eBay's Bill Me Later a Bad Idea
Doesn't John Donahoe get it? Bill Me Later may increase sales but it will ultimately drive the last seller from eBay (EBAY) because allowing buyers to purchase wish list type items they can't afford without a short term extension of credit doesn't make sense.
There are no details of how Bill Me Later will impact eBay sellers have been forthcoming but this author predicts the following:
- Bill Me Later will be mandatory not optional for sellers.
- Seller funds may be held up to 180 days just like Paypal does.
- Sellers will be stuck with higher fees, more defaults & more chargebacks.
Does John really expect sellers to ship their inventory to buyers who can't afford it and hope they get paid? I think he does because Bill Me Later will generate more seller fees and eBay doesn't have to worry about taking a loss on inventory because they're just a venue.
eBay stock is now at a 6 year low because John has yet to discover that eBay's strength lies in its small sellers who sell hard to find, wacky, wonderful items that used to only be found on eBay. There's not very many of these sellers left because:
- Sellers can't sell due to ongoing SYI glitches.
- Search has been manipulated to the point of being nonfunctional.
- Seller information has been sporadically removed from buyer invoices.
- Shipping is capped at below actual costs for many popular media items.
- Paypal holds, chargebacks and buyer refunds have increased by leaps and bounds.
And the list of what doesn't work goes on and on seemingly without end or resolution.
Once the first seller receives notification that a Bill Me Later purchase has gone into default (resulting in a chargeback) the news will spread like wildfire on eBay discussion boards. This is likely to trigger another seller boycott or sellers will simply leave.
But sellers may have the last laugh. If Judge Fogel rules in favor of Malone in the class action antitrust lawsuit Malone v. eBay Inc. then sellers will be able to choose whatever payment method they wish, which has the potential to render both Bill Me Later & Paypal substantially overvalued.
Stock position: None.
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This article has 28 comments:
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1seller
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1 Comment
Oct 12 10:11 AM-
Tippie
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30 Comments
Oct 12 10:46 AMBill Me Later at first glance sounds good and will probably be good for eBay in the long run.
Example...I want to buy something right now but don't get paid until Friday, or end of the month.
Great! Seller gets paid through BIN....buyer gets billed within 30 days. That is called leverage! I think for some people this will be great...providing of course they have good credit and bank accounts!
Many people are on fixed incomes...Social security checks come once a month! This service will be great for people that wish to pay later. Order now, pay later has been around for years! Magazines do it all the time!
On the other hand....Bill Me Later could be eBay's worst nighmare in a few years due to non paying deadbeats!
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User 277598
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1 Comment
Oct 12 12:20 PM#6 (but should be #1) FEES! Try to sell something and make a profit when eBay/PayPal get 15% off the top.
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Patricia013
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63 Comments
My Website
Oct 12 12:37 PM-
NYM Arts
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27 Comments
My Website
Oct 12 01:06 PMI Can't believe he can't be Penalized for doing this. Labor Camps were MADE for people like him. Too much the "Yachting", not enough Dirt Work & Humility.
Work Him HARD 'til he drops.
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karl anders
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1 Comment
Oct 12 02:35 PMAlso so many people have left ebay that you can no longer auction anything as a seller because there are never bids or bidding wars like there used to be.If you list at 99p it will end at 99p usually.
The dsrs are a ridiculous and immature idea and have damaged the site extensively because the search system is not fair and some sellers hardly get any visitors to their items due to this.
Doing serious business on ebay is totally impossible.I'm using ebid now as the fees are much fairer.
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TekGems
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1 Comment
My Website
Oct 12 03:01 PMAlso, where did you get this figure for funds being held 180 days? What context does a 180 day hold actually occur? If transactions are held on eBay, they are sometimes 21 days unless you meet certain requirements:
pages.ebay.com/sell/up...
If you are required to offer a safer payment option, you might also be subject to holds on payment. PayPal may hold payments for the sale of an eBay item until the earliest of the following occurs:
* the buyer leaves positive feedback,
* 3 days after confirmed item delivery*
* 21 days without a dispute, claim, chargeback, or reversal filed on that transaction
*PayPal can confirm delivery. PayPal will confirm delivery if you use USPS, UPS, or FedEx to ship the item and (i) use PayPal shipping labels, or (ii) upload tracking information to PayPal via the transaction details page. This applies to US domestic transactions only.
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Dinah Balk
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155 Comments
My Website
Oct 12 03:03 PMThanks for your input because everyone's opinion is important!
FYI - eBay's latest batch of bad script makes it impossible for buyers to checkout according to numerous posts on eBay discussion boards.
