Son Of A Titanic Is eBay’s Defect Rate Rating Going To Be A Disaster

Is there anyone on planet Earth who can’t see that this policy is going to significantly help sellers of New product and completely crush sellers of Used or Refurbished product?

Hi gang,

Well, it’s almost here.  August marks the line in the sand where eBay begins judging sellers on a brand new, er, brand new to eBay metric.  It’s called the Order Defect Rate, or ODR, and man-oh-day do I think it’s going to be a disaster for a lot of sellers.

Let’s start out with a battle-tested philosophy of mine concerning eBay.  This is coming from a dude who has sold over $15 million on Amazon and eBay over the years.

Number 1 –  The level of seller disruption increases exponentially based on eBay’s competency level.

What do I mean?  Well, let’s take Feedback for example.  For those of you who don’t know, eBay doesn’t buy or sell anything – eBay exists to facilitate transactions between individual buyers and sellers on their platform. Also, somehow, eBay considers the transactions themselves to be eBay property, which means the person who bought from you is eBay’s customer, not yours.  You can’t brand yourself in any meaningful way and you aren’t allowed to communicate with buyers off of the eBay platform.  Anywhoo, that’s another discussion.

eBay should be, and pretty much is, competent at designing Feedback policy, and so for their original Feedback system, there was minimal seller disruption. UNTIL they rolled out the new 5 star rating systems.  Why? Please see above – eBay does not buy or sell anything.  So when eBay decided to judge sellers based on things like Shipping Time and Shipping and Handling Charges – things which eBay knows nothing about – we had a giant train wreck in the seller community for a long time.  Sellers were PUNISHED, and big time, for not being able to live up to eBay’s crazy, uninformed standards.

But let’s be fair here – over time, the Rating System got a little better, then a little better again, and for a decent amount of time, eBay seemed to understand and reconfigure the metrics to mimic the real world of sellers.  In fact, sellers became so good at living up to eBay’s expectations that eBay’s Top Rated Seller status became pretty worthless.

Well, hold on to your butts sellers – it’s about to get Alice in Wonderland down the rabbit hole bad for a while again.

So here comes the ODR, which stands for Order Defect Rate but really means Oh Dammit, Run!

Why should sellers be freaking out about it?  Let me count the ways:

1. 2. 3. and 4.  EBAY DOES NOT SELL ANYTHING OR BUY ANYTHING, but they are about to judge the hell out of you for doing so.  Amazon also has an ODR and has for a while, but the difference is that Amazon has sold product since Day 1 and they completely understand the system and so their ODR makes pretty good sense.

5. Sellers are going to be pounded for receiving 1,2 or 3 ratings in their DSR’s.  I’ve never liked this even for the current system.  Here’s what a buyer who is unhappy does:  leaves a negative, leaves 1’s across the board for the DSR’s.  Do sellers sometimes deserve that?  Um, NO.  A bad transaction that was the seller’s fault was probably in 1 area – not all of them.  Unfortunately, eBay has done a very poor job of educating buyers that anything less than a 5/5 rating will mean serious trouble for the seller.

6.  This one scares me the most:  Return initiated for a reason that indicates the item was not as described.  Let me address one particular group of sellers with this one.  Are you listening? I’m going to scream anyway:

HEY USED SELLERS ON EBAY, KISS YOUR DISCOUNTS AND TOP RATED SELLER STATUS GOODBYE

Is there anyone on planet Earth who can’t see that this policy is going to significantly help sellers of New product and completely crush sellers of Used or Refurbished product?

eBay’s new benchmark for Top Rated Seller status is going to be < 2% Defect Rate.  This is a very simple conclusion for me – Used/Refurb sellers are going to be kicked out of the Top Rated Seller program by the Titanicload.  They will lose 20% discount, visibility, and ranking.

dr

If you were to research large e-commerce company performance even the ones that only sell new product will not be > 98% perfect.  Used item sellers have no chance here at all.

It’s always interesting when eBay makes moves like this because if you read between the lines you can identify where eBay is trying to ‘push’ the marketplace.  This move sure seems to be a clear statement that eBay wants Used product on the site way less than New, which continues their trend of implementing policy that leads to New goods – policies like actively recruiting brands to the site and crushing the Auction format in favor of the ‘standard’ e-commerce Buy It Now model.

I spoke with a seller the other day who has a 99.9% feedback, 4.9 5.0 5.0 5.0 DSR’s, and is Top Rated – who is losing TRS when the ODR rolls out.  I suspect that, across the board, many more sellers are being dropped in rating than are holding or being promoted because of ODR.

I am looking forward to seeing the data on this after we get a Quarter in the new DR era – I love eBay sellers and I hope I’m wrong.

