Copyright © 2014 SYDNEY SCHUSTER – All Rights Reserved
Do you sell your book (or anything else) on eBay? If you’ve had more than zero sales, consider yourself lucky.
eBay sellers have seen catastrophic drop-offs in sales this year, while eBay steals scads of their dough. WTF happened?
The easy blame is the glitch-plagued search engine eBay rolled out in 2013 (it’s called Cassini) at the same time sales started flatlining. Naturally everyone assumed a connection. And there is one, but the real answer is more complex.
In fact, eBay started doing other things that are way more awful than Cassini:
● eBay gives preferential treatment to foreign mass marketers, pushing aside smaller domestic sellers.
● eBay started selling postage to sellers, for which it gets a fat cut from carrier services (a whopping 58% from USPS).
● eBay launched its Global Shipping Program and forced sellers to use it. Sellers mail their international packages to a domestic distribution center run by Pitney Bowes, who removes their packing materials to save money on postage and then ships broken purchases, often to the wrong place, with exorbitant export fees due to buyers (typically 33% of item value) that apparently eBay keeps.
● eBay deliberately hides many listings.
● eBay’s mobile app is virtually useless.
● eBay interlards the listings you pay for with links to competing listings, typically 31 per page not including advertising from external retailers (who pay eBay to skunk up your listings) and eBay product promotions.
● eBay tasks its programmers with screwing sellers instead of improving security, resulting in broad downtime outages and the hacking in May by cyberthieves who stole the private data of many, if not all, of eBay’s 128 million users. As a direct result, many buyers abandoned the venue.
● eBay sellers suffered massive cutbacks in their listings on Google Shopping search after Google made the service pay-to-play and eBay didn’t want to so much. And Google’s new search algorithm (Panda 4.0) uses bid-based priority ranking that ignores cheap-ass clients like eBay. eBay has since moved its Internet ad business to Bing, used by no one.
● eBay pirated YouTube tutorials, further antagonizing Google (who owns YouTube).
● Google minimized the presence of low-quality and/or thin content promotions, like eBay’s poorly thought out AdWords campaign.
● eBay’s unwillingness to upgrade its staff or infrastructure is a big mess of stupid, best exemplified by a market launch on October 9, 2014. eBay began hosting live auctions for a consortium of major art auction houses, a highly publicized event that crashed eBay’s American servers the first day and its European ones the next. eBay shut down other marketing operations and/or transferred their databases to foreign servers to free up bandwidth and server space for the live auctions. US sellers found their stores had become Russian or Chinese ones, their PayPal accounts were German, and their auctions had vanished. Some members could only access their accounts by logging in via eBay Canada. US buyers were blocked from making purchases from US sellers because, eBay insisted, one party wasn’t in the US.
Fun Fact: the buyer’s premium on eBay’s live auctions ranges up to 30% of price realized. Ha — bite that, screwed eBay Mom & Pop Store!
The upshot: eBay sales have tanked because eBay willfully thwarts sellers in pursuit of various ends, none of which benefits you. eBay revenues nosedived in 2014 (including a $200 million loss due to the Google debacle alone). And, apparently, eBay recruits programmers from the local bus station. If a buyer tries to leave you five-star feedback on his iPhone, eBay’s mobile app will erase it. Worldwide, eBay has had 16 site crashes in 2014 alone, plus the bonus site hacks resulting from inadequate security.
Fun Fact: eBay started out 2014 blaming its spring/summer sales slump on the May data breach. eBay is ending 2014 — after partnering with bottomfeeder mega-retailers like Wal-Mart and Sears — by blaming its fall/winter sales slump on food stamp reductions.
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Anyway, here’s how and why eBay limits visibility of (your) listings:
● Rolling blackouts (rotating exposure). eBay’s file management system herds what it considers less-desirable listings (ie, yours) into dead zones. It assigns server locations and listing numbers based on criteria like category and seller volume, allocated regionally, which eBay can manipulate discreetly. So like, if eBay needs you to step off because they got boxcarloads of bad art and Korean Rolexes to fence and you’re sucking up their precious bandwidth with your dumb book, they just turn off your whole server and the entire Midwest (or wherever) goes dark.
● eBay restricts visibility of listings to small, distant areas. eBay doesn’t want you selling locally, where buyers can — horrors — pick up for free! By forcing you to sell far away, eBay gets a bigger postage commission. Plus it keeps you from competing in desirable markets against eBay’s mass-market darlings, except when eBay’s had a real slow quarter and its financial report to investors is due and shazam! just watch those floodgates open. Fun Fact: ebay plans to force indie sellers to let their customers pick up purchases at partner retail outlets like Target, Best Buy, and Home Depot. Hey — what could possibly go wrong?
● eBay imposes secret selling limitations (throttling). No matter what you do, you’ll only be able to sell as much as eBay allows, and not one widget more.
● eBay physically turns off listings (tap-on-tap-off) without notification (including ending auctions early, often within one minute of the end, to block snipe bidding because it overtaxes eBay’s inadequate infrastructure and bandwidth; eBay uses other means to block sniping, too).