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lemsr
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2 Comments
Oct 12 08:30 PM-
N. Tesla
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2 Comments
Oct 12 08:53 PMWhy not make the article what you really think: you don't like John Donahoe's management of eBay and leave it at that. How he does it, judging by the veneer of this article, is seemingly irrelevant when one just wants to attack the person.
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eBay +++
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29 Comments
Oct 13 12:53 AM-
Dinah Balk
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155 Comments
My Website
Oct 13 05:52 AMDo you know what Paypal's data & fraud engine is?
It's the false positives Paypal generates and then uses to place illegal holds on sellers accounts so they can earn money on the float while sellers struggle to pay their mortgage payments.
IF there weren't going to holds on seller funds then why did Lavelle (BML Corporate Development) state that "PayPal's data and fraud engine will lower BML's loss rates" (currently at 1.5 to 2.0 percent) during a telephone conference during the first week of October?
And what happens when a buyer files bankruptcy? Who's going to eat the default because most debtors have good credit up to the day their bankruptcy petition is filed.
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Crayon G.
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7 Comments
My Website
Oct 13 11:51 AM-
Dinah Balk
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155 Comments
My Website
Oct 13 12:24 PMYou are 110% correct - that's why Bill Me Later makes no sense. Either a buyer can afford something or they can't. It's that simple.
And if a buyer doesn't have a credit card, debit card, or bank account from which to make their purchase given today's lax credit standards, then a BIG red flare should go off at eBay headquarters.
Btw, did you happen to notice that Donahoe didn't offer to let SELLERS pay their fees in installments, lol.
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eBay +++
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29 Comments
Oct 13 02:00 PMYour credibility is weak to none.
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dmshs
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1 Comment
Oct 13 03:15 PM-
Dinah Balk
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155 Comments
My Website
Oct 13 05:35 PMBill Me Later is an eBay acquisition, just like Paypal, Skype, etc. In a recent CNN interview, Donahoe stated that Bill Me Later was purchased to help increase eBay sales.
You should check eBay's user agreement because PAYPAL IS MANDATORY for all sellers unless they have a merchant account, which most small sellers can't afford.
You might want to surf the net for Mehmet vs. Paypal or Malone vs. eBay. Mehmet addresses the issue of Paypal placing fraudent holds on sellers funds by automatically generating FALSE POSITIVES. Malone addresses eBay's flagrant violation of the Sherman Antitrust Act. Both cases are being decided by Judge Fogel.
And I hope you like your personal information shared with every single eBay acquisition because eBay added an addendum a while back that allows all eBay companies to share user information with eBay's entire "corporate family."
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smiley
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4 Comments
My Website
Oct 13 07:07 PMSome had no choice but to regroup since September at a new international auctions and stores site auctions8.com & starting fresh where first 1000 VIPs to register get everything free for life.
List, Relist, Sell all you want and pay nothing forever.
auctions8.com is owned and managed by determined & hard working group of members to become a permanent and safe home for all. Site is only for genuine sellers.
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Sara, PayPal
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1 Comment
My Website
Oct 13 08:06 PM-
Duke91
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3 Comments
Oct 13 09:52 PM-
Mokkori
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6 Comments
My Website
Oct 13 09:56 PMDinah, your analysis of the dip in eBay's stock price shows that you know absolutely nothing about the stock market. Do you live in some kind of information bubble where eBay is the only stock? How do you explain Amazon's decline? Did John Donahoe cause that too? How about Google? Just use a basic online comparison tool and look at the 1-year chart for these three stocks. You will see that eBay is simply riding the same roller coaster that most other tech stocks are on.
You have repeated your incorrect statement that PayPal holds funds for 180 days. They do not. The correct figure is 21 days, and only on risky transactions. There is a significant difference between 21 and 180. Repeat this misinformation again and risk being branded a liar.
You continue to suggest that PayPal is mandatory. It is not. PayPal is optional. Most sellers wisely choose to offer it because buyers like it. If you decide that PayPal is not for you, then obtain a merchant account that accepts payments online. The fees for such a service are likely equal to or higher than PayPal except for the very upper echelons of PowerSellers who do massive numbers of sales per day. All the ones I've researched so far cost more. The dealbreaker for me is that buyers cannot pay my merchant account with their bank account. eChecks are a significant percentage of PayPal payments. I wish I had the exact numbers; it would be interesting to know.
When you say "not very many of these sellers left", I find that hard to credit. I can find significant numbers of sellers offering antiques, coins, stamps, odd collectibles, and any number of "Everything Else" items I've never heard of before. I believe that you just made that up.
Have sellers left eBay? Absolutely. Bad ones. Having seen the "pink slip" letters eBay sends these bad sellers, I can't say I have a problem with it. If a seller can't stay out of the bottom 1% of all sellers in terms of buyer satisfaction, they should be shown the door. Their poor practices hurt my business. I have bought on eBay before too, and have run into a few clowns over the years. I know how it feels to be a buyer who's held hostage by a dirty seller.
