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eBay Redux: Shortcutting Fee Changes For Profit

Is $1,200 a month worth a high DSR?

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The latest changes at eBay may encourage the opposite behavior from sellers that the online marketplace wants to encourage.

Humanity has its flaws and foibles, but no one should underestimate the ability of the common person to find the easier route to profits when given a set of choices. If that ability could be distilled and sold by the gallon, the oil industry really would go the way of the dinosaur.

eBay Redux: Shortcutting Fee Changes For Profit

In the updated seller policies, eBay mentions Detailed Seller Ratings (DSR) a few times. The better one’s DSR, the better the discounts a seller could enjoy on Final Value fees for an auction.

Ina Steiner’s excellent AuctionBytes blog recently demonstrated how a seller can find a simpler way to make more money on eBay despite giving up the best available DSR-based discount, based on her chat with Steve Grossberg of the non-profit trade group, Internet Merchants Association:

If you are a PowerSeller and all four of your detailed seller ratings (DSRs) for the past 30 day period are 4.6 or higher, you qualify for a 5% discount on Final Value Fees

If you are a PowerSeller and all four of your detailed seller ratings (DSRs) for the past 30 day period are 4.8 or higher, you qualify for a 15% discount on Final Value Fees

Steve used an example of a seller who might push to get 4.8 DSRs and save $200/month with the new discount. He said that seller might instead raise his shipping and handling fee by 50 cents – forgoing the 4.8 rating (which is hard to attain anyway in the S&H DSR), and make an extra $1,200.

Work harder and make less? That doesn’t make much sense in any context. It looks like eBay may be tweaking these concepts again in the future.

eBay Redux: Shortcutting Fee Changes For Profit
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  • http://www.stores.ebay.com/patricianjewelry Patrician Designs

    I understand that Ebay, by giving up fee on the front end, listing side, is trying to make up the money on "final sale value" fees…….but 8% is outrageous!

    Excessive fees like this will no doubt be adjusted soon or there will be a major exedus…..

  • Craig C

    A 4.8 average DSR is very hard to maintain as a large powerseller. However, I welcome the idea of eBay trying to promote honest sellers. It’s the fly-by-night and shady sellers who try to mis-lead people with confusing item descriptions, extrememly overpriced shipping and handling, etc. that give eBay a bad name and make it harder for us honest sellers to survive. 

    Adding 50 cents to your S&H is not as cut and dry as stated above. If you deal with lower dollar items, you may loose buyers, receive lower bid amounts,  etc. With that said, did you really make an extra $1,200?

  • http://stores.ebay.com/ArtCantHurtU artcanthurtu

    Ebay sellers are assumed guilty -period amen

    The changing DSR scores, on the surface, sounds like a great improvement, better feedback and creating more honest sellers. However as a power seller and avid eBay buyer, I think this will actually have the opposite effect.

    Buyers will suffer because mom and pop stores will not be able to make  enough money to stay on eBay and absorb the buyer fraud rate.

    This effects smaller business even more adversely because smaller seller cannot compete on lowest price, volume and customer service. Especially when 4crabby or dishonest customers can shut them  down.

    What you failed to mention with this new DSR is the removal of bad feedback for buyers, simply put, any buyer  that cheats stiff sellers or abuses the guarantee policies can no longer receive any negative feedback, therefore sellers MUST build the  cost of this into their business – hence all honest buyers will have to pay more for everything.

    How does buyer Fraud rate impact smaller businesses? 

    For example: a seller of hand made children’s clothing only makes 100 sales a month and four of them fraudulent . They  must  be able to eat the material and labor costs ( plus pay all the associated fees) AND at the same time get penalized by eBay.

    Without a diverse group of sellers, there is no customer choice

    The effect will be that more of the boutique style, and smaller, even honest sellers will get pushed out leaving LESS CHOICE FOR BUYERS.

    All because of a lesser talked about issue, and that is buyer fraud.

    There is such a thing a buyer fraud

    A standard brick and mortar business builds in well over 20% losses for theft, shrink and customer fraud, yet as an eBay seller I get 0%.

    Seller who have smaller inventories and more individual products can get put out of business with just a few complaints – as few as 4 in one month – even if  the complaints are not legitimate and are fabricated.

    What is buyer fraud?

