The Ebay Problem in One Word: Trust.

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Ebay, now almost 13 years old, is facing some pretty big problems that leave its future success in serious doubt. Being the market leader in an industry with slowing growth is one obvious issue. The number of new people participating in online auctions appears to be dwindling, at least in this country. And overseas, Ebay faces some tough competition that it hasn’t seen here in the states since Yahoo! and Amazon closed their auction sites.

Ebay has a deeper problem though, one that is eating at its core: Trust. Buyers don’t trust sellers anymore, and in some cases, sellers don’t trust buyers. Both groups are getting scammed, and the front-line mechanism meant to protect everyone – the Ebay feedback system – has evolved into a completely meaningless measure. When everyone has a five-star rating, you just know things aren’t as they seem.

Things have gotten so bad that Ebay recently announced a major change to its feedback system. Beginning in May, sellers will no longer have the ability to leave negative feedback on buyers. At first glance, this seems like a great idea. It removes the unspoken threat of retaliatory negative feedback against a buyer if they ever give a seller a negative rating. I think this would invite more buyer-based scams against sellers, who will soon have to go through a manual process if they have a run-in with a bad buyer. I don’t see how Ebay will be able to handle all of these new customer service interactions without hiring a ton of new people, something I’m sure they’ll do only reluctantly.

To me, it seems that a better solution would be to use one suggested by several Slashdot members while discussing this news. Each party would level their feedback in private, without seeing what the other wrote. Only after both the buyer and seller submitted feedback, or after a set period of time elapsed, would the feedback rating actually appear on the site. I’m sure there are some holes in this solution too, but it seems less drastic than the system that will soon be in place.

Ebay has a really tough balancing act to do in keeping both its buyer and seller communities happy. The sellers are not happy with continued rate increases and this new feedback system. Many say they will stage a boycott starting today, though we’ll see if that becomes a reality. Personally, I haven’t bought or sold anything on Ebay in years. It’s a huge hassle having to worry about the other party being legitimate, so much so that I simply won’t do it. Amazon is my default place to shop, and with Prime shipping, I get my stuff in two days or less without any doubt about whether it will ever show up.

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