Kevin

Come play with me at GodImSexy.com

 

 

 

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eBay Spring Seller Release 2014: Detailed Seller Ratings Are Out – Defect Rate Is In

Today, eBay released the Spring 2014 Update. Let’s talk about them.

NEWDSR

Hi gang,

Many moons ago, when eBay wanted to implement a change in policy or code they would just roll it out whenever they felt like it.  I remember one change in particular that eBay decided to roll out in mid-November – right before the busiest time of the year. The change had bugs in it and sellers were deeply impacted by it. A few years ago, eBay very smartly began to roll out changes in planned sequences which they called Seller Updates.  Today, eBay released the Spring 2014 Update. Let’s talk about them.

First off, if you want to read everything in full, you can go to eBay’s Seller Information Center here . They also have a video up which discusses the changes here

What I want to say is that in general, eBay casts very broad, very wide nets with the changes they make. Depending on how much you sell and what you sell, these changes could impact you negatively or positively.  I’m just going to hit some of the highlights. Here we go:

From eBay’s website:

“Starting with the August 20 monthly seller evaluation, a new measure, the transaction defect rate (“defect rate”), will replace the current four individual detailed seller rating requirements in evaluating seller performance. This new rating may impact your status”

This is going to be the most contentious of the changes and I am going to predict that sellers are going to be the most vocal about this one. Couple of things here:

1. So, Amazon has had this measurement for a while now. They call it the ODR, or Order Defect Rate. If you sell on Amazon at all, you’ll recognize this new rating immediately. It’s very interesting that eBay is, once again, moving towards Amazon with policy

2. They are REPLACING the current DSR system.

“Starting with the August 20 evaluation, to meet eBay’s minimum standard, sellers can have up to a maximum 5% of transactions with one or more transaction defects over the most recent evaluation period. A maximum 2% will allow a seller to qualify as an eBay Top Rated Seller. Only transactions with US buyers count.”

1. I don’t think they stated the penalty, but you can have a max of 5% “defective” transactions. How this will work out is anyone’s guess. For various reasons, I don’t think you could ever do an apples to apples comparison of Amazon ODR and eBay DR – the platforms are just too different.

2. So now, instead of a feedback goal, you’ve got a Defect Rate goal of 98% perfect to become a Top Rated Seller and be boosted in search results.

“The defect rate won’t affect your status until you have transactions with defects with at least 8 different buyers (at least 5 different buyers to impact Top Rated status) within your evaluation period”

1.This is the “casting a wide net” that I was talking about. So, a small seller might take months to have 5 different buyers that affect their Defect Rate.  A large seller will be affected in a single day.

2. Also, this will really affect sellers of used/refurb items over sellers of new goods.

To summarize these particular changes:  eBay is doing away with their Detailed Seller Rating System in favor of a new Defect Rate metric. The DR looks to be one of the only determining factors now in Top Rated Seller status and search results, even above overall Feedback %.

At first glance, this seems to be a pretty dramatic change in policy. Unfortunately, it’s also going to be very tough to determine if the change is a good one or a bad one for sellers. eBay spent a ton of time and energy developing the DSR system. Yes, it was a really flawed system, but I’m not sure that the new DR system is going to improve on it or just confuse the heck out of both buyers and sellers for a while. In reading through the changes, eBay doesn’t appear to be adding any additional rewards for meeting the new qualifications.

” To qualify for the Top Rated Plus seal and 20% final value fee discount between November 1 and December 31, your listings must include the new extended holiday return option, with returns accepted through January 31. Bullion, Gift Cards, Tickets, and all Business & Industrial categories are exempted from this requirement”

I don’t know how I could be reading this wrong, but is this saying that sellers must have up to a 60 day return policy at Christmas? Wowza, that’s a long time. Again, though, I don’t know what this new policy is fixing – most sellers offer a very generous return policy and guarantee anyway. Personally, I think that eBay is the only marketplace where sellers have to state their own return policies – wouldn’t it just be better to standardize them?

eBay then moves on to the returns process. Of course, every seller deals with returns. Recently, eBay launched a returns portal for sellers and continue to integrate the eBay returns process into the platform:

“Buyers using hassle-free returns are happier. The process is streamlined for you. And now, with the latest enhancements, managing returns is easier than ever”

“Confidence-boosting message to buyers on your item page: Buyers appreciate knowing that they can initiate a return and print the shipping label—and if necessary pay for shipping—right from My eBay. Now, to encourage the purchase, eBay lets buyers know right on your item page that you offer that service and they can buy with confidence”

Returns is another “your mileage may vary” system.  I would imagine that small sellers like the returns process built in. Large sellers, however, are using completely different systems to handle returns, and I think the last thing they would want is to have their returns processes dictated by eBay and be forced to generate shipping labels and pay eBay postage rates.  By the way, I think that is exactly the plan – eBay will require all sellers to use eBay returns at some point.

