The Decline of eBay

If you know me, or if you've been reading this blog for any length of time, you know I am a Gadget Freak. I have the latest version of almost everything Apple makes, the latest Garmin Nuvi, the latest camera from Nikon, camcorder from Canon, and so on and so on. And while I make a decent salary, I certainly can't afford to just pile up new electronics on top of old month after month.

How do I keep doing it? One word: eBay .

The same week I get my new Thingamabob, I put the old Thingamabob up for sale on eBay. I'm careful to keep all of the original packing materials, the original box, and even the original receipt. Most of the time every item I sell is less than a year old, sometimes only six months old, and I take good care of my things (thanks for teaching me that, Mom and Dad!) so I'm usually able to get a pretty good price.

I consider the difference between what I get on eBay for the old Thingamabob and the price I paid for the new Thingamabob to be my "early adopter fee". And by turning around my gadgets like this, I can always have the newest thing without going broke. It's worth noting that for electronic gadgets, you have to sell them quick if you want to have any hope of recovering some money. A 2 year old computer is worth less than half of a 1 year old computer, and a 3 year old computer is almost worthless.

For example, I just recently bought a new MacBook Pro. So, last week I sold my old MacBook Pro on eBay, hoping to get at least half of what I paid for my new one. Didn't work out that way; although I asked $1699 for a fully-loaded "Late 2007" MacBook Pro with 4GB of RAM, I only got a little over $1100.

However... this was the first time I've used eBay since they made some dramatic changes a few months ago. And sadly, I discovered that the eBay I have been using and loving for more than 10 years now... is no longer a welcoming place for Sellers like myself.

To understand the changes, let me provide my own little summary of why eBay was so great. It was the perfect form of social network. Buyers gave feedback on the Sellers, and the Seller gave feedback on the Buyers. This ensured a proper two-way street: Since most Sellers on eBay were small-time merchants or individuals selling their own possessions, they needed to be very sure that the stranger they were selling to would actually pay them. Since Buyers were buying from individuals, they needed to feel that the person they were buying from was trustworthy.

Now, I am both a Buyer and a Seller on eBay. Therefore, I have feedback both as a Seller, and as a Buyer. As of this writing, I have a feedback score of 52, 100% positive. This means that of 52 people who left feedback for me as either the Buyer or Seller in a transaction, 100% of them gave me a positive review. In addition, each person leaves up to 80 words of written comment attached to feedback.

This system helped to ensure civility as well:

• As a Buyer, I'm going to be sure to send in my payment promptly; communicate clearly with the Seller as necessary; and give good and proper feedback if the item I receive is as it was described by the Seller. My incentive to do this is knowing that if I don't, the Seller could give me bad feedback, which could in turn influence how someone in the future might view one of my own auctions.
• As a Seller, I'm going to take extra care to clean up my items for sale, photograph them clearly, package them well, and ship them off immediately after payment has cleared. My incentive to do this is knowing that if I don't, the Buyer could give me bad feedback, which could in turn influence how my future auctions may be viewed. Or, the bad feedback might prevent me from being accepted as a Buyer in some future auction.

So there we have it. A simple online marketplace where Buyers and Sellers come together, and each can have equal influence upon the other. A marketplace where the field is level for all. It's worked for well over a decade, and has made eBay into one of the giants of the internet.

Then they screwed it all up.

A few months ago, they go rid of Seller feedback. Now, the feedback is only one way. A Buyer can give feedback on a Seller, just like always... but a Seller cannot give any (negative) feedback on a Buyer. As a Seller, I can praise - but I cannot criticize. If I encounter a deadbeat who stiffs me on payment, there is no way to warn anyone else. If a Buyer gives me negative feedback for no reason, I have no recourse. The field is no longer level.

eBay claims this is to help "the customer". But eBay, like many businesses these days, seems to have forgotten who their customer actually is.

eBay's customer is the Seller. No Buyer pays eBay so much as a single penny. Only Sellers pay. And they pay plenty. As an example, let's look at my latest MacBook Pro auction. The final sale price was $1151. My total fees from eBay (including PayPal processing) were $77.46. That's 7% of the total, leaving me with only $1073.54.

Without Sellers, eBay would not exist. The Sellers pay eBay's bills; the Buyers, in turn, are customers of the Seller.

I have some understanding of how businesses can mistake who their customer actually is. For example, I worked for a software company whose product was sold exclusively by resellers. It was pointed out to me, over and over again, that our customer, therefore - was the reseller. Not the end user of the software. The end user of the software was a customer of the reseller. Therefore, all our direction for product design, features, etc. should be taken from the reseller - and not from the end user of the software itself. It took me a while to fully embrace this principle, but my boss made it clear: "The person who pays your bills is your customer. Always remember that."

eBay has forgotten who pays their bills. No Seller ever asked to have the feedback mechanism taken away. They decided to do this on their own.

And sure enough, my auctions, for the first time, did not go smoothly. I received no communication of any kind from the Buyers. I had to wait over a week for a response, and then days further for payment. And when the items were delivered to the customers, I got no feedback at all. And I understand it, sort of. There is no longer any incentive for a Buyer to do anything.

And then, if this were not bad enough, PayPal (eBay's payment processing division), now places a 21-day hold on all funds. Now what kind of retail business ships to their customers and waits 21 days to collect the money? Do you think Amazon would ship me books and DVDs and then not charge my credit card for 21 days? I don't think so.

In typical Orwellian Corporate-Speak, PayPal claims this 21-day hold is a "security measure" to protect "both Buyers and Sellers", instead of the obvious short-term interest rate scam that it really is. They list nearly a dozen "possible" reasons they "may" issue this hold. Tellingly, they do not inform the Seller of this until after the auction has completed. Therefore, as a potential Seller, there is no way for me to know ahead of time that this auction will be subject to a 21 day fund hold, thus allowing me to decide whether or not I want to list the item for auction.

So, I have to pay to ship the items out of my pocket, and then hope that the Buyer does not cancel the transaction, give me bad feedback, or otherwise screw me over completely. And if they do, I can't do anything about it. I have to wait 21 days to find out if I really, truly even received payment.

At the very least, I'd expect to be paid 21 days of interest on the money they are holding. But of course not... that interest is money that eBay is collecting, in addition to all of the other fees they've already charged me.

It's a shame to see such a good concept, such a good business, destroyed right before my eyes. And a quick perusal of eBay reveals, in fact, that very few actual auctions are going on any more. Most of the items for sale are offered by large businesses themselves, who can afford to have funds withheld or to have an occasional non-payment.

And there appears to be no true competitor available. Yahoo runs auctions - but they are just a front for the exact same PayPal-based system. For a while, Amazon ran auctions, but dropped them in favor of a much more simple merchant agreement. And, Amazon does not allow individuals to sell any kind of electronic items - only licensed, approved merchants who pay a stiff monthly fee can do that. So if you have one computer to sell... you can't do it on Amazon.

So, from now on, looks like I'll have to fall back and use Craig's List. I've never really liked Craig's List because I prefer not to have to deal with people over the phone and/or in person. I liked eBay's completely online model much better. But I no longer have a choice.

Is this the end of my Gadget Freak days? If I can't reliably and regularly sell my previous-version gadgets, I can't keep on buying new ones.

Maybe eBay will return to sanity. But it's been my experience that once a company forgets who their customers are - once they no longer cater to the people who are paying their bills - that's a sure sign of the beginning of a long, slow slide into oblivion.