Friday, 11 April 2008

RANT: eBay and PayPal

My salary, at the moment, is largely dependant on eBay Australia - I work in a business that sells primarily on ebay.com.au - but for a long time my boss has been talking about the need to move away. Customer service just doesn't exist at ebay - they care a little bit about the end customers, but not at all about the sellers (who are ebay's customers). And neither they nor PayPal can be relied upon to make good their promises, when things go badly - a number of their guarantees are valid only until it's going to hurt them, and then they don't fulfil (or delay things until you realise you're wasting hours and hours trying to recover $25 from them). But a recent announcement shows that they've outdone themselves. Massively.

eBay and PayPal have long maintained a strong, almost-monopolistic association (for instance, you're not allowed to pass on the PayPal fee to the end customer, but have to absorb it yourself, thus making PayPal look better to the buyer, thus encouraging its use). There have been many advertisements saying that PayPal is safe, and other methods are not safe (that's true of some, like putting cash in the post, but there are other methods that are as safe as PayPal - especially when you factor out their empty promises of refunds and such), but it's always been up to the seller to announce what they'll accept, and up to the buyer to pick a payment method.

Now we get this announcement (hopefully that page will stay valid). I checked the date - that's April 10th, not April 1st, so this is for real. Some significant passages:

All items listed for sale on eBay.com.au on or after 21 May 2008 must offer PayPal as one of the payment methods.


That's annoying, and it's monopolistic. But it's livable, and any semi-major ebay seller is going to have a paypal account and be using it already. But that's just the interim order.


All items appearing on eBay.com.au as of 17 June 2008 must be paid for using one of the following:

1. PayPal
2. Pay on pick up (i.e. paid for when picking up the item)
3. Visa/MasterCard (with transactions processed by PayPal).


(And what's the betting they're going to strongly FUD against option #2?) This is completely monopolistic. eBay is using its position as the #1 online auction site to FORCE people to use their money-transfer company.

I had a quick look at www.ebay.com, but I couldn't see any corresponding announcement, so at the moment, eBay US doesn't seem to be taking this action. But unless it backfires really badly on eBay AU, it's going to be seen everywhere in a very short space of time.

The business philosophy of eBay doesn't include customer service anywhere (and they're not likely to add it either, unless something shakes them up), so they're not going to take any notice of people complaining on their forums or by email. Perhaps if every seller just ignores them and states (in the description) that they take other forms of payment, then maybe they'll notice. But the only real way to wake them up would be to move away. And here we have the vital key that makes a monopoly possible: There is no alternative. Yet.

There are other online selling sites, however. And it may be that one of them, or maybe several of them, will become tomorrow's eBay. But a site needs two things: code, and people. You can't attract buyers unless the likelihood of finding what they want is worth their investment of time; same for sellers - you can't attract sellers unless the likelihood of having someone find them is worth their investment of time. Good code will reduce the "investment of time" requirement, but ultimately, it takes a large community to get over that hurdle. So for a site like OZtion (for example) to succeed, they first need good code, then lots of sellers, and then lots of buyers. One crucial factor here, though, is cross-listing. If it takes 1 minute more to relist something on OZtion that you already have listed on eBay, then it's only going to cost you 1 minute of time to list it. That would make the whole concept a lot easier to get started.

But there needs to be code before any of that can happen. And for all its faults, all its bugs and stupid stupid foibles, eBay's system still has the best of anything that I've seen. There's room for someone new. Who is going to step into the gap and be tomorrow's big online selling site? Because it won't be ebay, if they continue as they are now.