What's up with eBay?

Daniel Leffel is CEO and founder of social retailing startup Yardsellr. A version of this post also appears on the Yardsellr blog.

I’ve thought for a long time about whether to post this. I finally decided that I had to do it because I would want you to tell me the truth if the shoe were on the other foot.

Many of you know that I used to work at eBay, and today seemed like a good day to share some of some thoughts with you on what’s happening over there. For a long time, it was a magical place. There was a special, personal connection between the buyers, the sellers, the website, and the many wonderful people who worked at the company. Big corporations paid the same prices as the little guys and everyone had a fair shot to build their business. Most of all, eBay provided *value* to the buyers and sellers alike — sellers got great traffic to their items, and buyers got the world’s biggest assortment at great prices.

Today’s eBay is something altogether different.

Traffic Generation Blows. eBay is losing share of ecommerce to large and small competitors alike. Their ability to bring you buyers is broken. People I know inside the company despair that they have no idea how to get their mojo back on demand generation given that senior executives think “social commerce” means putting like buttons on ten percent of listings.

Big Sellers Get Special, Back-Room Pricing Deals. Today’s price increases — and make no mistake they are increases — are targeted at small sellers. You can bet that all the name-brand retailers who have special, back-room pricing deals — some of which I am told include zero listing fees of any kind, special placement in search results, and guaranteed sell through percentages — are not paying final value fees on shipping costs. eBay is unleveling the playing field again in a very big way. The worst part? We don’t even know how bad it is: The special, back-room pricing deals with big corporations are closely guarded secrets.

You Pay “Success Fees” on Your Shipping Costs. When Pierre [Omidyar] created the final value fee, it was designed to let eBay and the sellers share in the same success. I always thought that shipping *costs* are like merchandise costs, labor costs, material costs. Now they are something to be taxed in this crazy way. That smells like it came from a Washington DC playbook, not from a playbook to build businesses. It just seems wrong to me.

Using PayPal to Spy on Your Business. I first heard about this a few weeks ago. At first I didn’t believe it. A senior level eBay person confessed to me that eBay monitors sellers’ PayPal accounts to see how much off-eBay business they are doing. It’s how, this person said, they figure out who to worry about and who “doesn’t matter.” They are doing it to Yardsellr too and he wanted me to know it I think. I am very happy that the vast majority of your sales are processed through our own, secure and private merchant account. :)

Planning to Centralize Checkout and Collect Your Money. I happen to like shopping carts and simple checkout more than most people. That’s why, when I built Yardsellr, I made it easy for the buyer to pay just like they do on normal ecommerce sites, and yet easy for the seller to get paid by Yardsellr regularly and smoothly. Fast and easy checkout, and fast and easy payments to sellers have been part of our service from day one. I think we have earned the trust of buyers and sellers one transaction at a time on this.

So, you might expect I’d be a fan of eBay’s unannounced plan to force a new checkout and escrow system on sellers (supposed to be coming this summer or fall). After all, it validates one of Yardsellr’s key notions of ecommerce. But I think it’s going to be rough times for sellers. Why? According to one person who is working on this project, more than 100 engineers are writing and testing a centrally-controlled checkout and escrow system for eBay. But you know and I know that gatekeeping other people’s money is a matter of trust more than a matter of building software. And I think it’s OK to say that a company that freezes cash in PayPal accounts, that suspends selling accounts first and asks questions later, that cuts sweetheart pricing deals behind closed doors with anointed sellers, that “scores” you as a person with made up DSRs [detailed seller ratings], that taxes your shipping expenses, and that fails to solve the fundamental problem of buyer traffic is a little questionable in the trust department. Centralized collection of your money is not a good thing when its eBay that’s doing the collection.

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