Ebay Sellers Boycott – Did it Make Economic Sense?

Ars Technica Posted an article today about the effectiveness of the Ebay sellers boycott.

If you are unfamiliar with the story, Ebay in an effort to compete in an increasingly competitive marketplace decided to do two things:

  1. Change their fee structures, which will benefit some sellers and potentially hurt others.
  2. Eliminate negative feedback from sellers about problem buyers. Problem buyers are a huge problem for some sellers on Ebay.

Some sellers were furious about these changes and decided to mount an organized boycott of Ebay last week.

I’m not going to debate whether this particular event – the boycott – had any impact or not, I’m going to give you what I think is the core economic lesson here…

If there is money to be made selling what you are selling on Ebay, then someone will sell it on Ebay. It might not be you, but someone will fill your shoes and render your boycott meaningless.

If you’re right, and Ebay has changed the rules so sellers can’t run a profitable business on Ebay then you’ll leave Ebay permanently and no one will backfill your position because they can’t make money either. Ebay will suffer and the business will go to Amazon or some new marketplace.

For years, sellers have complained about other booksellers pricing books for a penny on Amazon. And it hasn’t changed, because someone has either found a way to make money selling books for a penny (we haven’t) or there is a constant flow of people willing to give it a go. Either way the internet company (Ebay or Amazon) would be foolish to change the rules in favor of the sellers and make an imbalanced marketplace. It is in the market’s best interest to facilitate the transaction with as little interference as possible.

In fairness to Ebay, it appears there is apprehension on the part of some buyers to leave honest feedback on Ebay because they fear retaliatory negative feedback from sellers.

In fairness to the current sellers, Ebay is gambling with your business. If they are right, and the current rules favor sellers over buyers, they will gain market share. If they are wrong, they will lose market share, and it should open new marketplaces for you to sell your wares. Unfortunately, in the meantime, you’re a pawn, because you don’t own the marketplace. Right now, the only choice you have is to stay or to leave. I suggest sticking it out, seeing what happens, because it might not be that bad. You never know, it may increase the number of ‘good’ buyers and result in an unexpected windfall. However, if it is bad, you can always leave later.

Remember, historically, when you go on strike, even when you win, you rarely come out ahead in the long run, because during the strike you leave too much money on the table and the economic conditions which forced the conflict will ultimately control your destiny if you don’t change. The best antidote is to keep your eyes open for new opportunities and position yourself for rapid change.

6 thoughts on “Ebay Sellers Boycott – Did it Make Economic Sense?”

  1. I think many strikes or boycotts just don’t work because people didn’t plan it well enough. They tend to overestimate how irreplaceable they are, while whoever they are protesting against somehow find ways to make things work… or their competition find a way to replace them. The eBay sellers are not in unions and they can’t really force one another to do one thing or another. So in this game (as in “game”theory), they will not end up winning since people are looking out for themselves.

  2. I’m hearing what you’re saying, Steve, but I think that’s a pretty strong statement to make: “Remember, historically, when you go on strike, even when you win, you rarely come out ahead in the long run, because during the strike you leave too much money on the table and the economic conditions which forced the conflict will ultimately control your destiny if you don’t change.” The big strikes happened because there weren’t other opportunities, at least not on a large scale, and the raises and condition changes they won weren’t just better economically, they saved lives in some instances.

    Still, I think an Ebay sellers boycott would have to be mighty well organized to either have an impact, or to benefit the sellers.

  3. Kelvin,
    Unions can’t force anything anymore unless they have the force of government behind them, that’s why the only unions which seem to effective anymore are government employees.

    Mark,
    I think you are talking about organized labor in early 20th century. And you may be right, but it is still arguable whether labor improvements would have happened anyway because of the changing economy and society. Conflict usually has a much higher opportunity cost than any other option. But, I agree, that there are times when conflict is the only option. I am no pacifist.

    However, almost all recent strikes against private industry have been miserable failures, and when the Teamsters did win in the mid-nineties against UPS, they figured it would take the average worker the rest of thier careers to make up for the lost wages during the strike.

    In my lifetime, I’ve never seen this strike/boycott thing work, because mostly it is used to protect the status quo in a rapidly changing global marketplace.

    My family boycotts Wal-Mart and Sam’s Club for a variety of reasons, one of which is their labor practices. But I suffer from no delusions that my boycott is making any difference whatsoever. I do it to feel better about myself. Wal-Mart will end its reign of abuse when economic changes render them impotent because their huge economies of scale won’t allow them to react to new rapidly changing economic conditions.

    Someday Wal-Mart will be the new Montgomery Wards – I loved that store. I worked in the warehouse. Wonderful company. They employed a lot of working class people at decent wages. To bad Wal-Mart killed it.

    Until then, we are stuck with Wally World and no amount of boycott or unionization will make a difference. The only thing a union might do is speed the demise of the giant. But if economic conditions remain the same, it will just be replaced by another abusive company.

  4. Hi Steve,

    The best way to make a profit on selling a book for one penny is to hike up the shipping charge. Ethical? not really…but I thought you may benefit from the information anyway!

  5. I’m an individual who ocassional sell items on ebay from time to time. I got ripped off by Paypal for the following reason. I sold a perfecrly good working PC computer to a buyer in Canada who obvious fried the motherboard doing his installation. The buyer then wanted his money back claiming it was a non-working motherboard I sent him. I refused his request for a refund. Paypal knowing but not being able to determine who was in the right decided to side with the buyer and demanded I refund the buyer his money. When I refused they closed my Paypal account. I had over 450+ positive feedbacks and only one negative retallation feedback on ebay since 1996. The buyer had been with ebay for only a year with 45 feedbacks. I can definitely say that ebay/Paypal is not looking out for the seller. They are only interested in making money for themselves.

  6. I have been EBaying for just over 5years.
    My stats are, 1 out of 10 buys have been scams!
    2 out of 10 buys had something missing or wrong!
    7 mostly happy…
    1 out of 10 sales they tried to scam ME.
    1 out of 20 sales they got PayPal to refund.
    3 out of 10 won’t leave feedback…!!!?
    5.5 out of 10 LOVE me & can’t believe it!!!
    Ebay’s recent changes to feedback have striped me of MY rights to respond to liars or people who make a mistake .
    Who now can’t retract it!
    I have been using PayPal for 5 years.
    I have been having increasing problems with PayPal!
    My most recent problems have been them being too busy to even read or verify proof offered to them for a claim…
    Even with requesting reopening the claim and offering more proof.(7 faxes to the 7 photos)
    I still lost 110.10.
    Calling them to discuss this to offer more incite to the facts proved fruitless!
    PROOF OF MY CLAIMING THEIR NEGLECTING TO EVEN READ MY INFO BEFORE MAKING A DECISION.
    Comes from a request from them to verify return of item.
    There was 5 items in the set, My 1’st response to all this offered the info they sought!
    Missing parts and it was modified to a different design…
    Their request for an answer didn’t offer any place to say ,missing items or incomplete return.
    Upon responding to a return of most of the set.
    They returned his $ in 3 minutes!
    2 requests for reopening proved hopeless!!!
    I have closed all PayPal & Ebay accounts.
    I’m seeking newer/ hungry alternatives!

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