Thursday, September 23, 2010

Why E-Bay Sellers Hate Meg Whitman--And You Should Too

If you are interested in the California governor's race, you may have already read about Meg Whitman's tenure at e-bay. If not, go here. I'm here to give another perspective, that of an e-bay seller.

The original mission statement of e-bay was to create a community for people to sell their stuff online. E-bay treated these small sellers as partners in growth--all could prosper together.

I joined e-bay in September 2004 and started selling a few months later. I opened a store in May 2005 selling books. By this time, the worst of the bugginess of the e-bay system was past. Sellers were grumbling about e-bay rate hikes and a few had left, but there was no mass exodus.

As a seller, I followed a pretty standard path, first getting some auction items together to sell one weekend a month, then moving up to a combination of store and auction. The first month I had a store, I had less than $100 in gross sales. I was excited just to make a profit. E-bay fees were low enough that a new seller had room to ramp up. For a marketing person like me, e-bay also allowed store and listing customization to create an "experience" for buyers.

When I opened my store in May 2005, there were still people with stores with only a dozen items listed for $1 or $2 each. In other words, there were people with no business sense that were paying out of pocket to play on e-bay. There were one or two sellers with over 100,000 books, but after that, it dropped off fast. If you had 1000 books listed, you were a big seller. It really was a community for small sellers.

While I was an ebay seller, my sales grew and so did e-bay pricing for sellers. Many sellers who had built a good following left in disgust, but I reworked my inventory to stay profitable (for example bundling paperback books into lots to create higher per-item prices). It wasn't what customers preferred, but they adapted, so I did too.

Then e-bay introduced the PowerSeller program to reward high-volume sellers. By this time, my volume qualified for the bronze level. I got 15-20% of my e-bay fees rebated each month, depending on my customer service scores that month. Silver and gold members (later platinum was added) received even more rebates.

Without the rebate, I would have quit right then because it would not have been profitable. That, of course, means that true dilettante sellers were being priced out. Thus e-bay, the original birthplace for small business, created barriers to entry.

E-bay argued that the market demanded more seller accountability. However, the market also demanded better policing of gray goods and knockoffs from Asia, and that didn't happen.

I think the last of e-bay's original fans left then, and they were very angry about the promise broken and the community taken away from them. E-bay had gotten its start through the efforts of the original sellers, and now e-bay was trading up to large Asian sellers.

The original sellers argued, and correctly, that e-bay could make plenty of money following its original vision. It could have been the cozy community that it once promised to draw in small sellers.

E-bay under Meg Whitman made a choice to put profits ahead of people, just as so many other companies do, and that is why I don't want Meg Whitman anywhere near the governor's chair. Of all the things that should not be run for profit first, government heads the list.

My last straw with e-bay came when it announced in 2008 that in 2009, it would begin charging fees based on type of item. The sale fees for books nearly doubled, while fees for some categories, like electronics, actually went down. I was still making a profit, but now e-bay was making more on my sales than I was, and I found that unacceptable. And I was a bronze PowerSeller.

E-bay also announced measures to homogenize the site and reduce store customization, thus reducing the last visual signs of community on a site that community members had already left.

So let's recap. During Meg Whitman's tenure, e-bay

1. Nurtured small sellers to establish itself
2. Advertised itself as an incubator for small businesses--and was for a while
3. Drove away the successful small businesses it helped to create.
4. Drove away budding local entrepreneurs
5. Completely sold out its original vision of community for even more profit
6. Welcomed cheap overseas sellers with goods of questionable origin

Just say Hell No to Meg Whitman.


  1. A great recap of a company that changed the world for a few minutes, then sold out for the status quo.