eBay Boards Are On Fire Over Feedback Changes

The eBay Seller's News, February 2008, Volume 8, No. 3

Learn How To Sell More on eBay with The Newsletter for Professional
eBay Sellers by:  Skip McGrath

In This Issue:

Musings

1. eBay Boards Are On Fire Over Feedback Changes
2. Putting The eBay Fee Increase In Perspective
3. Changes to The eBay PowerSeller Program
4. How The Game Has Changed and How eBay Sellers Can profit From The New Policies
5. New eBay Wholesale Sources for February 2008

"Opportunity is missed by most people because it is dressed in overalls
and looks like work" ~ Thomas Edison

Musings

eBay's announcements last week were an awful lot to digest. There were so many announcements in so many areas that sellers are still trying to figure out what the impact is. We have three stories this week on the most important facets of the announcement.

There are only 13 days left to register for the $500 discount to the Skip McGrath/WorldWide Brands/Magniphy wholesale sourcing seminar to be held at the end of the month in Las Vegas on February 29 and March 1st.

Click Here to read more about the seminar or to sign up for the special email list to get advanced information and up to $1000 in discounts. The seminar information page also has a link to the agenda and outline of the seminar.

I discovered a great little gem of a book called 31 Steps to Your Millions in Antiques and Collectibles. Actually I didn't discover the book, it discovered me when the author called me asking me to review the book. He sent me a copy (its a printed book --not an eBook). The book is written by Daryle Lambert, who has years of experience in the business. At $19.95, the book is grossly under priced considering the valuable information it contains as well as free membership in his 31 Club that comes with every purchase.

Actually I have it backwards. What you do is pay a one-time $19.95 membership to join the 31 Club - 31 Steps To Building Personal Wealth Step by Step with Fine Art, Antiques & Collectibles, then the book is mailed out to your for free. This is not an affiliate program (I wish it was because I enjoy making money from things I can really stand behind). I spent about 15 years in the antiques and collectible field and I can tell you this is one of the best books you will ever read about making money with art, antiques and collectibles. The book and membership is available at www.31corp.com.

I recently wrote about the new rules for Trading Assistants in my blog. I also started a post on the topic on the eBay message boards, that resulted in eBay doing a post telling all Trading Assistants that they are taking another look at the program. So eBay does monitor the boards and posts can have an effect. The key is to be polite, factual and reasonable. A little passion is OK, but too much and people just gloss over your comments.

With all the changes at eBay, sellers are looking at other venues to expand onto. I have been very playing around with OnlineAuctions (www.ola.com) and have been very pleased with the results. They have no listing fees, and for a fairly new auction site they are growing very fast. I mentioned them in a previous newsletter and several of my readers tried them. Because of this, OLA got in touch with me and said they would make a special offer to my readers. If you sign up for their founding member program, they will add $100 in optional feature fee credit to the $200 they now give and they will also add one full year free to the store credit. To get this you will need to use my coupon code: SkipMcGrath when you sign up. You won’t see these additional items immediately, but they will be credited to your account within a couple of business days.

Let's get started with this month's issue:

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1. eBay Boards Are On Fire Over Feedback Changes

The firestorm over the new eBay feedback policy keeps growing. In my 8 years on eBay I have never seen an issue ignite this much passion. Any time there is a change to feedback policy it always stirs up passions, but this one takes the cake.

Let me say right up front that I am no fan of the new feedback policy that stipulates that sellers can only leave positive feedback for buyers. Apparently a lot of eBay sellers agree. The eBay Feedback Message board has been on fire all week. At one point posts were coming in at the rate of dozens of posts per minute.

Buried in the eBay announcement was also some good news about the feedback system. Here is eBay's summary of all the changes to feedback and how I feel about each one. The comments in italics are mine

1. Buyers will only be able to receive positive Feedback. The elimination of true mutual feedback completely changes the culture of eBay for the worse.
   
2. Positive repeat customer Feedback will count (up to 1 Feedback from the same buyer per week.) This is good for sellers who get repeat business.
   
3. Feedback more than 12-months old won't count towards your Feedback percentage. I have mixed feelings about this one. Everyone should get a chance to rebuild and fix their mistakes, but isn't getting more good feedback to raise your percentage the point?
   
