Some sellers move away from eBay

Changes in fees, feedback irk many online merchants

August 14, 2008|By The Wall Street Journal

Some online retailers are moving away from eBay.

Irked by February's changes in fees and the feedback-rating system, merchants who once sold wares exclusively at the online auction site can now be found on a number of smaller alternative sites that have sprung up. With names like Wigix, Silkfair, Etsy and Oodle, these sites aim to offer more hand-holding for sellers - and charge lower fees - than the behemoth eBay.

Some of these new sites target niche markets, such as Etsy, which focuses on handmade crafts, where small sellers say their products can stand out better than they do at a soup-to-nuts-to-carburetors site like eBay. And many offer free features, such as how-to videos and blogs designed to improve communication between merchants and shoppers. Some sites are even tapping into the social-networking trend - where items for sale can show up on sites like MySpace or Facebook.

"I don't need a million people to see my things, just the right people who have hopefully good taste to buy my things," says Cathleen McLain, a 58-year-old jewelry maker who began selling her handmade necklaces on Silkfair this year.

Shoppers must beware when buying on newer Web sites. It's hard to know the merchants' track record, whereas eBay displays sellers' positive and negative feedback ratings. And some of these sites don't offer buyer protections, such as Amazon's "A-to-Z" guarantee, which covers buyers for up to $2,500 each should their purchases be defective or incorrect. Shoppers who use PayPal on eBay are covered for up to 100 percent of purchase price.

"You're always taking a risk with sellers from sites like these," says Sucharita Mulpuru, an analyst at Forrester Research. "Unless there are guarantees or some seller ratings like the ones eBay has accumulated over time, there will always be some bad experiences."

Alternatives for eBay Inc. sellers have existed for some time. One of the best-known is Amazon.com Inc., which offers several services for merchants. But sellers are increasingly gravitating to these newer and smaller e-commerce sites.

McLain switched to Silkfair in part because she found it increasingly hard to compete with cheap overseas merchandise. She says it didn't help that eBay instituted a policy that allows only buyers to rate sellers - a change from its traditional system of letting buyers and sellers mutually rate each other. Also, when a buyer searches for an item, the results are weighted to show the highest-rated sellers first, a system that smaller merchants argue hurts mom-and-pop operations.

Finally, sellers who use PayPal, the online-payment service owned by eBay, may not get their funds for as long as 21 days. It's an effort to protect buyers from transactions eBay considers "risky" or "suspicious" - mostly big-ticket items or transactions with low-rated sellers.

An eBay spokeswoman says that the company is no stranger to competition from other Web sites, and that it expects many of its savvy users to sell on multiple sites. The company says its recent changes are designed to offer competitive pricing and the best overall value for merchants. For now, though, only eBay offers the volume of auction-style and fixed-price listings, which generated second-quarter transactions valued at $15.7 billion, and audience of users, with 84.5 million in the second quarter.

Entrepreneurs have been trying to displace eBay for years and haven't managed to do so, says Mulpuru of Forrester Research. She estimates that nearly one in every five dollars spent online goes to either eBay or Amazon.

Besides Silkfair, Etsy also attracts artists who want to display and sell handmade goods. Here, shoppers can see large images updated every few minutes with the most recent products listed for sale - eBay doesn't offer promo slide shows on its home page of newly listed products.

Another site drawing sellers is Oodle, a classified-ad site started in 2005 by former executives of eBay and Excite. Oodle aggregates classified ads from more than 80,000 Web sites and publishes listings on its Web site network. Merchants can advertise their listings on Oodle's network and choose among payment options, mostly commission-based. Some sellers say they prefer to list items on classified-ad sites because their items, such as secondhand mattresses or strollers, can be picked up in person by local buyers.

Wigix targets shoppers who like fixed-price transactions, not auction-style trading. Co-founded in March 2007 by James Chong, who helped develop Charles Schwab's original Web-trading application, Wigix seeks to offer easier navigation. On eBay, for example, prospective buyers looking for an iPhone must scroll through individual listings that might run over several pages to see the prices offered for various models of the phone. Wigix designates one page for a specific iPhone model where all individual offers to buy and sell the device are posted in one place. The site also allows sellers' items to appear on social-networking sites.

Wigix's system appeals to online merchant Jerod Husvar, a seller of used-car parts for sport-compacts. He's moving his e-commerce operations from eBay, partly because of the customer service he got.

Husvar says eBay only recently started offering phone support. Before, he was such a small seller he didn't qualify for personalized attention through an eBay account manager.

"We built our business around eBay," says Husvar. "They lost focus. All their money comes from sellers. Buyers are what drive the market, but you need quality and protection for the sellers or else they don't even want to deal with the buyers."

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