eBay is growing up.  That adorable toddler who smelled of sweet milk and talc and who just wanted to play in the snow all day, has given way to a surly adolescent who stinks of stale sweat and cigarettes, and whom you wouldn't leave alone in the same room as the liquor cabinet.

Ten years ago, when eBay began, it was a clubhouse where enthusiasts and collectors could get together to trade goods.  Buyers and sellers would meet on an equal footing and, with founder Pierre Omidyar's innovative feedback system, grade each other to create public reputations. 

But, as of this month, this system will go the way of other 90s nostalgia, such as references to "the World Wide Web, the multimedia part of the Internet," and the now poignant "information wants to be free". 

In a bow to the undisputed fact that sellers have few choices of venue but buyers have many, eBay is revamping.  Now, sellers will no longer be able to leave feedback for buyers, but buyers will still be able to leave it for sellers.  And that feedback will be more detailed.  Since mid-2007, buyers have been asked to leave not just the positive/negative/neutral feedback with a descriptive phrase (if you call "AAA+++++++++" descriptive), but four categories of Detailed Seller Ratings (or DSR's) - Item as Described, Communication, Shipping Time, and Shipping & Handling Charges. 

These ratings are graded from one to five stars.  Sellers' scores in these categories will qualify them as a PowerSeller, and for various discounts in their eBay fees.  To maintain your coveted PowerSeller status, you will need to score at least 4.5 in each of the four categories. 

I predict that eBay will not be losing a whole hell of a lot of money on these discounts, and the ranks of the PowerSellers will shrink dramatically.  That last category, the S&H charges rating, is the culprit. 

As the manager of a PowerSeller (the iSold It store in Los Angeles), I can tell you that buyers do not like paying shipping and handling.  There are shoppers who feel that they should only pay the actual postage, period.  Materials, time?  Those are my problem.  There are actually some PowerSellers who charge nothing at all for shipping and handling, who still do not score 5 stars in the S&H Charges category!  What do people want, a crisp, new dollar bill in the package?  Who am I, their uncle?

International buyers are even more irritated.  Shipping abroad can get expensive, especially if we insist on tracking, which we do.  A common scam is for a buyer to tell PayPal that they never received the package, and thus get a refund.  The seller has to show delivery confirmation to prevent this.  The only service that offers delivery confirmation and tracking is USPS Express Mail International, which is never less than $17 (1 lb to Canada), and usually well north of $30.  So international buyers complain even more than Americans, and leave a commensurately lower score in that category. 

The awful truth remains that, for sellers, there are very few choices.  Amazon isn't bad for books, music, and movies.  You can sell on Bidz or uBid, but who buys there?  There are specialty sites such as eBang, for guns.  Craig's List is strictly local, but good for large items.  If you are a buyer, though, the world is your mall.  So eBay has absolutely no incentive to make life easier for sellers.  You don't like it?  Start your own website!  Go ahead, get a merchant account!  Hire a designer!  See how you like it out there! 

So eBay has grown from a clubhouse, to a yard sale, to a flea market, to a regular old mall.  Like we need another mall. 

The seller community is not thrilled with these changes.  At a webinar on February 2, some larger sellers were worried, and some, especially those who have been there since the beginning, were incensed.  They have found that the profit margin in eBay selling is thinner than they had thought.  And now it will be harder than ever. 

eBay admits that sellers will get a lot more negative feedback.  Used to be, according to eBay's research, that buyers have always wanted to leave a lot more negatives, but they were worried about retaliatory feedback, so they held their fire. 

No more.  They days when everyone was in the 97% to 100% range are over.  The spread is going to grow like the San Andreas Fault. 

A study at Berkeley in 2006 by Haas School of Business Professor John Morgan shows that reducing the opening bid and raising shipping fees were how you maximize profit.  Turns out, it's no fun to shop from people who are trying to make money. 

eBay has been overrun with industrial sellers whose main goal is not to see their stuff in loving homes, but to generate a profit.  They have no stake in the original anarchic, free-market utopian vision of eBay.  They don't even have a stake in the particular items being sold - when GPS devices stop being profitable, maybe high-end strollers will do the trick.  Their only stake is in extracting profit.  Fine, I get it:  we all have mortgages.  But it does mean that the community, and thus the buyer experience, have deteriorated.  Startling handling fees, confusing legalese, tortuous corporate policies, all of these make eBay much less fun.  And if eBay becomes just another place to shop, just another mall, maybe there are better malls with more consistent, straightforward policies and fees. 

One irony is that eBay's departing CEO Meg Whitman is considering running for Governor, as a Republican.  Taking eBay as a model of the economy at large, she should have learned that as a market grows it needs more supervision to maintain growth and prosperity.  This confirms Democratic ideas of governance.  But you just watch Whitman run on a platform of lower regulation, lower taxes, unfettered enterprise...  And poor Pierre Omidyar must be swimming, Scrooge McDuck-like, in his pool of banknotes a tad more gloomily.  That perfect free market he loves so much just hasn't scaled up as seamlessly as he thought. 

I don't know if these new eBay rules will prove effective - mainly because they require a lot more supervision by eBay, and I seriously doubt they are hiring the platoons of Trust and Safety people they will need - I can practically hear supervisors in San Jose giving heartfelt speeches about "doing more with less".  But certainly some rules need to be enforced to keep eBay a fun place to shop and competitive with other internet retailers.  I hope eBay finds them, because I still like to sell there.

Peter Basch

In a couple of weeks, more video downloads and more about the writers strike!