I made the mistake, I admit it freely. I really should have known better. I received an email from eBay and they offered to handle all my transactions without paypal fees. As a long term ebayer, it’s the platform I use to sell old tech and the other flotsam and jetsum of my life so I can buy new tech and toys, so naturally I have been burned by excessive PayPal fees. I had just recently completed some larger transactions, well larger for me, and was still smarting from spending approximately $110 in eBay and PayPal fees. So I jumped at the offer. I figured, if I didn’t like it, I could always switch back. That’s where my mistake was. I had completely missed the ongoing feud between eBay and PayPal which has apparently been growing in animosity since eBay spun PayPal off. Going back to my decision, after some reflection I realized that if I can’t accept PayPal payments then I can’t keep using it as my little ‘fun money’ account which I used quite frequently to buy the aforementioned toys. PayPal also has a few other advantages, for example if I want to buy something I can use it at retailers other than eBay. Also, if there isn’t enough in the PayPal account I can automatically draw money from other accounts instantly. The best part about PayPal was its immediacy. The moment I get a payment, even before I shipped the product I could use the PayPal money to buy something else. Bottom line is that PayPal is expensive, but it’s flexible and allows me to do what I want so I’m getting some value for my money. I decided to change my settings back so that my payments would be managed by PayPal. That experience was so horrible it became the inspiration for this article.
I did a quick search online, as I always do, to identify the process to change back. That’s when I realized that it was going to be difficult. There wasn’t a switch on the eBay website in the settings menu. According to the info I found online it was only possible if you reached out to the eBay’s customer service organization, and the online forums I read said that the process was extremely difficult and in many cases it was outright refused. I started getting nervous but I thought I would try my best. I decided to go through the motions for talking to their customer service group and found the published number online. I was reminded that eBay is a classic web-centric company with limited customer service options. When I called the customer service phone number I got a recording that said that number is not used anymore and you had to go to the web and use their service portal. Let’s pause for a second and think about that. A monsterous online organization that’s decades old has completely shut down their well published customer service contact information and is forcing customers through a labyrinthian series of menus and steps to get to speak to a human being.
The new phone number, as you would guess isn’t prominently displayed, in fact there is no phone number. Only a link for you to put in your number and they will call you back. Another pause moment. I’m the customer and under this new system they will call me back when it’s convenient for them. I don’t even get the option of waiting in an abnormally long phone hold queue. That, as you would imagine, also got me hot. We aren’t talking about a single individual, we are talking about a large corporation with a massive call center that should have had this figured out decades ago. I clicked on the link three separate times and got a call back each time. I spoke with three seperate reps who all gave me the same story. To eBay’s credit, two of the tree reps were clearly very well spoken Americans by their accent which, to me, is astonishing in this day and age of outsourcing call centers and customer service. Unfortunately their talking points were “This is how we do things now” and “there is no going back, and we are going to convert everyone away from PayPal”. Another moment of pause. They’ve got millions of people still using Paypal, a deeply integrated service, and the attitude was “screw what you want and what works and has been working for decades we are doing what’s best for us.”
It didn’t take another internet search to understand why eBay is taking such a hard line on this. It’s a classic case of an anti-customer decision made in the name of shareholder value, driven by, surprise surprise, activist investors. By holding the billions in revenue themselves, eBay gets to enjoy the benefits of that cash flow, i.e. they will make money on their customers’ money. I’m not a CFO or a funds trader, but I can understand this fundamental benefit of leveraging other people’s money. Why give that to PayPal if they can avoid it? By keeping it in-house eBay also keeps people like me from using other Ecommerce platforms. I’m locked into buying on eBay. Additionally, as the years go on, eBay can expand this cash management into several other services and, more importantly, fees that can be charged. It’s strategically a good move for eBay and it’s shareholders. It’s horrible for the platform users like myself and it’s only made worse by the company’s obstinate attitude. eBay can only pull this off because they are so big. If you look at the total retail market, eBay is one of the big three in online retailing, only just losing it’s number two spot to Walmart. If you look at just online auction sites, eBay has to be the 800lb gorilla.
Another point that keeps rolling around in my head is that eBay’s decision to go anti-consumer is directly at odds with the current political environment. In today’s world big tech is very much the target of the FTC and the state attorneys general. I can only assume that eBay isn’t as big as Facebook, Google, or Apple so they are flying under the radar. It probably also helps that this decision is being phased in as opposed to a wholesale cutoff which would result in a massive outcry. If you look at the online auction market share eBay is big enough where I think their behavior would draw some ire from the anti-tech monopoly busters.
