(Editor's Note: ECommerce-Guide.com is thrilled to welcome our newest contributing columnist, eBay and online auction expert Ina Steiner.)
When eBay sellers learned in May there was a new class of merchant on the site in the form of Buy.com, it threw many into panic mode. The sheer volume of listings from Buy.com led many to conclude that eBay was giving the large retailer free listings.
Sellers complained they could not afford to compete with Buy.com due to their higher costs of listing on the site, as documented by the New York Times.
For example, Buy.com has a significant presence in eBay's Books category. Of the 1,630,489 listings in eBay's Books category, Buy.com has 604,103 listings — 37 percent of the category's listings. That's clearly a sizable chunk.
Buy.com Deal Births Operation Catalog
For many years, PowerSellers had asked eBay for volume discounts, only to hear the same reply from executives — eBay is a "level playing field." For the first time in its history, eBay fees were no longer transparent, and it looked like the level playing field had become decidedly slanted.
E Bay is unlikely to ever reveal the details of its deal with Buy.com, but eBay added a new top tier to its PowerSeller structure. Added to Bronze, Silver, Gold, Platinum and Titanium levels was "Diamond." eBay executive Stephanie Tilenius said the company had heard from sellers asking how they could get access to the same deal as Buy.com, and she said that's how the Diamond level PowerSeller tier came into being.
Tilenius said there is no fixed fee structure for the Diamond tier. Sellers with DSRs of 4.8 or higher and who have $500,000 in monthly sales (or 50,000 items sold/month) are eligible to negotiate with eBay over pricing and terms (such as shipping and handling fees and return policies offered to buyers).
I recently wrote about a pilot program eBay is expected to roll out, possibly this month, in which a number of manufacturers and big-box retailer catalogs would be launched to eBay. If these "Diamond" sellers are granted similar terms as Buy.com, it would throw existing sellers who compete in those categories into a tailspin during the all-important holiday shopping season.
Do Mega-Sellers Mean Unfair Mega-Competition?
Operation Catalog, as the program was dubbed, would welcome mega-sellers that could fill out eBay's inventory with breadth and depth to satisfy shoppers. Negotiating one-on-one with Diamond-level eligible retailers, eBay is likely to give the best deals to companies with the broadest inventory catalog in those categories eBay most wants to fill.
Some eBay sellers could conceivably find themselves competing with the manufacturer of the very products they are selling, but be paying higher fees. High-volume sellers who are better positioned to offer free shipping receive higher rankings in eBay search results, since the search algorithm favors sellers with free shipping and with higher ratings from customers. And since free-shipping leads to higher customer satisfaction, the pressure on low-volume sellers is exacerbated.
In addition, certain eBay policies reward high-volume commodity sellers, such as eBay's move to eliminate paper payments (checks and money orders). Even eBay's established PowerSellers would find it difficult to compete head-to-head with Diamond level sellers.
A move by eBay to bring high-volume, large-catalog sellers of new goods would not necessarily affect antiques and collectibles sellers, and sellers of unique items and end-of-life inventory, at least for some time. Most impacted would be certain sellers of new product in categories like clothing and electronics, depending on what brands are brought onto the site under the program.
EBay's continued claims that it wants to retain small sellers and support the auction format are greeted with some skepticism among those small sellers. eBay itself has said it wants to move to a more retail, more predictable shopping experience. Can eBay pull it off? And would such a streamlined commodity marketplace benefit all sellers by attracting buyers to the site?
With eBay expected to bring on a number of Diamond sellers this month, and with its new checkout system rolling out early next year, we may soon begin to learn the answers to these questions.
Ina Steiner is publisher of AuctionBytes.com and the EveryPlaceISell.com merchant directory.
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