Alan R. Bechtold has released the latest issue of E-Wealth Report. This featured article is titled “Has eBay Gone Completely Berserk?”. [E-Wealth Report]


Alan Bechtold has released the latest issue of ‘E-Wealth Report’ Newsletter.

Has eBay Gone Completely BERSERK?

The votes are still out, but it looks like the answer is “yes,” if you ask me.

In a move that has outraged literally thousands (maybe even tens of thousands) of sellers to the point of calling for an outright boycott, eBay has announced an increase in pricing and other changes to the system of fees the company charges sellers when they place items for sale on the gigantic online auction site.

This is no surprise. It’s happened before. Whenever eBay has changed its rate structures, sellers have always complained loudly.

What has shocked most everyone (including journalists who watch companies like eBay closely) is another move that can potentially change the entire dynamic of the site. eBay has also announced that is will stop showing feedback ratings for BUYERS.

What does this mean?

One of the key elements that makes eBay such a powerful system for buying and selling in an online auction-style format is its ratings system. Buyers can rate sellers based upon their timely delivery of purchased products and services, the quality of what was sold, and how closely the item that actually arrived in the buyer’s hands matched the seller’s representations of that item on eBay during the sale.

Likewise, sellers have enjoyed the ability to rate buyers. Buyers who reneged on their bids, stalled when it came time to pay, or did charge-backs or requested refunds too often could be ranked negatively by sellers. This would notify other sellers that someone who is bidding on one of their products is a potential problem.

This double-edged system also enabled a seller OR a buyer who received what they felt was an unfair rating from the other side of the fence to post a negative comment on the OTHER person, explaining that the negative is being “awarded” because the person unfairly posted a negative about them.

Yes – this sometimes led to “ratings wars.” Yes, it might hold some buyers back from rating a seller poorly. But, in spite of the potential pitfalls, the system appears to have worked for many years now.

By removing the buyer feedback ratings, eBay is now leaving all the sellers on their system vulnerable to every purchaser, with little recourse or warning ahead of time. Sellers will no longer be able to extrapolate, from a buyer’s history with other sellers, the buyer’s history of transactions and reliability as a customer.

This will leave sellers with the only option they have ““ ranking buyers within their own systems, enabling buyers to abuse almost every seller at least once, since there will be no other way for a seller to check a buyer’s rankings ahead of closing the deal.

Meanwhile, buyers will still be able to see all the feedback ranking info and comments left by buyers about sellers. And add their own, now without worrying about any kind of backlash if their comments aren’t on the up-and-up.

This hardly seems fair. eBay is turning this system that has apparently worked so well into a one-way street that’s fraught with hairpin turns every block or two.

I can’t even imagine what purpose this change by eBay would rightfully serve. It’s almost as if it was intentionally designed to irritate their sellers, but there wouldn’t be an eBay if there were no sellers.

This makes their reasoning behind the move completely unfathomable.

Are they concerned they might scare off buyers by listing their experiences with sellers and ranking their behavior?

I’ve always felt the online auction format eBay embraces is fraught with dangers and potential for problems. The unique two-way ranking system they created is what made it still work.

Now, with a flip of a switch, eBay is completely changing that fragile balance.

Sellers aren’t too happy, either. I found out about this through an article I read about literally thousands of eBay sellers who launched a one-week boycott of eBay that started February 19, 2008 and will run through February 25.

It seems the sellers picked the time to plan a boycott carefully. eBay’s roll-out of the new rate schedule and removal of buyer rankings kicked into practice February 20.

Fortunately, there are other players in the game. Some are already approaching eBay sellers and wooing them away from eBay.

Take note ““ if you see any competitor in your field taking harsh actions you don’t believe in and don’t take yourself, go after your competitor’s client base with fervor. You’ll reap the rewards of their dissatisfaction like a friendly sailor offering people adrift in a lifeboat a ride on his yaught.

My advice? Don’t ever put all your eggs in one basket. I don’t care how small your business is, one source of revenue can never ever be counted upon to sustain your livelihood, unless you simply enjoy living on the edge of a sword that could cut you in half with a single slip.

Personally, I haven’t done much buying OR selling on eBay. I’ll seriously re-think ever using them again, however.