I have on numerous occasions checked my own eBay listings, only to see this:
I now invite you to share my horror upon discovering that “a positive user experience” means my eBay listings are visible ONLY in Texas, Louisiana, Mississippi and South Carolina. They’re not big readers of cutting-edge literature there, so I gave up selling my novel Dead Spot on eBay.
Fun Fact: In December 2014 an eBay forum moderator posted an internal company memo explaining nine different kinds of limits to which sellers are subjected, including this one: “Silent limits (limits placed on an account that can’t be seen by the seller).” The post disappeared immediately. Here it is:
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This seems like a good time to remind everyone (especially eBay) that even though eBay acts like a retailer, it’s not. It has neither inventory nor salespeople. It’s just a brokerage for independent sellers who provide stock and manage their own sales, and pay eBay a commission to use the venue. For reasons that defy all logic of commerce, eBay has commenced jettisoning the small and mid-sized sellers who made it the 800-pound gorilla it is today, in ways it hopes aren’t obvious enough to start an avalanche of class actions.
In 2013 (and reportedly as early as 2008) an anonymous eBay manager posted this chilling warning on the sellers’ forum, accompanied by details of the secret Machiavellian makeover designed to result in exactly what has transpired: “[Small to mid-sized sellers] are not wanted. Leave. If you stay, you will be crushed. Leave. Go away. You cannot win. … You do not know how much they [eBay] hate you.”
Reports vary, but eBay admitted to (translation: probably grossly understated) 54,000 seller suspensions over just two days in 2013. In addition, ridiculous sales limitations were placed on an undisclosed number of active sellers. After a tsunami of bad publicity, eBay clammed up about whatever it’s doing. But on the 20th of every month since, thousands more sellers were kicked out, nominally for “underperformance” (directly caused by listing invisibility, duh).
Your turn will come. In the meantime, eBay doesn’t care if your listings never sell. Why?
Because fees, dog. When buyers can’t see listings, sellers relist perpetually, paying a fee per listing of 50 cents to $2. (By way of example, eBay collects $7.20 in basic fees for one unsold $10 item relisted for two years, compared with $3.63 if it sells once.) If a seller ends an auction early and there were bids on it, there’s a penalty fee. Do you prefer 30-day fixed-price listings? Don’t worry — eBay will convert them to Good Til Canceled without notice (no, you can’t change them back) and bill you monthly in perpetuity. If you do manage to actually “sell” something but the buyer doesn’t pay or returns it, you ain’t getting your fees back. Multiply all that by millions of unsold listings to get the big picture.
Fun Fact: For books, eBay limits the shipping fee you can charge to $5 or $6 and then steals 13% of that in fees (10% to eBay + 3% to PayPal). Selling coffee table books? Reference books? Textbooks? Good luck with that!
Plus also, there’s this:
● eBay forces sellers to start auctions at 99 cents to attract buyers to the site, then shuts off the auctions from views and late bidding, forcing a sale at the opening bid (or a relist).
● eBay secretly allows high-volume sellers to buy their way out of negative feedback (one reported payment: $150).
● If you call eBay customer service and the CS rep doesn’t like your attitude after you’ve been on hold for hours, watch out for damaging retribution. Fun Fact: eBay CS reps, who are mostly in the Philippines, are paid $5 per day plus a sandwich.
Fun Fact: PayPal now places 21-day holds on seller funds. Why? Because it can. The problem (besides the obvious): The length of time a money transmitter can hold funds is regulated by states, and most allow a maximum hold of 10 business days. PayPal hopes you don’t know this.
And there’s this:
● eBay unlawfully inflated the price of its stock by planting acquisition/spinoff rumors in the media. (Google to buy eBay! Carl Icahn to buy eBay! eBay may accept Bitcoin! eBay to sell off PayPal!) Board members and top execs sold their shares high, then bought them back low (or didn’t, if they grabbed the cash and bailed).
● eBay owns PayPal, and since it soon won’t have PayPal to suck the life out of (latest alleged spinoff date: mid-2015), eBay now offers eBay MasterCards, with a variable purchase APR of 19.99% or 23.99%.
Fun Fact: According to eBay’s 2014 Q3 report, the company had $749 million net profit from 128 million users. Really? That’s $1.95 monthly profit per user. Who needs massive infrastructure for that? Bums make more money selling soda cans.
So caveat emptor, dogs. eBay is no longer a venue for indie sellers. It’s just that eBay isn’t copping to that because they’re too greedy to blow off that much free dough.
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Sellers are already lining up to sue the crap out of eBay, if Icahn (who owns 46 million shares and the BOD’s balls) doesn’t rip it to shreds first. So far, three state attorneys general have started investigations.
eBay’s big, sure, but is it bulletproof? Nope!
● In 2013 the company settled a class action for $4.75 million after failing to provide visibility upgrades to sellers who paid for the service.
● Also in 2013, a PayPal program called Bill Me Later was investigated by the federal Consumer Financial Protection Bureau for predatory lending. (eBay’s solution: rename it PayPal Credit and resume as before.)
● Tiffany & Co. sued eBay after proving 73% of “Tiffany” jewelry sold on eBay was fake.