4. When a buyer doesn't respond to the Unpaid Item (UPI) process, the negative or neutral Feedback they have left for that transaction will be removed. Excellent and long overdue. Sellers have been asking for this for years.
   
5. When a member is suspended, all their negative and neutral Feedback Left will be removed. This is good, but what is not clear is what happens to their received feedback. Is that removed too? This ties into the 12 month rule. If a seller was suspended for a year then he starts over with 100% feedback.
   
6. Buyers must wait 3 days before leaving negative or neutral Feedback for sellers with an established track record, to encourage communication. This helps. It gives the seller a chance to fix a problem and for the buyer to calm down.
   
7. All Feedback must be left within 60 days (compared to 90 days today) of listing end to encourage timely Feedback and discourage abuse. Why not 15 or 30 days? If people aren't leaving feedback in a timely manner what is the point? Buyers want to see what your customer service is like now --not two months ago.
   
8. Buyers will be held more accountable when sellers report an unpaid item or commit other policy violations. I wish it said how they will be held more accountable. ???
   

So there is some good news mixed in with the bad. Some other nice things that happened is that PayPal will also give you seller protection when goods are shipped to any address --not just the confirmed address as long as the buyer puts an address into his PayPal account.

As for the Feedback Issue --All is not lost. eBay has backtracked and changed position before. Keep complaining, post on the boards, in your blogs and to other blogs. Again, all is not lost. eBay does read the boards. Reasonable thoughtful posts have the best chance of making an impact. If you vent your anger, just say you are leaving eBay or joining a boycott, you will not be taken seriously.

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2. Putting The eBay Fee Increase In Perspective

Last week eBay announced major fee changes and realignments in four areas of the eBay platform:

• Lowering insertion fees for auction and fixed price listings across the board.
• Balancing that change by adjusting some final value fees. (eBay will take a similar approach with Store Inventory Format listings)
• Gallery (Formerly 35 cents) will be free and fees for Gallery Plus and Picture Pack will be reduced
• Tiered pricing for Featured Plus
• Higher requirements to reach and maintain PowerSeller Status coupled with fee discounts for PowerSellers

Overall fees will increase, but the news is not all that bad when you factor everything in. Fees have been going up since eBay was founded and will continue to go up over time.

Lets look at the changes that will take affect on February 20th:

Most eBay Listing Fees will drop 5-cents.  As the starting value goes up, the discounts get a little better. This would seem to be a disappointment at first as sellers were hoping for a greater reduction, but remember that Gallery is now free. Since Gallery ($0.35) is used in 95% of all listings this is effectively a 40-cent reduction in listing fees on items that start under $25 and much better on those over $25.

Auction Listing Fees

Fixed Price Listings will also drop a nickel on low priced items with larger savings on higher priced listings.

eBay Store Listing Fees also drop slightly and 99-cent listings will disappear.

The "N/A" in the charts above reflect a new minimum start price for Fixed Price listings, Store Inventory listings and the Buy It Now feature. Starting in February 99-cent Fixed Price and BIN listings will no longer be available. The minimum starting price will be $1.00.

Store Inventory and Fixed Price listings must have a starting price of at least $1.00. So effectively 99-cent listings are gone.

Final Value Fees will see a huge increase in the first tranche with lower increases on higher value items.

The final value fees rose more than I would have liked as a seller.  3% is a pretty hefty increase. From eBay's perspective this increase should more than make up for the cut in listing fees.

Let's look at the impact on an actual sale:  One of the products I sell on eBay is a $97 Rachel Ray Chef's Knife Set. With the current fee schedule my total fees for listing, bold, gallery and final value are:$5.60. The new fee schedule increases this to $6.25 --an increase of $0.65.  On a $97 sale, that works out to a .67% increase in total fees.

What is not included in the example is the conversion  factor (sell through rate).  My auction-style listings for this product convert at 75% which is pretty good.  But this does mean that I have to add 25% to my listing fee to account for the items that don't sell. If I do this then my total fees under the new schedule are slightly less. Adding 25% of my listing and gallery fee under the current schedule increases my total selling cost to $5.84. Adding this to the new schedule increases my total fees to $6.39.  But this narrows the margin between the current and new fees to $0.55, or an increase of .56%.