I also often suggest to my clients who are just getting started that cleaning out the attic and garage and selling everything possible on eBay is a great way to raise some quick business capital to launch a home business. I’m certain I’ll re-think that recommendation.

Here are some leading alternatives I’m sure I will be recommending in the future, in case you’re interested:

OnlineAuction.com, based in Grants Pass, Ore. This company says they’ve already picked up roughly 7,500 new sellers since eBay announced its new policies – a 15% jump in the site’s user base in a matter of days. OnlineAuction.com claims 85% of their seller base is made up of ex-eBay sellers who appreciate the company’s flat fee structure. They charge only a monthly membership for unlimited listings. The site says it now hosts more than 50,000 sellers.

eCrater.com’s founder, Dimitar Slavov, said in a published report that the company has signed on 1400 new self-described “ebay refugees” as sellers. eCrater reports it now hosts 33,000+ active sellers.

iOffer.com is another alternative benefiting from eBay’s heavy-handed tactics. The company lets sellers post items at any price they wish ““ or with no price at all, inviting buyers to make an offer, then negotiating until a mutually-agreed-upon price is reached. iOffer also allows eBay sellers to transfer their feedback scores to the system. And buyers and sellers can opt to use cash or barter for their purchases. iOffer claims there are currently 75,000 sellers on the system.

Bidville.com is another viable alternative, owned by the long-running, mainly business-to-business auction site uBid.com. The company claims there are more than 350,000 sellers on the system.

Even Overstock.com, basically a competitor of uBid.com, has made the decision to start promoting the virtually unknown auction section of its site.

Amazon.com has also reported it’s seen a jump in new seller accounts during the week following eBay’s ill-received announcement, too.

But, Wait – It Gets WORSE!

Around February 1, eBay ALSO announced thata they would change the way PayPal, used by most of their sellers and many online merchants inside and outside of eBay, treats funds. Under the new plan, PayPal will be able to hold payments through PayPal for up to 21 days.

According to eBay, it all depends on their determination of the “quality” of the transaction. If PayPal deems the transaction to be “high-risk,” the funds can be held until the eBay buyer leaves positive feedback about the transaction, reports the goods have been received, or until the full 21 days is up, at their discretion.

Of course, I do know what eBay’s up to here. If PayPal can hold up paying out transactions for up to 21 days, it will more easily be able to control the quality of the goods delivered AND it’ll earn some nice fat interest on withheld funds – the same way most merchant account providers do.

But ““ according to the plan outlined by PayPal, if an eBay seller gets just two bad comments from buyers within a single 30-day period, all their future transactions can then be deemed “risky” and the funds from all of their future sales can be held for up to 21 days. Other factors completely out of the control of sellers will also play into the determination.

eBay is leaving a lot of the decision to PayPal’s discretion.

My concern here goes far beyond eBay sellers. PayPal is currently in wide use by many online merchants who never set foot on eBay. Until now, it’s been one of the easiest ways available to set up an online store and make online sales happen through PayPal or the credit cards that PayPal accepts.

In short, PayPal has grown dramatically because it’s an excellent “starter” alternative to getting your own merchant credit card account.

It’s interesting to note that PayPal is not actually a bank and, therefore, does not have to follow the same banking rules and regulations that most other merchant credit card service providers must follow, making them a viable alternative.

In his case, however, one group of eBay sellers – the mightiest movers of merchandise on the system, known as “power sellers” – will actually see a benefit from this move. For them, the cap on their guaranteed immediate payout from PayPal will climb, from the previous $5,000 maximum per year, to an unlimited amount ““ so long as they stay in eBay’s good graces otherwise.

The bad news for most sellers, however (remember most eBay sellers are never going to become “power sellers) – especially new sellers just emerging and trying their hand at running an eBay business -““ is that now buyers will hold all the power. They can post a bad comment about a seller without recourse from the seller and, if more than one buyer posts a bad comment in any 30-day period, that seller can have his or her funds frozen for 21 days from now on, without recourse.

What are the ramifications for all those other Web sites that use PayPal as their main payment system? It’s anyone’s guess. PayPal executives haven’t even mentioned how this new move will effect them. I’d guess it will work the same way ““ only without the seller ratings that eBay offers as one guideling. This means it will be entirely up to PayPal what they do.