    • one who buys and does not pay
    •  one who chronically returns or falsely claims postal damage
    •  people who simply do NOT READ the listing or details and then don’t like what they bought
    •  people who buy your product and illegally reproduce it and sell it at a lower rate
    •  people who threaten to give bad feedback in order to get free products
    • other sellers who buy your products and then give negative feedback to put you out of business

     These things happen just as frequently, if not more so , than scammy sellers. Remember  -as it is now, you can always read feedback before you buy or sell,

    When this changes – Sellers will not be able to know ahead of time if a person is a known frauder and there is no way to enforce guarantee policies.

    the new DSR scores will encourage only mass volume sellers,
    and Eliminate small owners and sellers

    Buyers will suffer because most honest sellers cannot compete on price, volume and customer service without some way to have buyers also be accountable. Let’s face it – you cannot compete on lowest prices, highest volume and best customer service and charge the same thing.

    That is what home depot is about. volume and low prices, if you want better service you go to a local hardware store.

    Ebay sellers are assumed guilty -period amen

    Ebay has NO mediation, despite what they say, You are guilty IF someone charges you , and there is NO recourse for sellers what so ever. Some buyers make a business out of extorting sellers for refunds or threaten bad feedback and lie about damaged property.

    I have had people give negative feedback because I asked the to send them item back to verify their claim, or because they were mad that they won the item and I expected them to buy it. EBay did nothing and made it clear I had to eat that cost.

    Accountability should be a two way street

    This is not to say that there shouldn’t be Seller accountability, there should be, I buy on eBay every week.

    I have always supported the feedback system, because it involved  a fair way to assess the interaction,  on both sides,

    Favors BIG colume sellers and cheap goods

    But this system clearly favors the folks who give eBay tens of thousands of dollars a month, they can afford to have hundreds of profit less sales a month in order to maintain a high volume and good feedback.  

    Huge volume stores that sell 50, 000 items a month can absorb hundreds of bad feed backs, (and hundreds of zero profits sales) but a smaller store who might only make 100 sales a month can be penalized because  of 2 people

    Would your business survive if 2 customers could close you down?

    YES  – 2 people can ruin your DSR score- even if they admit it was their mistake or never write you and even try to resolve the issue,

    We recently had an instance where someone gave positive feedback but marked item not as described, even thought they had also written us saying it was their fault for not reading the description!

    Wonky EBAY math

    eBay’s 4.5% DSR is not simple math ( it isn’t 4.5 people – it can be people who give you positive feedback and then mark that they think you charged too much shipping) and they make it nearly impossible to find out how they rank these scores.

    Plus sellers cannot tell if someone has a problem if they give positive feedback, It may look positive but eBay can count it against you.

    As a seller, I only ask for a fair and equal feedback system, and a chance to compete on an open market. To me that was the real beauty of Ebay – the ability for everybody to shop and sell safely.

  • http://www.atomicdatacreations.com Dennis Bottaro

    The increased fees will hurt sellers.  Period.  It will, however lessen the costs for items that go unsold.

    I have developed a fee calculator that runs both fee models and shows clearly that in the end sellers without high DSR will lose money after the 20th.  Even those with the 4.8+ required for the 15% discount will still not realize the same profits they did before.

  • http://www.TheMoldStore.com John Panagos – Oldeworld Stone & Tile Molds

    I’ve been an Ebayer for over eight years, and have an Ebay Store as well as our own on-line Store.  When is Ebay going to make BUYERS accountable?  Sellers are at their mercy, with NO EBAY RECOURSE!  I’ve found over the years that almost without exception, it’s the NEW BUYER, (feedback under 10), who ends up hurting you.  Usually, it’s because they are not well experienced with the Ebay system.  I think that Ebay forgets that it would be nothing without both SELLERS and Buyers!  We certainly pay enough.

    And have many Sellers noticed the slow-down in traffic?  Those Ebay television ads need some looking at.  I’ve been in sales and marketing my entire career of forty+ years… I don’t see how the Ebay ads will motivate potential Buyers to come to Ebay.  Maybe it’s me? :-)

  • boycott-ebay.net

     I urge all buyers and sellers on eBay around the world to take a stand against the greed that has set in to eBay’ headquarters.

    May 1st 2008 is the next worldwide eBay Strike day, join in and let eBay know now before it’s too late. In 5 years people will be talking about the site that was "eBay".

    eBay! What’s eBay?

    Make some NOISE!

    www.boycott-ebay.net

  • http://www.pdfclassicbooks.com Jim

    Do you know that you may have been penalized in the Best Match search results even if your DSR is 4.8 or higher?

    This will happen when you get some percentage of very low rating 1 or 2 as individual DSR.

    So, if you sell a lot internationally, then sometimes the shipping can be seriously delayed by the post, which of course isn’t your fault. But, the buyer can leave you three 5′s with one 1 for the postage time, which of course cannot be blamed.

    Now, even if your average DSR is higher than 4.8, but you have got enough of these 1′s, you are officially penalized in the Best Match search results.