April 5th, 2006
Caveat eBay Emptor
I’m never going to use eBay again.
Now this is no material issue to the billion dollar company, since I’ve only bought a couple of things on it over the life of the company. The real eBayer in our family is our eldest daughter, a college student on a tight budget with a heightened interest in getting the best deal on everything. But even she agrees that something is rotten in Denmark. Especially with a “feature” called Second Chance, an official eBay method of bid shilling that might not be illegal, It didn’t have to be this way if eBay had kept focusing on its core product, instead of chasing the grail of growth at all costs. but it sure subverts the original promise of the company.
The real issue here is for shareholders. eBay looks like another Internet company—see this musing on Google—that has taken its eyes off a core business by buying Skype to satisfy Wall Street’s demand for growth at all costs. My evidence? A tale of damaged expectations, misleading descriptions, manipulated bids, colluding sellers, meaningless “feedback ratings”, and financial shenanigans, all of which is part of a recent eBay experience.
It all started when I tried to buy a handbag for my wife’s birthday. She wanted a particular “Prada” one, but since the designer has no store in northern California, we took a look on eBay. I’ve since realized that even used handbags with this marque cost upwards of a thousand dollars, but I naively assumed that a $300 handbag (palpitations!) on eBay was pricey enough to be legitimate. When I saw several dozen “authentic” “guaranteed” “brand new” bags, festooned with glowing descriptions and lots of fancy sounding guarantees—stamped metal and lining logos, “controllata” card certificates of authenticity, etc.– all being auctioned by a bevy of “power sellers” and eBay members with hundreds of positive feedback ratings and their own online “stores”, I figured we had found a great source. After all, eBay, great brand name that it has promoted itself to become, wouldn’t let pirates and scamsters take over their service would they?
So we bid on a bag. As usual (as counseled by our daughter), nothing much happened until the very last half hour, when one bidder pushed up the bid price until it exceeded our “maximum” (the price we had shared with eBay as our limit.) We were disappointed, but philosophical. There were several others on offer after all. One would be ours.
The next morning I was surprised to find an official email from eBay informing me that although I had lost the auction, the winner had backed out and I now had a “Second Chance” to buy the bag for my bid “limit” amount. I was a bit nonplussed that what I had thought was a private amount was now being publicly revealed, and I wondered how the buyer could have decided to back out between Sunday night and Monday morning when the email was sent to me, but no matter. I went ahead and agreed to the “Second Chance” deal. After all, I had been willing to pay that much so what was the problem?
It wasn’t until the handbag arrived a week later that things started to come unraveled. While the bag was well made, and was of genuine leather, the handle was a mishmash , didn’t match the rest of the bag and signaled a high quality knockoff. My wife claimed that she knew all along that it was going to be a copy—I was reeling at the price for a fake and wasn’t so easily mollified—and that if the handle had matched she would have kept it. We returned it.
That was when I started to look a little more closely at the sales environment at eBay. Here’s my list of problems.
- The Second Chance idea is simply a way for sellers to smoke out your maximum bid, then offer to sell you the item at your limit. An associate bids up the item until you drop out, signaling that your maximum has been reached. The next day the associate backs out, and eBay offers you the item for your limit price. This makes the idea that you’re actually able to get a “deal” for anything, a fiction—the best you’ll ever do is pay whatever limit you’ve set. And it is particularly ironic since eBay makes a big deal out of policing “bid shilling” (what it calls the practice of enlisting a fake bidder to up the price) and then offers an official way to do the same thing…
- The profusion of resellers of fake luxury goods makes eBay more like a Chinese side street market than an American flea market. Worse, because you have no way to know that the picture of the item has anything to do with the thing you’ll eventually receive, it is actually worse. At least in a market you can handle the goods before buying them.You also have to read every word of the return policy carefully—many “power sellers” say that all sales are final. In this case if what you receive isn’t what you thought was described, there is very little recourse. While this is a tough issue, eBay needs to police itself somehow.
- There is massive collusion among sellers. After I returned the original bag, I started looking carefully at other sellers. It was then that I realized that there was another “power seller” with the same picture, very similar description, same shipping charges, and similar price operating out of the same mid-sized Oregon town. This seemed too coincidental to be chance alone at work, especially since the two of them were the only sellers in the eBay world with this particular handbag. Was one of their associates also the bidder against me in the auction? Who knows…eBay should be able to figure it out if they put some of the brilliant guys who keep Skype alive on the issue.
- The “feedback” ratings are meaningless. My daughter explained to me that if you try to say something negative about a seller, they simply threaten to post nasty comments about you in return, thus tarnishing your “rating” and ensuring that you’ll never get your money back. This is why there are so few negative comments. Essentially eBay pretends to be a buyer friendly place, but in actuality it is skewed to the sellers. This is probably good for business—since people who sell lots of things on the service generate the most profits—but it is ultimately going to be bad for eBay as more and more buyers give up on this unfriendly, unpoliced environment.
- PayPal, while providing some assurance that a completely fraudulent transaction can be rescinded, is playing the “float” in a way that might be expected from an old-line bank, not from a new-generation Internet financial institution. Within minutes of my agreement to take the Second Chance offer, I noticed that the money was electronically sucked out of my bank account. However, the transaction was not officially completed (i.e. money credited to the seller as evidenced by an email) for two days, or 48 hours. PayPal charged me a fee, and used my money for 48 hours. Nothing illegal about this, just another example of a customer-last attitude that augurs danger for the future of eBay.
So, enough of this screed. Many of you are probably whispering "Caveat Emptor" under your breath. I agree. And I’ll be much more caveat in the future. The sad thing is that a great idea, which was well implemented at first, has degenerated into another den of human venality where the honest citizen has no chance against the sharpies and the scamsters.
But it didn’t have to be this way if eBay had kept focusing on its core product, instead of chasing the grail of growth at all costs. I won’t be shopping at eBay again.
Jeffrey S. Young is the co-author of iCon Steve Jobs. He currently tends a vineyard in Northern California.
