New eBay policies hurt some sellers, boost others

    By Adrienne Burke | Small Business

    For nearly a decade, Lynn Abbott has relied on eBay to reach buyers for her classic Mustang parts dealership, PonyPartsPlus. In a typical month on eBay she sells around 150 parts to more than 100 customers and generates upwards of $10,000 in revenue. She hands over about 13 percent of that in listing fees, commissions, and transaction fees to eBay and its subsidiary PayPal.
    As a “top-rated powerseller” she has benefited from good visibility for her products and 20 percent discounts on commission fees each month. But no more. Changes in eBay policies that went into effect last month translated to several hundred dollars in new costs as well as reduced sales for Abbott’s business, she says.
    Announced in February and implemented in June, eBay’s new policies push sellers to handle orders within 24-hours and offer refunds on returns for up to 14 days. eBay also demands that sellers now ship with tracking to retain "top-rated seller" status. Company spokeswoman Johnna Hoff says the policies are driven by customer demands. “Consumer expectations of online shopping have been evolving for some time. People now want the opportunity for reliable and easy returns, to know where their packages are, and to find great inventory from top sellers who are giving them the best customer service experience,” Hoff says.
    Only eBay product listings that comply with the new rules remain eligible for the 20 percent commission fee discount and get spotlighted in consumer searches on the site. Because much of what Lynn Abbott sells (under the eBay user ID newenglandmustang) is made-to-order—from custom-color floormats to specialty convertible top boots—she says one-day order handling is impossible and offering refunds on returns would put her out of business. Her own policy has always been “production and delivery is 10-14 days from order,” but, she says, “eBay policies override your company policies.”
    Ina Steiner, editor and co-founder of the industry publication EcommerceBytes and author of the book Turn eBay Data into Dollars, has covered eBay closely for 13 years. She says Abbott is far from the only merchant frustrated by the new rules. “eBay is unpopular with sellers when it comes to changes—both for the frequency with which they roll them out and their implementation of policies,” Steiner says. “They cause a lot of angst on the part of sellers.”
    Steiner says the latest changes are in line with others that have been implemented since 2008 when John Donahoe, a former Managing Director for Bain & Company, became eBay’s CEO. “He has taken a carrot and stick approach—some say just stick approach—to get sellers to do what they can to provide a better user experience,” Steiner says. “It feels to small sellers that eBay has someone dedicated to thinking of ways to make their lives miserable, but eBay is asking, ‘How can we make more money?’ and, ‘How can we pass along the risk to the seller?’ From the seller’s point of view, that really stinks.”
    Indeed, for specialty retailers like Abbott who are already suffering reduced sales due to the recession, the new policies feel like a kick in the gut. eBay’s seller discussion boards are populated with the complaints of long-time merchants who feel the company has turned on them. “It's time to leave before eBay's downhill slide gets worse for the Mom & Pop sellers,” wrote a merchant called bizybeez who has decided to retire.
    But eBay insists that the policies are helping more of their sellers do better business, in spite of the economy. Hoff says eBay’s top-rated sellers have seen growth three times the rate of the rest of the e-commerce industry and are capturing 50 percent of overall eBay sales. “The sellers we’re speaking to are saying that as they’ve made the policy updates, because we’ve given them several months notice, they’ve been seeing the benefits, and we’re seeing that on the statistics around their sites,” she says.
    Mindy Loll, owner of SavoirLuxe, is one example. Loll, who sells high-end designer accessories and clothing on consignment exclusively on eBay, says she was hopping mad when she read the new eBay policies. “I hated them, I was livid," she says. "But when I realized that eBay is doing this because it’s what customers want and that buyers will pay more money for extra customer service, I figured out how to adapt.”
    Loll’s inventory includes a $2,200 pair of Christian Louboutin platform heels and a $3,300 Hermes leather tote, which she offers on behalf of consigners. “Consignment is one of the worst businesses for accepting returns,” she says. To comply with eBay’s 14-day refund policy she set new conditions for customers and instituted a 15 percent restocking fee for returns. She says conforming to eBay’s new requirements got her more visibility and reaped her two or three additional sales per week during June.
    eBay officials say other new policies are designed specifically to benefit smaller businesses. A $3,000 sales threshold to achieve top-rated seller status has been reduced to $1,000, and small sellers may now avoid a 20-cent-per-item listing fee for up to 50 products, paying fees only when they make a sale. Says Hoff, “In this economy more people, both buyers and sellers, are coming to eBay, and it is proven out in our financials. Overall, the platform has been very much a benefit to buyers and sellers alike.”
    To be sure, without eBay, Abbott concedes that her sales in these tough times would be even worse. She has tried other online auction sites, such as Ahwooga, which caters specifically to car parts dealers, but says none drive traffic like eBay. Says eBay watcher Ina Steiner of Abbott's situation, "She's stuck between a rock and a hard place." 

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