Look at it this way. eBay reportedly has 1.3 million active sellers as of August 2008. If only the bottom 1% of those sellers are ejected, that's still 13,000 people. 13,000 people can make a lot of noise in the boards and on YouTube and in the press. But ultimately, they're 13,000 people that eBay is better off without.
I can't figure out the anticheerleaders such as yourself who claim to want eBay to succeed, but can scarcely contain their glee when eBay is hit with a lawsuit (which will fail), and pray openly for eBay to die.
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Mokkori
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6 Comments
My Website
Oct 13 09:56 PMDinah, your analysis of the dip in eBay's stock price shows that you know absolutely nothing about the stock market. Do you live in some kind of information bubble where eBay is the only stock? How do you explain Amazon's decline? Did John Donahoe cause that too? How about Google? Just use a basic online comparison tool and look at the 1-year chart for these three stocks. You will see that eBay is simply riding the same roller coaster that most other tech stocks are on.
You have repeated your incorrect statement that PayPal holds funds for 180 days. They do not. The correct figure is 21 days, and only on risky transactions. There is a significant difference between 21 and 180. Repeat this misinformation again and risk being branded a liar.
You continue to suggest that PayPal is mandatory. It is not. PayPal is optional. Most sellers wisely choose to offer it because buyers like it. If you decide that PayPal is not for you, then obtain a merchant account that accepts payments online. The fees for such a service are likely equal to or higher than PayPal except for the very upper echelons of PowerSellers who do massive numbers of sales per day. All the ones I've researched so far cost more. The dealbreaker for me is that buyers cannot pay my merchant account with their bank account. eChecks are a significant percentage of PayPal payments. I wish I had the exact numbers; it would be interesting to know.
When you say "not very many of these sellers left", I find that hard to credit. I can find significant numbers of sellers offering antiques, coins, stamps, odd collectibles, and any number of "Everything Else" items I've never heard of before. I believe that you just made that up.
Have sellers left eBay? Absolutely. Bad ones. Having seen the "pink slip" letters eBay sends these bad sellers, I can't say I have a problem with it. If a seller can't stay out of the bottom 1% of all sellers in terms of buyer satisfaction, they should be shown the door. Their poor practices hurt my business. I have bought on eBay before too, and have run into a few clowns over the years. I know how it feels to be a buyer who's held hostage by a dirty seller.
Look at it this way. eBay reportedly has 1.3 million active sellers as of August 2008. If only the bottom 1% of those sellers are ejected, that's still 13,000 people. 13,000 people can make a lot of noise in the boards and on YouTube and in the press. But ultimately, they're 13,000 people that eBay is better off without.
I can't figure out the anticheerleaders such as yourself who claim to want eBay to succeed, but can scarcely contain their glee when eBay is hit with a lawsuit (which will fail), and pray openly for eBay to die.
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Dinah Balk
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155 Comments
My Website
Oct 13 10:57 PMPlease note that under Restricted Activities, paragraph 9.1., subparagraphs l & m below are most often used to hold funds:
l. Conduct your business or use the Services in a manner that results in or may result in complaints, Disputes, Claims, Reversals, Chargebacks, fees, fines, penalties and other liability to PayPal, a User, a third party or you;
m. Have a credit score from a credit reporting agency that indicates a high level of risk associated with your use of the Services;
10.2 Actions by PayPal. If we have reason to believe that you have engaged in any Restricted Activities, we may take various actions to protect PayPal, eBay, a User, a third party, or you from Reversals, Chargebacks, Claims, fees, fines, penalties and any other liability. The actions we may take include but are not limited to the following:
a. We may close, suspend, or limit your access to your Account or the Services (such as limiting access to any of your Funding Sources, and your ability to send money, make withdrawals, or remove financial Information);
b. We may contact buyers who have purchased goods or services from you, contact your bank or credit card issuer, and warn other Users, law enforcement, or impacted third parties of your actions;
c. We may update inaccurate Information you provided us;
d. We may refuse to provide our Services to you in the future;
e. We may hold your funds for up to 180 Days if reasonably needed to protect against the risk of liability; and
f. We may take legal action against you.
And here's another clause in Paypal's user agreement that gives Paypal the right to hold sellers funds. Please note that the time period is NOT defined.