The rest of the update concerns Best Practices for sellers to prepare for the updates, category changes, etc – the usual.

What do you think, sellers? Are the changes going to help or hurt you?

-Kevin

Come play with me at GodImSexy.com

 

 

 

 

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Want To Be A New eBay Seller? Good Luck…

I have fielded some incredibly disturbing calls lately from companies wanting to do business on eBay, and I want to talk about that for a bit

10ebay

Hi gang,

There is an old Chinese saying: “May you live in interesting times”

I could really write an entire blog post just about that saying.  To me, it means this: “Hey pal, I hope your life isn’t boring. I hope that interesting things happen to you, around you, and because of you.  I didn’t say ‘good things’ or ‘bad things’ – I said ‘things’

Of course, I always hear the voice of Mr. Miyagi in my head when I think of that saying, but that’s beside the point.

As a 12 year e-commerce veteran, I can honestly say that I am living in interesting times. I’ve been completely immersed in e-comm both as the owner of a large online seller, as an e-commerce consultant, as an e-comm writer, and as an executive for e-comm companies. I have watched small companies become big companies, big companies spectacularly fail, and other companies completely pivot when they see an opportunity. I’ve seen technology change so dramatically that it has completely leveled playing fields and totally changed the rules of the e-commerce game.

At one time, many moons ago, I was a large eBay seller. By large, I mean we were selling 5,000 items a day on the site and were the 25th largest seller in the world. At the same time, we were in the Top 15 of all Amazon media sellers. Neither relationship ended well but when I write my book about those two experiences, I will absolutely say they were interesting times.  Regardless of what my personal experiences have been on both sites, I remain very respectful of what both companies have accomplished and the potential for both in the future. I actually feel like a battered spouse – both companies have treated me in the worst way possible, yet I have a very soft spot in my heart for them because they have been such an integral part of my business life.

Now, I am an e-commerce consultant and a writer.  I’m in a very unique position to leverage my extensive background, especially with third party e-commerce sites like eBay and Amazon, to guide other e-comm companies and help them succeed. It’s a great gig for me because I have walked the walk and can really help others avoid the minefields.

I have fielded some incredibly disturbing calls lately from companies wanting to do business on eBay, and I want to talk about that for a bit because I’m just concerned by what I’m hearing.

The conclusion I’m beginning to draw from these case studies is that eBay really doesn’t want to do business with new sellers unless they are large enough to be recruited by eBay’s Business Development teams. Let me give you a few examples:

Last fall, Company A decided that it wanted to be an eBay seller.  They formed a company, leased a warehouse space, negotiated with suppliers to bring in some inventory, and hired a few people to get things rolling.  They opened up a new eBay account and a new Paypal account, and got busy listing items.  On the first day of operations, they were stopped from listing any more items on eBay.  They had listed 10 items.  On their eBay account was a message to call in to discuss their selling goals, so they did.  The eBay representative told them that because they were a new company and because it was Q4, their company had to prove itself a competent seller.  So they were limited to selling 10 items for the month.

ex

You read that right.  Again, this was a company that had formed an LLC, leased space, hired people, and bought inventory with the purpose of selling on eBay.  In addition, PayPal, which eBay owns, told them that it was going to hold up to 100% of the company’s funds for up to 21 days, and may force them to maintain a 25% or more balance long term if they wish to sell on eBay.

Company B tried to start an eBay business about 5 months ago. Their initial limit was 10 items a month, but after maintaining 100% positive feedback, after 3 months eBay lifted their limit to 100 items a month. On the 5th month of business, after the company still had 100% positive feedback and had now qualified for the Top Rated Seller program (which is supposed to be eBay’s best sellers), the owner called in to ask for another increase.  The eBay representative’s first question to her was to ask her where specifically she bought all of her merchandise from (that’s right – The Forbidden Question). Then the rep told her that they were raising her limits to 200 items a month.  When she asked the eBay rep why the amount was still so low, the rep told her that eBay didn’t want her to “grow too fast and not be able to keep up”.

What has happened with both of these companies?  Well, unfortunately, Company A was forced to shut down before it even got started.  Luckily for Company B, she opened an Amazon account at the same time she opened her eBay account.  When the eBay rep told her that eBay was afraid that she wouldn’t be able to keep up with the growth and limited her to 200 items a month, she was selling approximately 200 items a DAY on Amazon and growing rapidly.

These are just two of dozens of examples I could provide and I could go on and on about it, but let’s just go with a few comments:

1.  What company could possibly survive and grow with that level of constraint on them?

2. What is the point of the eBay Top Rated Seller Program? Isn’t it supposed to be for the best of the best eBay sellers? How could you qualify for that program and then be severely limited and not wonder what the value of such a program is to a seller?

If you are a large company and want to be an eBay seller, that is a completely different story.  eBay will grant you substantially lower fees, raise you up in search results, not punish you for your feedback, and even open specific brand pages for you.

