June 25, 2008, 12:00 AM

Merchants give eBay an earful at its annual gathering

Ebay merchants used last week’s eBay Live Conference in Chicago to express their frustrations with recent policy changes. Many merchants say the adjustments lean too heavily in favor of buyers.

Ebay merchants used last week’s eBay Live Conference in Chicago to express their frustrations with recent policy changes that many sellers believe lean too heavily in favor of buyers. But eBay, whose growth has been slipping, says the changes are designed to keep buyers coming back, which is critical both for eBay and its merchants.

A key point of contention are changes to eBay’s Feedback system, which no longer allows sellers to leave negative or neutral feedback about buyers, and the relatively new practice of counting a neutral rating by a buyer as a negative when calculating the seller’s positive feedback rating. Another hot topic is the inclusion of free shipping as a factor in Best Match rankings, eBay’s internal product search system, which ranks sellers in search results based on how well they serve customers as well as on the relevancy of their products.

Erik R. Faraldo, co-owner of cell phone accessory store Wireless Unlimited, is an eBay Power Seller with sales of about $60,000 a month. He says his feedback rating dropped from 99.9% to a 99.2% with the “neutral as a negative” change. The switch was retroactive for all sales feedback over the last 12 months, he says. The drop has him worried, because a feedback score below 98% would cost him his Power Seller status and the discounts that come with it.

10% of all eBay sellers and 11% of power sellers have been negatively impacted by the change to count neutral feedback as negative, and there has been a .5% average drop in feedback ratings, Brian Burke, eBay`s director of global feedback policy, said during a presentation at eBay Live. Buyers were saying they were afraid to leave negative feedback for fear of retaliation by the seller, he said. “A neutral was often seen as a soft negative,” he said in his presentation.

Faraldo and other merchants at the conference admitted in the past slamming buyers in retaliation for what they considered unjustified complaints. Sellers left negative feedback eight times more than buyers last year, up from twice as often four years ago, Burke said.

An eBay spokesman says the changes are an attempt to make buyers more comfortable and to end the tit-for-tat game. Sellers now must report problem buyers through eBay, which will investigate and determine what actions to take, he says.

“Over the last few years, we found that sellers have been leaving unwarranted negative feedback,” says an eBay spokesman. “Reputation means a lot on eBay. It’s a hot-button issue and we want to make sure buyers stay.”

And, they likely want them to buy more. Gross merchandise sales, the total value of goods sold on eBay, is growing more slowly than in the past, increasing 13% in 2007 over 2006, down from year-earlier growth of 19%.

But eBay merchant Faraldo says some aspects of the Feedback overhaul could hurt buyers. Another change is that there is no longer a way for merchants to erase negative feedback, therefore some don’t see the point in correcting issues. “We used to be able to work with the buyer on the issue to get it resolved and get negative feedback removed but we can’t do that anymore, so what’s the motivation?” he says.

EBay’s Burke says that the change is designed to help buyers differentiate between a “seller who gets it right the first time and a seller who fixes things.”

Other moves, such as taking into account free shipping in selecting Best Match results, are part of eBay’s attempts to satisfy buyers. “Buyers want free shipping,” the eBay spokesman says. “And free shipping is becoming the norm. It’s certainly not going anywhere.”

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