So yes this is an increase, but my listing fee risk is lowered.  Theoretically I can list more items for less money. If this generates additional sales, my total income is increased.  Right now I seldom list an item that will end on Friday or Saturday as my products tend to convert poorly on those days. But now with the lower listing fee I can do this with less risk.

The other opportunity is for Fixed-price listings. If I list my knife set at $97 fixed price, the total listing fee (including gallery) drops from $2.75 to $2.00. Since my fixed price listings only convert at 50% this is pretty significant and I will now list more fixed-price items. 

The impact on eBay store listings is even greater.  All of my eBay Store items are in the $25-$199 tranche where the listing fee is cut 50%, from 10-cents to 5-cents.

PowerSeller Fee Discounts will be based on Detailed Seller Ratings (the Star system).

• 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

So if I keep my current 4.9 DSR, I will get a 15% discount on my final value fees. This will reduce my final value fee on the $97 knife set by 70-cents, so my adjusted total selling fee drops to $5.69 on the $97 sale.

One of the biggest problems I see is that the special rebates and seller protection will only be available to PowerSellers. The new Best Match Search feature will also favor PowerSellers with high DSRs by favoring their results in the search results. The effect of all of this is that it will be harder for new sellers to reach PowerSeller status. This will be a positive for alternative auction platforms such as OnlineAuctions.com who favor smaller newer sellers. (Use the promo code SkipMcGrath at www.ola.com to get a special offer for my readers.)

I don't see the new fees and policies driving people off of eBay to other sites, but I think sellers will be experimenting and selling in multiple venues. I will launch just as many auctions on eBay as I always have, but I am also selling from my three websites, on Amazon.com and OnlineAuctions.com.

eBay has been losing buyers to competitive sites. All the actions announced this week are designed to make eBay more fun and convenient for buyers to bring them back to the site. If that works, then this will be good for sellers, but if it doesn't work, sellers may just drift away for easier and more profitable venues.

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3. Changes to The eBay PowerSeller Program

eBay is raising the bar on PowerSeller Qualification. ThePowerSeller program currently requires $1,000 a month average sales volume, a 98 percent positive feedback rating and that your account be in good standing (pay your eBay fee bills on time).

eBay wants to change the program to give PowerSeller status a competitive advantage by adding Detailed Seller Ratings (DSRs) as a requirement to the program.

Starting this July, you will need to have a minimum 4.5 score in all four DSR criteria over a 12-month period to be designated as a PowerSeller (or remain in the program).

PowerSellers who meet or exceed certain standards will be rewarded by eBay as follows:

• Discounts for PowerSellers. This is a radical change for eBay as they have always had the philosophy that eBay should be a level playing field for all sellers.
• Better payment protection through new PayPal policies only available to PowerSellers
  
  • PayPal will no longer require that PowerSellers ship to confirmed addresses for items sold on eBay. Every address in the PayPal system will get protection.

  • For PowerSellers there will no longer be an annual $5,000 annual limit on seller protection...you'll have unlimited protection coverage.

  • Also starting in February – seller protection will be extended to cover transactions with buyers in many markets around the world (instead of only to US, Canada and the UK). Now PowerSellers can sell with confidence to a much larger group of buyers.
    
• And for all qualified sellers, greater exposure for listings in search
  
• Finally, the Unpaid Item Protection Program that refunds feature fees to PowerSellers in the event of an unpaid item will become a permanent benefit of the PowerSeller program. In addition to auction-style listings, eBay will also extend this protection to single-item fixed priced listings. This is very welcome but why doesn't eBay extend this to all sellers --not just PowerSellers?

Fee Discounts

Beginning with your April eBay fee bill, there will be two levels of discounts for qualified PowerSellers that will be based on Detailed Seller Ratings you have received over the last 30 days:

• For those with a 4.6 and above on all four DSR criteria, eBay give you a 5 percent discount off your final value fees.
• And for PowerSellers with a 4.8 and above, the reward is even better: 15 percent off all of your final value fees.

