An article written by Douglas MacMillan in CRM Daily, titled “eBay’s Last Minute Delivery Push” published December 24th 2009 caught my attention. CRM Daily is an e-publication delivering “Customer Relationship Management news for Pros”.
Here is the ‘hook’:
“eBay’s expansion into selling new products has brought in more customers who expect cheap, fast delivery; flexible return policies; and attentive customer support. Those have been tough demands for the company to achieve, and could be affecting the site’s popularity. In November, eBay’s online visitors dropped by eight percent.”
In my opinion eBay could use some CRM tips because their philosophy under current CEO John Donahoe is to channel Rhett Butler in Gone With The Wind; “Frankly my dear, I don’t give a damn” as seasoned sellers look for the exits. eBay is clueless and indifferent (def. #1) when it comes to Customer Relationship Management, but I digress.
Off Target
The implied frame of reference for the article is that eBay is the seller, not “only a venue” for sales by independent retailers. It posits (def.#2) buyers as eBay’s customers, and sellers as merely eBay’s suppliers. This causes a dilemma (def.#2) in that any eBay CRM program targeting the consumer will not target the customer; the one who pays fees to eBay. A sampling of key phrases that support my contention are:
- order-fulfillment problems bedeviling eBay
- eBay doesn’t have as tight a control of its supply chain as rivals
- eBay’s expansion into selling new products
Another quote in the article would appear to indicate that the perception of eBay as retailer is becoming much more widespread.
“They started as an auction site, but they are now seen by most people as a retailer,” says Larry Freed, CEO of market researcher ForeSee Results.
The Heart of the Issue
Mr MacMillan compares eBay’s performance as retailer with Amazon and to a lesser degree with WalMart. There are deep flaws in the comparison.
Unlike Amazon which started as a retailer before permitting third-party merchants (3P) on the site, eBay has never had product to sell, never sourced, listed, picked, packed or shipped. eBay is not a retailer, without 3Ps eBay has no product to sell.
Like eBay, Amazon claims the transaction, in other words the buyer is Amazon’s. A major difference between the platforms is that Amazon takes responsibility for the transaction, offering an A - Z guarantee to the buyer, while verifying the buyer and processing payment for the seller. All Amazon buyers are verified, there is no sale without payment, the Non Paying Buyer (NPB) does not exist.
eBay disavows any responsibility and has maintained for years that it is only a venue and is therefore not responsible for the items bought or sold on its site. Liability is passed to the seller and eBay’s role is limited to collecting fees from them at every opportunity, including for unconsummated transactions, the ones in which sellers do not get paid.
Amazon clearly delineates the expectations and obligations of a partnership, a relationship that is characterized by mutual cooperation, responsibility and benefit. eBay prefers a punishment based authoritarian and adversarial relationship with 3Ps, clearly shown by secret search algorithms and an unnecessarily complex fee to listing structure which intentionally makes it very difficult for sellers to calculate costs and predict margins.
Finally, Amazon spells out realistic time frame expectations for buyers to receive their purchases. A seller who can deliver faster has a happy customer and so does Amazon. eBay doesn’t have a clue and the result is everyone is mad at each other.
Crystal Ball Department
Salute to a master, Randy Smythe said it in 2007. So far, I would say he called it exactly right.
Has Donahoe succeeded in remaking eBay?
What is the new eBay?
Y’all come back!
“Has Donahoe succeeded in remaking eBay?”
Yes, he has succeeded in turning eBay around from a successful, high traffic platform into a site that alienates buyers and sellers and declining sales.
“What is the new eBay?”
The New eBay is an empty void that will be the subject of study for decades to come. Business professors will hold eBay up to students as a model of how to take a successful thriving business and run it into the ground.
eBay’s constant system and policy changes imposed by neophyte CEO John Donahoe are responsible for the steady year/year sales decline the company has been experiencing over the last two years.
With a first time CEO who has essentially no experience as a company leader or as an eBay buyer or seller, changes imposed by Mr Donahoe miss the mark and are driving small and medium sized sellers from the marketplace.
To build a successful business, sellers need a platform that is solid, stable and successful. Under CEO Donahoe, eBay has become anything but. Constant changes to policy, systems, and search, coupled with fee increases serve to make the eBay platform uniquely unstable and inconsistent. The result is an ever increasing numbers leaving eBay.
The problem is compounded by Mr Donahoe’s ignorance and disregard for eBay’s past. History proves that eBay’s most active buyers also happened to be eBay sellers. Constant policy and system changes continue to alienate sellers and as those disgruntled sellers leave, they also cease buying as well.
Mr Donahoe once publicly dismissed unhappy eBay sellers as “noise”. The statement fully illustrates the disregard and disdain Mr Donahoe holds for his own fee paying customers.
This alienation and erosion of sellers fully explains why eBay sales are steadily declining while other sites like Amazon have seen consistent and significant increases. Previously Mr Donahoe has dismissed eBay’s declining sales on the state of the economy. Mr Donahoe’s excuse is no longer valid as eBay seems to be the only online retailer that is seeing traffic statistics decline and gross sales shrink.
The problems at eBay have been created from within eBay and come from the top. The problems at eBay continue because eBay fails to see the site’s issues have been self created by a CEO that grossly disregards the essential fundamentals that enabled eBay to become the one time online sales leader.
The company is in desperate need of new leadership and management.
