The eBay report, the changes in feedback and the community out roar:

Most of you have heard or read about the new changes that eBay plans to apply within the next few months as most ebaysers have been following the news really closely on the boards, blogs and different news outlets. I think people are quite angry with the new changes as they believe the "Good News" as portrayed by eBay, is really "Bad News" for both buyers and sellers. I think eBay is one of those company’s that most love, the grassroots movement that enables people to sell their good online to a large and vast community rather than the local flee markets which limit the visibility and diversity for their products. eBay upset a lot of people with their current set of changes and the blogosphere is buzzing with anger. At first glance, it looks like all good news but it seems like the devil is in the details.

The changes seem to really give most of the breaks to the huge sellers as those guys usually posts thousands of items in which at least 60% of their items don’t sell. It will obviously help them cut their costs as the insertion fees is what eats away at them most, but for the majority of eBay users that are selling at the most ten to fifteen items at any given time, they will be the ones who will be affected most. Small sellers in general are not working via volume; they are working on small profit margins hoping to make an extra buck. I think eBay does not really understand the dynamics that the company was built around, the idea that anyone can easily bring their goods and offload them to someone who may think they are of use to them.

The notion that eBay is at a crossroads is really false, the real pressure under management is that they are new, as investors, board members, and the media has them under a microscope, and this is what seems to make them want to make drastic changes to their market place. If the changes were made to enable eBay to compete with other internet heavy weights such as Amazon, Yahoo, and Craigslist, than I believe they went about it the wrong way as most sellers are outraged and now looking to post less as they research other destinations to sell their goods online.

The feedback changes seem to be upsetting sellers the most, I have read and talked to many power sellers that are willing to deal with the fee hikes, but they just can't absorb the changes in feedback where a seller is no longer able to issue a neutral and negative feedback to a buyer. I propose for eBay to leave the current system but make the following changes, some of these changes they are making which is a good sign.

1. One of my ideas is as sellers or buyers reach a certain milestone, lets assume 200 feedbacks, they are rewarded and able to remove one neutral/negative feedback mark from their score, this change encourages buyers and sellers to work hard so that they are able to improve their feedback after a certain milestone is reached, the number of 200 is just an example, it could be a certain number for sellers and another for buyers or the same for both.

2. I like that negatives don't affect your score if they are over 1 year old, for sellers, this seems to be a win, but they could have done the same for buyers by leaving the ability for sellers to leave negative feedback.

3. DSR, I am actually one of a few who likes the new DSR system, I think its a measure that gives buyers the ability to rate/view a buyers history in regards to shipping charges, shipping time, communication, etc. I am also happy to see fee reductions and rewards to those who have high DSR ratings. eBay will issue sellers who achieve an average of a DSR score of 4.8 a 15% credit and those who reach an average of an average DSR of 4.6 will receive a 5% credit that applies to their fees. The DSR system seems to have been copied from Amazon as this is very similar to how their rating system works.

4. Blocking users, I mean who will block 5,000 users? come on, I mean it is possible but if you block that many people, it basically means you have a staff assigned to block people, this is a trivial change that was just added as gravy, it really does not mean anything.

5. Negative or Neutral Feedback left by deadbeat buyers will be removed. This is obvious really, nothing new here.

6. The Suspension of buyers will allow you to get feedback removed. This also seems to be obvious, anyone is able to register an account, buy an item, issue negative feedback and just go away.

7. They will allow buyers and sellers up to 60 days rather than 90 days to issue feedback. What does this really do? I mean I guess it’s a good thing but it’s not really a big deal.

8. A buyer will not be able to issue feedback within three days of purchasing a product, this is nice but again, most buyers won’t do that anyway, someone who is trying to extort or ruin your feedback may but most never do so.

9. Repeat buyer feedback is now factored in to your score. This seems pretty obvious to me, I think it is a very good addition.

I think that eBay has made some very nice changes when it comes their feedback system but the most dangerous change is not allowing sellers to leave neutral/negative feedback. The eBay management team believes that sellers often threaten buyers that they will issue them negative feedback if they do not get positive feedback issued them selves. This does make sense BUT now you have another problem, the problem will just be on the other side where outlined in the new rules, buyers can just issue feedback without trying to resolve the issue, extort, threaten, etc. It means more for a seller to get negative feedback removed than for a buyer, as most sellers are willing to sell to a buyer with a 90%+ feedback score while most buyers are not willing to purchase from a seller that has a feedback score of less than 98%.

The notion that buyers are not bidding on eBay because they are scared to receive negative feedback is really false and baseless, they are not bidding because eBay has basically been the same company as it was 10 years ago, the company has really not evolved or changed one bit until the last couple years while competitors have been planning and executing in the background as eBay just sat around and enjoyed market share. The reason most people use Amazon now is because they seem to be on the cutting edge with branding, building infrastructure and being part of the web 2.0 revolution. I believe that it is a crossroads for eBay when it comes to their competitive advantage but not from a revenue perspective. Amazon carries a lot of their products in-house which means they are able to control the flow of goods in the most sense, I know they also have a seller network which is closely watched and assisted by the Amazon team.

What eBay seems to not understand is that any change made to the way sellers do business will also affect the buyer. If you raise fees, sellers will raise their prices, if you make it harder to sell, their will be less products, thus, less buyers who can’ afford or find what they want.  It seems that eBay wants to be the next Walmart, where they have a small network of large sellers who are doing most of the selling while doing away with the little guy and if this is their internal goal, it stands to be a grave mistake.