The irony of all of this is that, many moons ago, me and the other Top 100 eBay sellers were in constant dialogue with eBay execs about unlevelling the playing field. We demanded better rates, higher search results, more leniency on feedback, and the ability to brand ourselves.  At that time, all of our requests were denied.

I wanted to discuss these new developments with the other Top 100 eBay sellers, but I can’t find any of them on eBay anymore. Seriously.  About 90% of them are gone now.

sorryfolks

Interesting times.

-Kevin

Come play with me at GodImSexy.com

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GodImSexy Greatest Hits: eBay Announces “FreeBay” – The Completely Free Program

To enhance the recent fee changes that will force sellers to offer free shipping, eBay announced this morning that all sellers must offer their items for sale for free as well.

Hi gang,

I remember writing this post very clearly.  It was during the ChannelAdvisor Catalyst event in 2011. eBay had just announced another round of fee increases but, more importantly, they announced that sellers who offered free shipping would now get a huge bump in search results. It was another move that really frustrated the sellers. It also happened to be April Fool’s Day.

As I wandered through the halls of the conference the day it was posted, more than one person stopped me to tell me how great the post was and that I had really nailed their feelings about the Free Shipping mandates by eBay. It felt great…

…until a high level eBay exec rounded the corner and came right at me.

“Freebay, huh?” he said. “Yeah, that’s REAL funny”. He walked off, unsmiling.

You can read the post in its’ entirety over at Startupnation where it was originally posted.  Just click HERE

FS

Enjoy!

-Kevin

Come play with me on Facebook! and here at GodImSexy.com

 

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Wal-Mart Passes The Torch And Magnifying Glass To Amazon.com

Does Amazon deserve all of this negativity? Well, like every company that becomes a larger and larger force in the world, it absolutely deserves scrutiny.

Hi gang,

Simpsons-Angry-Mob

Remember way back like 3 years ago when Wal-Mart was the Evil Empire?  It seems you couldn’t turn a page or click on a website without hearing more news about how terrible Wal-Mart treated their vendors and employees.

Welcome to Press 2.0, where Amazon.com is the new punching bag.

There’s news this morning that Amazon is being sued over their Prime Third Party pricing. The suit makes the claim that third party FBA sellers inflate their prices to compensate for shipping (expert side opinion: um, duh! I have SOOO many stories, particularly from the mouths of eBay people, about free shipping. That’ll be another post) and so Amazon makes a higher fee on the commissions earned from the sale of an FBA item, which in turn contradicts the “free shipping” portion of their Prime program.

You can read the entire story over at Geekwire

That lawsuit comes on the heels of another story making the rounds about the treatment of Amazon workers in their distribution centers.  I can summarize it very briefly for you: it’s bad. TheGuardian.com has a good in depth story about it here .

A dew days ago Salon.com joined the fray by publishing a pretty scathing report titled “Worse than Wal-Mart: Amazon’s sick brutality and secret history of ruthlessly intimidating workers” . Summary: Amazon treats its’ employees badly.

And of course, I would be remiss not to mention my own nightmare story about Amazon, their FBA program, and Warner Bros, which is the most widely read blog I’ve ever done and still generates several e-mails a week from petrified Amazon sellers.  My story remains at the top of the most active posts over at Startupnation.com and can be read here:

Third Party Sellers Need To Rethink The Amazon FBA Program

By the way, I am writing a new post which will update you on this story and answer some frequently asked questions about it.

Even the Wall Street Journal has jumped in, having independently investigated Amazon on several claims of counterfeit and fraudulent items being sold on their site. I was interviewed for that article as well and the reporter had a very good handle on the issues facing Amazon when it comes to policing their own site. You can read that article here

Does Amazon deserve all of this negativity? Well, like every company that becomes a larger and larger force in the world, it absolutely deserves scrutiny. I think it’s fair to question any company on their treatment of employees, customers, and vendors. Every large US company has been held up to the candlelight at one time or other – Microsoft, GE, Apple, Walls Fargo, etc – and Amazon should be no exception.

It baffles me, though, to read the reactions to these reports from people.  As any seller can tell you, FREE shipping does not mean free. Having the lowest price means the lowest margins.  There’s a cost to all of that, knuckleheads.  To excel in some areas, Amazon has to give in other areas. People. Compensation. Benefits. Third Party Seller Services. Etc. Yes, you can get that video game tomorrow or even today

Is Amazon a bad company? Based on what you know about my dealings with them, you’ll be surprised to hear that I don’t think so.  They are an amazingly innovative company with vision that rivals and even surpasses the Mount Olympus of Vision: Apple.

But, like Apple, don’t be surprised when a few cockroaches scurry for cover after you lift up the rug and look under it.

-Kevin

Come play with me at GodImSexy.com

 

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