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Tuesday, February 9, 2016

Rumours About E-bay's Business Practices - Fact or Fiction?

Sales have been relatively good this first week of February. However I have noticed a pattern emerging over the past few months, where I will have a few very busy days and then nothing for 2-3 days, even though my volume of material has been continuously expanding almost daily. I certainly do not yet have the sales increase that I had hoped for after having nearly 3 times the volume of material listed than I had before back in 2012 when I had just topped 1,000 lots. Cause for concern? Hard to say for several reasons:

  • The material that I was listing back in 2012 was from the 1920-1940 period mostly and I have not yet gotten around to replenishing that material. I have been working on either Queen Victoria or Queen Elizabeth. 
  • The material that I have listed in depth has done relatively well after the listings have run a full month and buyers have had a chance to see them. 
  • My listings have focused on depth rather than breadth, so that while I may have over 3,000 items running, at the moment more than half those items are from just two issues, which only have a limited market. But the market that does exist for this material has responded well. 
  • My pricing strategy is not to be the cheapest and so the internal search engine on e-bay tends to rank my listings lower in "best match" search than other sellers.
  • There is a natural ebb and flow to traffic and it is not realistic to have the same volume of business every day.
My attitude so far has been to take the long view: I am looking to expand my inventory and get it all listed so that buyers can see a massive presence on e-bay and can choose from an absolutely unrivalled selection of stamps. Once I am dominant in most categories of Canadian stamps I can begin tinkering with pricing and marketing. What I haven't wanted to do to this point is get so hung up on making sales that I charge too little and stuff goes flying out of inventory faster than I can replace it. That is no good as it means that I would never get a firm presence established among my prospective customers, nor will I make much money. 

But it is getting hard to ignore the things that I am reading about online. If I google things like, "how does e-bay's search engine work", and "does e-bay limit your sales?". There are articles upon articles talking about various nefarious practices put in place by e-bay to keep small sellers paying large fees to e-bay while enjoying only enough success to pay the bills and not much more. These practices allegedly range from silent limits placed on sellers without their knowledge to deliberate manipulation of search results and hiding of sellers listings to prevent them from making sales. These articles are very compelling when you read them and very disturbing. If they are true, then e-bay is not a very good venue on which to base my business model. 

But are they true? It is so difficult to know. The online world is full of all kinds of people, including those who are quick to blame others for their problems. It is very difficult to tell who is just bitter because they couldn't adapt to e-bay's evolving standards, versus who has been genuinely wronged. From what I have read, e-bay has made no secret about the fact that they are trying to change their venue into a more retail oriented marketplace. There are many aspects to their vision, and one of them is buyers being able to get the most value, which often means the lowest price. So they have made a lot of changes to their search engine that put listings by sellers that offer free shipping and low prices to the top of the pile. Of course, one size does not ever fit all, so some sellers in some categories are going to be negatively affected, while others are not. 

But is that really a bad thing in the long run? I am operating in the collectibles market and a very large part of the customer's decision to purchase comes down not just to price, but selection and the degree to which they trust the seller. It seems to me that a seller who prices his or her stamps too cheap will simply run out of items to sell eventually and will be unable to consistently supply collectors at the lower prices eventually. So what will happen is that while they will enjoy a temporary advantage in best match" for a while, that will disappear once they run out of material to sell. Another thing is that even if I am lower in search, I'm not sure it matters that much because I think all serious collectors are going to look at ALL the listings for a particular stamp until they find one they want, in the condition they want, at the price they want to pay. Once the customer has been happy dealing with me several times, I expect that they are going to come to my store rather than come to me through a general search on e-bay. I will have to start looking at the traffic reports to see if this is true. 

As for the nefarious practices that these sellers are all alleging, it is hard to believe that a large organization like e-bay would go to the trouble to limit a seller's success on purpose. What is in it for them? There are charges that they spread the wealth among small sellers to keep them in the game paying fees. While that sounds somewhat plausible on the surface, I think it kind of falls apart when I look at e-bay's fee structure and note that the vast majority of my monthly bill comes from listing fees and final value fees. Limiting one seller's success to help another seller does not maximize listing fees for e-bay at all. It actually makes no difference to their revenue - at least none that I can see. The only way that it would make a difference is if the unsuccessful seller leaves e-bay and e-bay loses out on the monthly store fee, plus the listing fees they would have had from that seller. But the sales that that seller would have had are now picked up by the sellers that remain and they pay the fees to e-bay instead. Remember the buyers are going to buy whatever they want regardless of who is selling it. Besides, I cannot see how e-bay can actually limit your sales if buyers want your merchandise, since they can simply visit your store and buy as much as they want. As a buyer, I have never run into a situation where the amount I could spend with a seller was limited. 

I have seen some evidence that the internal search engine does temporarily hide listings as I have been searching the new Canada listings for material myself when I have tried to go back to a listing that I was just looking at and can't find it. But usually if I am persistent and go back within a few minutes, I can usually find it again. Now I am talking about "buy it now" listings. I don't know about auction listings as I run very few of those. But I do know that e-bay has quite openly admitted for several years now that they would like to see more sellers with stores offering buy-it-now items. So it would not surprise me if they are trying to make auctions less lucrative for sellers than they were before. This is entirely consistent with what is best for e-bay as I believe they will probably make more money from good-till-cancelled store listings than they will from placement fees for auctions. I think they also recognize that there is a significant segment of the shopping market that doesn't like buying at auction. If you look at the stamps category you will see that the buy-it-now listings vastly outnumber the auction listings, so it stands to reason that many auction listings are bound to get lost in the search shuffle anyway. 

All this fuss over the search engine seems to be to be a case of not looking at the bigger picture since it seems to me that the only customers you are likely to lose by your listing disappearing for a few minutes are the casual browsers, most of whom aren't going to buy anyway. I think serious collectors who are looking for my stamps are going to find at least most of my listings at any given time and if they are serious and like what I have to offer, they are going to visit my store where they can see everything I have for sale. That's what I do when I see a seller who has good material at decent prices. Why would my buyers be any different? I can see how this might be a problem with sellers of consumer goods where the customer is not a repeat buyer and each sale, by definition is a "one-off", since losing that customer means losing the sale for good. But that is not how it works with stamp collectors. Instead collectors are creatures of habit who tend to spend a certain amount on their hobby periodically. So even if you miss them this week, if you are consistently on e-bay over the long term, it seems to me that you will catch their attention eventually.  

So while these allegations are unsettling and somewhat disturbing, I am going to take them with a grain of salt until I can see more compelling evidence. All I know now is that I get far more sales - over 1000% more on e-bay than I do from competing platforms where my material is also listed - marketplaces which do not have these allegations against them, but who also seem to be wholly incapable of generating the traffic that I need to sell my stamps.  

If you happen to be curious about what I have to sell, you can view it by clicking the following link:


  1. Nice analysis.

    It reminds me of my collecting of Nero Wolfe paperbacks. A very specific market and essentially there are two things I look for - Quality and Price. Surprisingly for a first book of a particular kind I don't worry too much about quality. I get a cheap one, check it out and then see if I want to pay more for good quality. What I end up doing is looking at 30+ pages of listings at a time. Invariable those on the first few pages never get bought by me anyway.

    1. Thanks Dale. I do think that many collectors will pass me over because of my prices, but I don't think anyone makes a good living selling collectibles by being the cheapest. Maybe if you are selling a product you can easily just replace it is a different story, but with a relatively low volume product, I just think it is a recipe for being busy and poor.