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4. How The Game Has Changed and How eBay Sellers Can profit From The New Policies

This is so much to digest and this newsletter is already so long I was tempted to stop with the last article and wait two weeks for the next issue until how I address the big question on everyone's mind: "Can I still make a living on eBay with these new fees and policies?"

As time goes on over the next couple of months until all of these changes take effect I will be addressing these issues in great detail and they will be incorporated in my books as I update them, but I wanted to give my readers a few short thoughts:

Customer service will be king. Unless you ship quickly at a fair price and communicate well with your customers, you will earn low DSR scores and you will miss out on the search preference and fee discounts.

Marginal sellers will leave eBay. Unless you are one of those marginal sellers, this will benefit everyone. There will be less competition --and who knows, maybe eBay is right. If poor sellers leave, business overall might just increase.

eBay will continue to grow, but the days of hyper-growth are long gone. In the past you could count on a steady flow of new members to prime the eBay pump. eBay has more competition today and this will continue. A few sellers will actually leave eBay for these other venues, but the majority of sellers will look at other channels as a way to grow their business beyond or in addition to eBay. Once you master eBay and eBay stores, the next logical step is to set up your own website. Fortunately this is easy to do these days. There are dozens of companies offering easy-to-build websites including my offerings at PowerSellerBuilder and Maginiphy.com.

The Touchy-Feely eBay is gone forever. eBay will still be a profitble venue to sell and a place where the little guy or gal can start a business with very little risk and potential great rewards, but it is pretty clear the sense of community is all but gone. The problem with the new management is that they make their money from eBay --not on eBay, and they will never understand the sense of community and passion that is fast disappearing. That's too bad --but life goes on, and so will eBay.

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5. New eBay Wholesale Sources for February 2008

With the changes on eBay, niche marketing for small sellers wanting to grow against the larger competitors, will become increasingly important. For those of you who have purchased (or will purchase) The Complete eBay Marketing System or The Wholesale Buying System, we have been adding hundreds of niche suppliers including companies that actually drop ship to the member's site that comes with the purchase of either of these books. Remember, don't buy both books because the entire Wholesale Buying System is included in The Complete Marketing System. If you are already well skilled and profitable on eBay then the Wholesale Buying System will help you expand your wholesale sourcing knowledge and give you a great list of actual sources and dropshippers to get you started. But if you are just starting out on eBay, get the Complete eBay Marketing System to take you from the basics to learning how to actually make a living on eBay.

Here are some other niche sources for this month:

Remember not all of these companies have wholesale pricing right on the web site. With many of them you have to send them an email through the web site to request wholesale information. Don't mention eBay in your email unless they ask. Just say you are an "online reseller." If the subject of selling on eBay comes up, tell them you are willing to sell at their MAP Price and won't undercut their retailers. MAP stands for Minimum Advertised Price.

Funky Junque carries the hottest, reasonably priced fashion accessories including bags, bracelets, earrings, necklaces, and watches for girls of all ages…. Great holiday gift items

Aircraft Models is a manufacturer and importer of fine hand-crafted ship and airplane models. The web site only shows retail prices, but if you email them they will send you wholesale and drop ship information.

Mpressions Inc. sells beautiful handcrafted, American made products to specialty stores. Their inspirational framed prints include hand painting, embossing, calligraphy or personalization.

Creative Illuminations have the most wonderful gel candles in all different styles. Very popular because they burn much longer than wax and they're more unusual.

Fountainology have wonderful stone fountains, tumbled gem stones and much more.

Ogallala Down Company sells fluffy, elegant duvets and pillows. They include classic products like wool mattress pads and featherbeds.

Panaria is a large wholesaler of children's and teeny-bopper novelties. I have seen many of their products selling on eBay.

FaithWorks Launched in 2000, FaithWorks provides sales and distribution for about 300 Christian publishers and music labels into the Christian marketplace. Formerly a division of National Book Network, it has been bought by Send the Light, a UK publisher.

That's it for this issue.

See you next in two weeks

Skip McGrath
The eBay Seller's News

P.S. If you missed the last issue, click here to read it.