Posted by Ric on January 5th, 2010.
Ebay as retailer.
I think it was only about 4 months ago that I breathed a sigh of relief, and applauded eBay for NOT wanting to become a retailer.
You are correct Henrietta, all language is pointing to ebay as “retailer”, and next year may well reward them as an upcoming “retailer of the year” :-), i’m sure they would appreciate that.
Question is does it also want to become a liquidation buyer? Much money to be had in liquidation markets, and eBay has clout and $$ to pull that off.
Oh, the small sellers, I don’t think they fit the retailer crowd on ebay, hopefully they’ll have found their new home in 2010.
Our tent pegs are already up, and the caravan horses are well fed and getting anxious. I hate hold them still — but so long as we make a good profit on ebay we’ll hold the reins.
I’m a small seller, with small expenses and small eBay invoices. That’s the problem, being there is still cash in the bank. No matter how messed up their venue system becomes it seems it can’t really hurt us, at least in our case.
What change do I fear for 2010? eBay trying to front as a retailer and providing “customer service” to the buyer. That is the one thing that WILL kill eBay - it can withstand all the rest, but not that.
I have a dream: eBay creates a culture based on their “customer service” expectations of 3rd party sellers — then proceeds to lose their 3rd party sellers by enforcing restrictions and penalties for slight glitches — THEN to maintain survival it has to move towards purchasing/selling it’s own stock —-and shipping for FREE—- TO THOSE SAME BUYERS it so carefully trained to literally KILL their 3rd party sellers.
Yes, it’s a dream, not a nightmare (for me at least :-)
j m opinion.
cheers
Vince.
Posted by vince jelenic on January 5th, 2010.
quick addendum.
just received emila from ebay buyer.
simply
‘Fyi your shipping rates are excessive”.
(Note, not a buyer, just an ebay friendly)
Answer was simple, buy today, Canada Post has rate rise after Jan 12th. :-)
I wonder how patient JD will be with his “customers” in his well bedecked retail environment.
cheers.
Posted by vince jelenic on January 6th, 2010.
Unfortunately it is human nature to compare shipping costs with those of our own country. Added to that most Americans don’t think of Canada as being ‘foreign’. We have no clue how cheap postage is in the USA compared to many if not most other countries. I know that I can ship a card all the way to Britain for very little more than the buyer can mail it in the UK using domestic mail.
Posted by Henrietta on January 6th, 2010.
While your article focuses on John Donahoe’s effect on eBay, Randy Smythe’s uncanny (29 October) 2007 article shows Mr. Donahoe is merely the current “monkey” driving the train. 2007 means these changes happened during then eBay CEO Meg Whitman’s watch.
To wit. Or perhaps twit.
“We know that we were only here because of a disruptive innovation.”
Meg Whitman, 18 October 2007
Apparently Amazon has Meg Whitman to thank in part for their success today. As well as the existence of the legions of small business websites now dotting the Internet.
Makes one wonder what else John Donahoe plans to execute from Meg Whitman’s moldy playbook this year?
2010 is going to be fun to watch unfold.
//
“We also think about very disruptive ideas that could disrupt our core business, or we could disrupt other major segments of the economy. And many times those very disruptive innovations will come from outside eBay”
Meg Whitman, 17 May 2007
Posted by EventHorizon1984 on January 6th, 2010.
You were spot on when you described the “heart of the matter”. eBay is a hodgepodge of 3P sellers who offer product via multiple different formats (auction, fixed price, best offer, etc) with a few payment alternatives, and different shipping options (standard, first class, priority, express) that the buyer doesn’t pay attention to. Buyers on Amazon who pay for standard shipping expect standard shipping. Buyers on eBay who pay for standard shipping expect express shipping.
The expectations on eBay between buyer and seller are sometimes unclear but even when they are crystal clear, the buyer has greater expectations than they paid for and/or were promised. Every year, without fail, I have eBay buyers who purchase items December 21st or 22nd, pay for standard shipping and then include a note in the payment telling me that they need the item to arrive by December 24th. Every year, without fail.
What would be interesting is to have a Reality Show featuring different eBay sellers as they go about their day just so that the rest of the world could see what it is that we endure. I love the freedom that my ecommerce business affords me but I sure could do without eBay’s constant policy changes and whacko customers.
Posted by TheBrewsNews on January 10th, 2010.
@EventHorizon1984
“2007 means these changes happened during then eBay CEO Meg Whitman’s watch.”
Yes Meg was Queen then, but you do know that when Donahoe joined eBay in March 2005 it was as President of Marketplaces? Plenty of room for disruption in that role for the three years he held it before ascending to the Emperor’s throne.
In my book it all started turning pear shaped early in 2006 and he was already on board a year by then.
Posted by Henrietta on January 10th, 2010.
@Ric
>>Business professors will hold eBay up to students as a model of how to take a successful thriving business and run it into the ground.<<
Agree for the most part except for the above I’m not so sure. I keep thinking it was those same “Business Professors” who trained most of those folks in eBay we blame the most for disrupting and destroying the eBay community. Tho I do think “the professors” love to teach often lame theory as if it were fact and later evaluate the failures as if they were completely without blame or part of the fabric that created the lame theory that they taught. Very much like our Congress over the years.
You know, man, I really taught it perfectly–too bad they screwed it up.
Posted by TomH on January 10th, 2010.