every user on sign-up.
And even though eBay is primarily an auction site, the stores aspect means that businesses using eBay as a shopfront have to abide by the same trading laws as regular retailers. The only catch is that buying at auction generally means you accept the product ‘as-is’, even from a retailer.
More problematic is the dispute process. When a serially bad seller is deregistered, all traces of their account and transactions are hidden from view, although eBay's Daniel Feiler told PC Authority that records are kept for account-keeping purposes. Even so, having no readily accessible record of the transaction or visible presence of the seller makes chasing money or goods difficult.
Advice from the ACCC is that a paper tail is crucial to make any sort of claim. It recommends screen shots or printouts to document transactions and correspondence, to use traceable payment methods and take advantage of escrow or insurance facilities if you can. With so much security effort required by both sides to ensure a good shopping experience, is it any wonder that people think twice?
eBay Alternatives
Like the iPod in the MP3 market eBay is not the only ecommerce web site, says Drew Turney.
Frank Bannnigan, the Australian founder of Kambrook, failed to patent the electric power board in 1972 and regretted it every time he walked into a department store selling hundreds of cheap knock-off brands.
Will eBay feel the same sting? A Google search for ‘online auctions’ returns thousands of non-eBay results. But why use anywhere else when eBay simply is online auctions?
In two words; fees and niches. First, fees at eBay have steadily climbed and driven many sellers away. Second, eBay tries to be all things to all people, while specialist auction and shop-search sites, for everything from musical instruments to houses, tailor to niche needs better. So how do the major competitors compare?
Grays Online
Grays is a traditional auctioneer that’s made the successful jump online. It doesn’t cater to people with old stuff to sell; its goods come from vendors, liquidators and retailers.
While it's not as comprehensive as eBay (a search for whitegoods produced just 19 results) Grays is professional and easy to use. Highlights include surplus (bargain) company laptops and its $9 auction, where everything starts at $9 with no reserve. It's great for stocking up on wine, too.
Bidsell
A colourful, clean looking site, Bidsellis very similar to eBay in everything from site design to bidding and buying methods. Once again the content doesn’t cast a shadow over a single corner of eBay’s territory – browsing digital cameras produced only 16 auctions.
But Bidsell is pushing for users with several hooks like relisting your item for free until it sells and reward points for introducing other users.
Bidmate
Bidmate has the most comprehensive first page category listing of any auction site we looked at, with 27 main categories taking up the main area of the homepage and several subcategories below those. It’s easy to use and navigate but it can't challenge the perception that eBay is the only site for online auctions. A survey over ten pages showed not a single bid on any item.
Oztion
When eBay Australia last raised its fees in 2006, many experienced sellers spread their businesses around, and Oztion was one of their first ports of call. It’s this influx of users that’s made it one of the most widely-used eBay alternatives. Though 60% of items in the categories we checked were Buy Now and few auctions have bids in numbers that suggest healthy competition, there are plenty of listings, so you might just nab a bargain. But auction prices tended to start too high: giving lie to suggestions that online auctions are no longer regarded as converters of junk into spare cash, but as places to boost income.
Shopbot
Australia's online shops, in the absence of Amazon, are a fragmented bunch. Searching for goods and the best prices can be a nightmare. But the likes of Shopbot make it simple. Searching for a product produces a list of shops selling it and the prices they're selling it for. Similar sites like www.staticice.com.au and www.shopferret.com.au are also useful, but Shopbot is the one favoured in our Labs for finding all those super cheap real-world prices. It poses a real threat to eBay because it finds rivals to eBay's 'buy it now' auctions – cutting out eBay as the middleman.
PriceUSA
There are plenty of reasons to buy stuff from the USA. One is 'bargains' and another is 'Australian availability'. An Apple Macbook costs US$1499 ($1678) at the US Apple store. It costs $2199 at the Australian Apple store. Even with PriceUSA’s 5% mark-up and hefty delivery fee you’ll save hundreds of dollars. The yet-to-be-launched-in-Australia iPhone is PriceUSA’s most popular item to the extent there’s a question about it in their FAQ. Yet PriceUSA is an Australian company governed by Australian laws, so unlike eBay, you can buy from abroad without running the risk of dealing with a dodgy foreign seller.
Froogle
Google's wonderfully named Froogle is big in America and the UK but is not yet available in Australia. It would be a welcome addition to these shores, and would bring shop searching to the masses (further damaging eBay's 'buy it now' sales). But with Shopbot and PriceUSA essentially doing exactly the same job, few people are currently missing it.
This article appeared in the
April, 2008 issue of PC Authority.