10.5 Reserves for Premier and Business Accounts. PayPal, in its sole discretion, may place a Reserve on funds held in your Premier or Business Account when PayPal believes there may be a high level of risk associated with your Account. If PayPal places a Reserve on funds in your Account, they will be shown as “pending” in your PayPal Balance. If your Account is subject to a Reserve, PayPal will provide you with notice specifying the terms of the Reserve. The terms may require that a certain percentage of the amounts received into your Account are held for a certain period of time, or that a certain amount of money is held in reserve, or anything else that PayPal determines is necessary to protect against the risk associated with your Account. PayPal may change the terms of the Reserve at any time by providing you with notice of the new terms.
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N. Tesla
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2 Comments
Oct 14 11:37 PMFurthermore, your "either a person can pay or can't" is pretty wrongheaded. Responsible people are always choosing which card (debit, credit, charge) they want to use when. Furthermore, you can look at any number of reports that people still feel uncomfortable putting their card numbers online. Some might just find Bill Me Later easier than trying to find their card. I don't know what drives them, but I have quickly gathered that you seemingly don't either.
I'd be interested to hear some numbers to back up your analysis.
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Mokkori
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6 Comments
My Website
Oct 15 01:28 AMI quote: "If we have reason to believe that you have engaged in any Restricted Activities, we may take various actions to protect PayPal, eBay, a User, a third party, or you from Reversals, Chargebacks, Claims, fees, fines, penalties and any other liability."
The restricted activities they're referring to include: Selling counterfeit goods (fake Gucci handbags), providing false information, fraud (collecting a refund from PayPal while at the same time charging back your credit card), hacking the PayPal site, disclosing private information (giving out the names and addresses of people who have paid you).
Anyone engaged in those activities is, I repeat, a criminal. Legitimate sellers need not fear 180 day holds.
A brick and mortar bank will engage in the same level of caution. If your bank thinks you're using your account to launder drug money or engage in other criminal activity, they are required by law to report it.
If Bill Me Later too deems it necessary to "hold" the funds of suspected criminals, I wholeheartedly support that position.
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webrunner75
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32 Comments
Oct 15 11:21 AM"And the list of what doesn't work goes on and on seemingly without end or resolution."
ebay has put out an announcement that listings are not showing up with searches and won't be fixed until some time next week. This coupled with all of the other tests, glitches and counter-productive new policies screams Deliberate Sabatage from the very top of this organization.
Whitman and Donahoe are both responsible for the disaster ebay has become. Their Disruptive Innovation scheme outline can be read by doing an internet seach of "Legg Mason Capitol Management Thought Leader Forum Donahoe". A break-down of it can be read by doing a search of "eBay’s Disruptive Innovation, How’s that workin’ for ya?".
We all know that Meg Whitman has placed herself in the center of McCain's campaign, but did you also know that John Donahoe's wife is covering ebay's political hold by cozying up to Obama, also? Search "Obama's $150 Billion `Cleantech' Pledge Lures Deal-Hungry VCs" to learn more.
It's HIGH TIME the government steps in and investigates the manipulating at the ebay monopoly. I hope they have several sets of handcuffs available when they do.
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5563
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7 Comments
Oct 16 09:44 AMTake a look at their stock price at a new 6 year low of $15.33 up from a low yesterday before closing of $15.01. I think that they can spew any corporate line they want, I will never sell there again and their stock price is reflecting the fact that their once "great" reputation is now DIRT.
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spork.man
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1 Comment
Oct 21 12:39 AM1) Bill Me Later just landed PayPal (not eBay) on more sites that it did not have present access to. This means they just opened a can of whoopass in the payments industry.
2) Bill Me Later is a credit facility. It offers single-channel facility for buyers to purchase goods on credit. How is this any different than buying with a credit card? It isn't and why Dinah doesn't get this is anything but clear.
3) "Shipping is capped at below actual costs for many popular media items." Um. Duh?! It's about time! Sellers have been gaming the shipping and handling for a long time making auctions largely rediculous because you have to sit down with a calculator and go through each auction to determine what each one would cost by time you add in many of the asinine shipping charges.
5. "Paypal holds, chargebacks and buyer refunds have increased by leaps and bounds." - based on what?! Where do you get this information? Looking at the general financials, these risks haven't budged much. This is an arrogant guess and unfounded.
"Sellers will be stuck with higher fees, more defaults & more chargebacks." - I'm calling BS. Of course there are fees for transactions. Would it be any different if the merchant had a different merchant account? No. So where does this illogical reduction come from? Oh yeah, he's just another angry seller.
"Sellers can't sell due to ongoing SYI glitches." - Then where did all of the revenue in the third quarter come from? Glitches? Yeah. Stopping sellers from listing? Obviously not all of them.
So Dinah, before contributing to a financial site, maybe it's time you first learn how to analyze information and stop being a proponent of single-minded, clueless garbage wrapped up in your largely error-ridden, emotional ranting in the guise of journalism.