The whole thing reminded me of Blockbuster Video. There was a period in Blockbusters history where they were ok with pissing their customers off with excessive late fees. It’s where the majority of the corporation’s profits came from. I believe the term they used was “Acceptable Dissatisfaction”. The idea being that Blockbuster was so big, customers had nowhere else to go. Then came Netflix, and based upon some horrible wall-street led decisions, again driven by activist investors, instead of Blockbuster surviving and crushing Netflix which they were poised to do, the company went completely under and now there are no more Blockbuster Video.
Another of my traditional go-to examples comes to mind. Dish Network. I was a rep for Dish for a bit and I witnessed their bad behavior first hand. To greatly simplify it, they had cultivated a network of resellers that they referred to as partners. They were mostly mom and pop shops who would resell the dish Network product line into more rural markets. Over time Dish changed the way they managed the equipment sales so that if an end-user failed to maintain the TV contract for the full year the small shop would be charged back the amount of the equipment. In effect, Dish pushed the risk of a failed sale onto the small companies eliminating all its own risk in customer acquisition. It wasn’t shared equally, 100% of the lost equipment cost was shouldered by the small retailer. This is especially egregious when you consider that for a mom and pop to have to sell some of the deals, Dish had to approve the end-user customer through a credit check. I could not wrap my head around the hubris of the company owning the decision making of who the end-user was allowed to be, but completely disowning the risk of that decision. If you look at the little satellite sales organizations as customers, it was definitely a David versus Goliath situation where David was at the mercy of the big company which was screwing over the little people simply because they could.
There are many other examples past and present. A recent one has to do with the trucking industry screwing over little owner operators by getting them to work for almost free. In all of these cases it was a monolithic market leading or platform owning company that made decisions that mostly benefited the company itself and were at odds with the needs and desires of their customers and/or business partners. In almost all cases the bad behavior can be traced back to arguments for enhancing shareholder value or activist investors who are in it for a relatively quick buck vs. long term slow and steady growth. I’ve argued in the past that communication companies should have a board that’s made up of investors, employees, and customers as the only way to make sure that all the stakeholders interests are represented. I’m starting to think that if you are a platform holder, especially one that serves as a platform for others to build their businesses off of, then the Board of Directors for the company needs to include the platform users who will have equal say on the direction of the platform. I have a feeling that the PayPal / eBay situation would have a completely different feel to it if that was the case.
Typically, at least in America, we wait for things like market disruption to solve these types of problems. unfortunately that’s not an instant answer. It takes years before some new tech or upstart, through real competition, forces the company in question to start doing what’s in the best interest of its customers and users. That means eBay won’t change it’s anti-user behavior for the foreseeable future. For my own part I’m trying to rectify my eBay payments mistake by opening up new bank accounts to take the place of PayPal and by exploring alternative options to continue to sell my old stuff to get new stuff without impacting the family budget. Sadly, no matter what mix of solutions I go with it won’t ever be as seamless as the eBay PayPal solution of yore.
I made a mistake. I feel a little bit better about it when I realize all I did was hasten the inevitable but it doesn’t change that it was a big inconvenience to me in the here and now. EBay made a mistake too, they put profits before customers. I know I’ll remember this for years to come. It was a big splash of cold water that taught me that I needed to find alternatives to eBay. I know that many businesses do this, it’s part of the natural lifecycle. A business, especially when not led by its founder or founding principles simply becomes a money making machine continually prodded by institutional investors trying to squeeze more out of it. The only thing that keeps it in check is competition, if there is limited competition then shareholder returns and profits rise above all-else including the customers.
Part of me wants to sit here and proselytize that we all need to band together and demand more out of these companies. It has been done successfully in the past, but it’s a lot of activity and effort with a very little guarantee of enacting the consumer prioritization we want to see. The real answer is to just accept that when you’re at the mercy of Goliath, you have to take it on the chin if you want to stick around and play in their world. Let’s face it David only wins in the Bible. in real life the Davids need to run as soon as they are able.
I may be inconvenienced now, but in the years that follow, when the next big Ecommerce disrupter comes along which encourages people to sell their old stuff and makes it easy to buy from anywhere I’ll be first in line to sign up. Considering the benefits a disruptor usually brings to a market, I’ll probably love whatever comes next. That will be the case until they get sold to activist investors or private equity and just become another corporate money making machine. Who knows, If I invest my 401k into some of these shareholder value first and only companies, maybe by then I have enough cash where I won’t need to sell my old stuff to buy the new stuff. It won’t be nearly as much fun as horse trading old toys but I guess it’s something.