As most of you know, in addition to regular blogging on news and events coming out of eBay Inc., I’ve been doing my best to set up more 1:1 conversations, either in email or face-to-face, with key people within the eBay organization. The goal is to continue to provide access to folks that you normally wouldn’t get. To that end, I exchanged emails with Dinesh Lathi (above; left), VP of Seller Experience, to get his take on some key topics I’ve seen come up on Ink in the past. What follows is a transcription of the 4 questions I asked and his subsequent answers. I look forward to providing more access like this moving forward.
Cheers,
RBH
1) According to a recent blog post by Randy Smythe, eBay has become a fixed price market but according to a recent eBay webinar presented by Todd Lutwak, auctions are alive and well and “auction style still accounts for 70% of the listings on the first page of search results.” This seems contradictory or are they both right? Is there equal room for both formats in the marketplace?
Yes, there is plenty of room on eBay for auctions and fixed price, and what Todd was driving at is that there are specific strategies for succeeding with both. It is not “this OR that” it is “this AND that”. But I think you are missing the broader point.
What’s been said outside of eBay is that lower prices and free shipping are “what eBay wants”. The reality is that it doesn’t matter what eBay wants… eBay.com is a marketplace and that means neither eBay nor our sellers get to set the price of goods sold on the site, buyers do. This is as true in auctions as it is in fixed price. Lower prices and free shipping are what buyers want.
The difference today is that buyers know how much items are worth because they can compare prices easily across the web. Whether you’re selling in auctions or fixed price or both, the point is that you are competing against the entire universe of merchants, not just other eBay sellers, and if you want to win the sale you have to price yourself accordingly.
Layer on top of that a lousy economic picture, where consumer demand is declining and inventory levels are swelling, and you have a lot of downward pressure on prices across the board. All you have to do is look at last Thursday’s NY Times and you’ll see that this is not limited to eBay.
2. Back in April I posted a video interview where Pierre talks about the “Level Playing Field” – where all sellers are treated equally – as being core to eBay. Yet within weeks we established the Diamond Tier of PowerSeller under which those who qualify receive negotiated pricing that is better than what’s available to most sellers. Isn’t this a contradiction?
When we think about Level Playing Field, we tend to focus on equal access to opportunity. In other words, anyone can come to eBay start a business, establish a track record and grow according to their capabilities. It doesn’t mean we will treat everyone the same, regardless of their track record and capabilities, but it does mean that we will make it possible for anyone to succeed.
In terms of the Diamond Tier of PowerSeller, we are willing to negotiate special pricing with any seller who can meet the very high customer service and volume requirements we demand of these sellers. Making it possible for anyone to access our market and succeed as a seller and offering incentives to the very best sellers are not mutually exclusive goals.
3. But back in May, Lorrie Norrington stated here that small sellers are our competitive advantage. If that’s true, why would we give a competitive advantage to the very largest sellers?
First of all, any seller of any size can list an item in the auction format today and they are virtually guaranteed that their item will get to the top of search results as their auction comes to a close. This is absolutely as true today as it was in 1998.
Second, our goal is to provide a vibrant and extremely competitive marketplace. In pursuit of this goal, we have recognized that the scale and capabilities of large merchants absolutely enhances buyer demand for eBay items. However, the needs of very large sellers differ from the more typical eBay seller and that has spurred us to both negotiate bulk pricing and to add things like Large Merchant Services APIs (which we did today).
At the same time, we know that many buyers shop eBay not just because of the values and selection, but also because of the one-of-a-kind experiences small sellers create. So we must continue our appeal to small sellers and do everything we can to help them stay competitive. To this end, we are still the best place on the Web to start a business because of the low barrier to entry and because we allow sellers to build a brand and own the relationship with their buyers. To help sellers stay competitive, we are offering more useful advice, such as last week’s webinar.
4. Jack Sheng recently visited eBay HQ to celebrate reaching 1 MM feedback as a seller – something he accomplished in a relatively small amount of time but he started out before 2008; I recently wrote a post that stated I still believe eBay is one of the best places to launch a business online, but is it really still possible to start today and enjoy the kind of success Jack has had?
Not only is it still possible, with FP30 it may be even more likely. Jack built his business in an extremely competitive category and through experimentation, smarts and determination built something hugely successful. What’s more, he did all this on an eBay platform that was simply not optimized to enable sellers like Jack who wanted to move mass quantity. Today, a new seller who can access well priced inventory will find a partner in eBay that can more readily on board them and scale with them as they grow. It is not easy and it is not for everyone, but there are literally millions of people and businesses who are profitably making eBay work for them.
UPDATED 11/25/08
I’ve seen a few comments on blogs and Twitter that suggest that Diamond PowerSellers receive special treatment with regard to their DSRs. Something that I’ve been told on a number of occasions is simply untrue. As a result, I went back to Dinesh and asked him specifically about that. He responded with the following:
“As a requirement for listing on eBay, all sellers – regardless of volume, category, and PS level (including Diamond Level) and without exception – must adhere to the same standards with respect to DSRs, feedback and policy compliance.”
UPDATED 11/26/08:
Todd Lutwak also sent me the following in email this morning:
“We have not, are not currently, and will not manipulate feedback or DSR’s for any seller on eBay.”
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