The uncertainty in all of this makes me leary of recommending PayPal any more, either.

Like basing your business entirely on eBay, I must advise you that counting on one payment system is just too risky to be considered. Always have multiple ways to collect online payment from your buyers. Use PayPal, if you wish ““ I don’t currently recommend it. But, add another one or two ““ especially your own credit card merchant account ““ as soon as reasonably possible.

Here are some possible PayPal alternatives you should also look into:

Digital River (digitalriver.com). This company currently has worked with more than 40,000 online stores and offers basic shopping cart features, multi-currency support for overseas purchases and “try-before-you-buy” options. They don’t hold sellers’ money and they are willing to “take the hit” if a product needs to be returned. There are no up-front costs and you won’t be charged until you make your first sale. Then the system deducts fees beginning at 2.9% plus $1.00 per transaction.

2Checkout.com. 2Checkout.com processes credit cards and checks and actively monitors for fraud over its entire network, offering some nice protection for sellers using the service. With roughly 50,000 vendors, it holds a 5% rolling reserve for 90 days, takes a 5.5% commission on all sales (plus a $0.45 transaction fee) ““ and charges a one-time setup fee of $49.00 to get started.

AlertPay (AlertPay.com). Designed to make online payments easier and focusing on the MLM market, AlertPay simplifies bank transfers, wire transfers, direct deposits and other payment methods. The introductory rate is 2.5%, but you can find yourself paying up to 3.9% on each transaction if your company comes up on their radar as “off the beaten path” and requiring more service than “normal” – whatever that is.

TrialPay.com. TrialPay takes an unusual approach to online purchasing, pairing merchants with advertisers to offer consumers a chance to get free products they’re interested in trying out. You must give away your products for free (which makes this system basically only truly valuable as a list-builder ““ I’m going to be testing it out for that purpose alone) … but only when a shopper completes an offer form from a TrialPay advertiser. They offer a shopping cart system or you can integrate the system with any existing shopping cart. This one’s only really an option if you offer digitally-delivered products such as ebooks or software that won’t cost anything to deliver since you don’t get to charge for the product.

E-junkie (E-junkie.com). This is another shopping cart provider, but it does something a bit differently by specializing in automated delivery of your products. It takes time and study to select the proper platform, as the system offers a multitude of “shopping experiences” that you can employ for use by your buyers, but the company claims their goal is to make buying easier for the customer. Pricing starts at just $5 per month for up to 10 products and the system will automatically determine the proper size shipping container to use to ship physical products and it automates getting the order ready to go. File storage and instantaneous delivery of digital products is also a specialty.

Check out all the alternatives. Consider one of the above or research the Web and find one or more of your own. Consider going with more than just one ““ even if you decide to stay with PayPal.

This will enable you to never again be concerned about eBay’s or Paypal’s decisions and actions. It’s always easier to leave an overly-oppressive service provider when you’re already working with alternatives, than when you’re married to just one.

Now – here’s something that’s just almost as good as a no-cost gift – dozens of free gifts worthy many hundreds of dollars when you buy a really nice book for a mere $11.53 (the current price on Amazon).

Here’s the deal:

Daniel Grissom is the author of a new book called “Step Up! How to Win More and Lose Less in Business.” Daniel the secret sales weapon behind Billion Dollar companies like Google, Hewlett Packard, UPS, NASDAQ, and Eli Lilly. Daniel has revealed his “secret sales strategies” in his new easy-to-read book. The book is headed for the bestseller lists, so I recommend you give yourself an edge and be one of the first to get it and put it into action.

Not to mention the fact that you can grab his book for mere pennies compared to the tens of thousands the corporate behemoths pay him for the SAME information he shares in his new book.

Even better – Daniel’s pulled together a special offer for my special friends and clients. You’ll not only get his great book, but some super valuable bonus gifts are in store for you (from Daniel, from me, and from a whole bunch of his other fans).

I recommend you take advantage of this special offer right away … (yes, today).

Trust me on this one; you’ll be glad you did.

I’ll see you next week!

Alan R. Bechtold

President/CEO

BBS Press Service, Inc.

‘E-Wealth Report’ Newsletter

*IMNewswatch would like to thank Alan Bechtold for granting permission to reprint the latest article.

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