● In 2011 the DOJ launched a criminal investigation after eBay stole confidential data from Craigslist in 2004 and used it to start a rival classifieds site, Kijiji, that eBay nicknamed the “Craigslist Killer.” eBay has yet to be indicted. (FYI: Unlike the civic-minded Craigslist, the sole purpose of Kijiji was to hoover cash and drag eBay’s sinking numbers out of the toilet.) eBay attempted a hostile takeover of Craigslist and ran bait-and-switch Google ads redirecting Craigslist searches to Kijiji. Craigslist sued eBay for 14 crimes including deceit, breach of fiduciary duty, securities fraud, and negligent misrepresentation. The case is still ongoing.
Last time anyone checked, the SEC still frowns on pump-and-dump and insider trading, and the FTC doesn’t look kindly upon theft of service. So the most plausible reasons why eBay has dodged greater regulatory scrutiny should make you think, and squirm:
1) Boardroom bully Icahn makes generous political contributions to Mitch McConnell, John Boehner, Mitt Romney, Orrin Hatch, John McCain, and other cash-before-Constitution carpetbaggers who endlessly block cabinet appointments and kill meaningful regulatory legislation; plus, he has successfully evaded SEC investigations himself;
As for the seller purge that’s destroying millions of small businesses, scuttlebutt is rampant in eBay forums and elsewhere concerning the real intent behind it. Pick your fave:
1) reduce payouts from upcoming lawsuits;
2) minimize claimants from a rumored bankruptcy filing;
3) easier reincorporation of eBay in the UK, where the company paid a paltry £620,000 income tax for 2013 sales of over £1.3 billion (eBay US paid $6.1 million on $2.86 billion net revenues the same year — and would’ve paid 80% less in the UK);
4) prep eBay for sale to Alibaba and PayPal to Apple, Google or Icahn.
On September 30, 2014, eBay announced it would part ways with PayPal sometime in 2015 (PayPal constitutes 45% of eBay’s value). On October 1 eBay assumed $7.5 billion of PayPal’s debt (ie, all of PayPal’s debt). Then on December 10, eBay announced impending layoffs in the thousands. According to the Wall Street Journal: “Analysts have said an independent eBay would be a candidate for a buyout, and job cuts would help lower operating costs, a key metric for buyout firms.”
Also on December 10, an eBay insider leak to the media posited that after the eBay/PayPal split, CEO John Donahoe will truck on into the sunset… with PayPal. And — surprise! — the stock goes up (over 5% in the next two days).
Fun Fact: Donahoe received a $23 million retention bonus to stick around and “help” with the PayPal spinoff. He also was awarded acceleration of all his restricted stock unit and stock option awards.
What’s not much of a surprise is that top eBay executives are fleeing, most recently CTO Mark Carges, VP of merchant development Michael Jones, board director and Netscape co-founder Marc Andreessen, PayPal president David Marcus, SVP for eBay North America Christopher Payne, and PayPal VP Stan Chudnovsky. On September 30 eBay announced the imminent departure of the much-despised Donahoe (the former Bain & Company CEO who calls eBay sellers “noise”) and CFO Bob Swan (who received a $12 million retention bonus), along with the first PayPal spin-off announcement.
Wow, what a coincidence! On September 30 Donahoe just happened to own 660,748 eBay shares that he no longer needed, the value of which shot up immediately by 7.5%. (And predictably sank 20% following eBay’s Q3 report in October, after it was downgraded by analysts who consider a clusterfuck a bad investment.) Spoiler alert: Donahoe dumped 485,665 of his shares on November 18 for $26,672,721.
Donahoe wasn’t the only dumper. Other eBay insider sell-offs in November 2014:
CFO Bob Swan sold 148,000 shares for $6,015,482
SVP Alan Lee Marks sold 6,750 shares for $369,427
SVP Michael Jacobson sold 94,000 shares for $5,124,880
SVP Elizabeth L. Axelrod sold 241,250 shares for $13,222,912
Director Thomas J. Tierney sold 10,120 shares for $295,200
CTO Mark Carges sold 11,392 shares for $600,358 just before resigning in November, after unloading 37,421 shares for $849,861 in July.
Fun Fact: John Donahoe claims he once sold an old cell phone on eBay.
Few NASDAQ companies need to be investigated more than eBay does. In the meantime, eBay still laughably promises sellers better visibility in exchange for sellers providing 24-hour turnaround, free shipping, generous return policies, and of course lots of fees. But in reality seller compliance doesn’t buy blackout immunity, and eBay penalizes sellers for things they can’t control. eBay forums are clogged with complaints from cooperative sellers whose stuff is still deadweight at the ass end of Best Match search results (when it’s visible at all) behind thousands of duplicate listings for Chinese counterfeits that don’t even have the search terms in the titles. And if you relied on buyers finding your listings via Google Shopping to pick up the slack, you can kiss that goodbye.
In other words, eBay’s current business model is you giving eBay money for nothing, not you selling stuff on eBay.
My advice: Don’t bother selling your book (or anything else) on eBay. Short of worldwide famine or collision with a comet, eBay is your worst nightmare.
Copyright © 2014 SYDNEY SCHUSTER – All Rights Reserved
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