Ebay Secrets Blog

Archive for July, 2009

Advertising banners that take users off of eBay are a long-standing sore spot for sellers

When eBay announces their new policy changes next week, part of the announcement will make sellers cheer.  I have confirmed with a source inside eBay that the advertising banners that appear at the top of search results will be curtailed beginning later this year –probably in the Fall.

eBay has always had strict policies to prevent driving traffic to non-eBay sites or engaging in any activity to take business off of eBay and direct it to other venues.  (Amazon has a similar policy). So sellers were understandably upset when eBay began placing large horizontal banner ads across the top of search results pages.

Although the banners were for services such as Quest telecommunications, Monster.com job seeking services and the Wall Street Journal, sellers have long felt that when someone is searching for something to buy –they don’t need to be distracted by these other offers. For example, if a buyer is searching for one of my items and a Monster.com ad comes up, he or she might click on it to check out the job market.  When they get there they see an interesting opportunity and forget that they were looking for something to buy.  OK, so a hour of so later they remember and go back to eBay, but my listing may have expired in that time.

eBay has not announced a specific date when the new policy announcements will be made, but the buzz is that it will come early next week. Part of the announcement will be details of the new Trusted Seller Program that was covered by AuctionBytes last week.

See Also

• Learn How To Start and Run an eBay Consignment Business
  Complete training course includes contracts, forms, advertisements and everything you need to get started.

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So You Think You Can Dance, Dancing With the Stars, America’s Best Dance Crew—it’s all about the Boogie Down Productions (i.e. TV shows) these days. Americans are obsessed with the artform. We have seen a rash of unique wedding dances invade You Tube and now I just happened upon something that is sure to be a trend and pop culture phenomenon, the wedding procession dance. Instead of the boring saunter down the aisle this couple had their friends slide and shimmy with sunglasses on. It could have been cheesy but it was actually really entertaining and joyous. I recommend it if your friends have rhythm but if they are challenged in that area perhaps walking fits the bill.

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Card payments, either directly or via eWallet services like PayPal, make up the vast majority of payments for goods online.  Consumers are well protected against fraud with the, however, merchants do not enjoy the same blanket level of protection and need to be careful when accepting online payments.

Online payments funded by a card can be subject to charge backs, where the card holder disputes the transaction up to 6 months after the sale.  Charge backs can either be because the card holder disputes that they made the transaction (i.e. it was a fraudulent transaction), or because they believe that the item they received was not as described.

Who Carries the Risk?

It is easy to assume that funds arriving in an account are cleared and legitimate payments.  However, for any online payments where the 3D secure test is not passed (see below), the merchant carries the ultimate risk of a fraud as the transaction is ‘card holder not present’.  To understand the risks associated with any transaction, merchants should understand the available security checks and other factors which can be used to filter out the good from the bad.

Card Security Checks

In my experience payment gateways make little effort to educate their customers as to the best security settings for their business and leave the merchant to create their own security settings.  However, it pays to spend some time working out the best settings for your business.  For example, if your products are all low value, you may wish to have a low security threshold as fraud is unlikely or a risk you are willing to take.  Conversely, if your products are desirable, high ticket items, then fraud settings should be high.

3D Secure

3D secure, also know as Verified by Visa or Mastercard SecureCode creates a virtual “card present” environment during internet transactions by asking the buyer to enter a password. 3D secure is only available for Visa and Mastercard transactions and as yet there are no similar initiatives for American Express, JCB or Diner’s Club.

The major benefit of this system is that a transaction that has been fully 3D Secure validated, cannot be charged-back to the merchant if subsequently found to be fraudulent. The merchant is protected by the card issuer against such charge backs because the bank themselves assume the liability.  However, charge backs are still possible as a 3D secure validated transaction will not protect in the event of the customer denying receipt of goods.

3D secure is not universally popular with some merchants complaining of reduced conversions.  Some consumers also find the extra step in the checkout process annoying.

AVS (Address Verification Service)

AVS checks the numeric values in a card holder’s address (i.e. flat or house number and numbers in the post code) given at checkout against the billing address on file for the card.  Checking that the buyer knows the right billing address is an important extra check, but by no means fool proof.  For example, a card owner can enter their address incorrectly, or a fraudster can have access to the card holder’s address.   The AVS result can be either match, partial match or mismatch.

CV2 (a.k.a CVV and CVVC)

These are the three numbers which are on the back of the card for Visa and Mastercard, or four on the front (American Express).  Their purpose is to provide some confidence that the buyer has the card in their possession as the numbers are not stored on the magnetic strip.  The system is by no means foolproof as the there are scripts available on the internet for generating the codes.

Fraud Screening

With experience humans can get a feeling for whether or not a transaction poses a risk.  However as transaction volumes grow, it is not possible to check each purchase individually.  Fraud screening services such as Third Man (www.the3rdman.co.uk) automate the analysis of each transaction by looking at various elements including name, card numbers, frequency of use, delivery address, value and IP address and produce a risk score for the transaction.  Fraud services are integrated into many payment gateways such as SagePay.

As well as using automated services, be aware of the following warning factors:

• Use of free email addresses with names unrelated to the name given
• Incomplete contact details
• Orders which are unusually large or have a strange combination of items
• Billing and delivery addresses different.  Be especially wary if the delivery address is a hotel or guest house
• Be wary of customers who ask insist on obtaining tracking number for deliveries, they could be trying to intercept the delivery.

A full list can be found here:

http://www.the3rdman.co.uk/fraud-screening-advice.php

Security of common Payment Gateways

PayPal

PayPal’s website payments standard product only provides seller protection for purchases which go to verified addresses.  All purchases which are made using the Website Payments Pro service are ineligible for seller protection.  AVS is available through PayPal but 3D secure is not supported and there is no additional fraud screening.

Google Checkout

Google provides merchants with details of whether a transaction has passed CV2 and AVS tests.  It does not support 3D secure, but does provide its own chargeback protection for eligible transactions.

SagePay

SagePay allows merchants to set their own security rules for AVS, CV2 and 3D secure.  It also provides a risk score for each transaction in conjunction with Third Man.

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Later today (Wed July 22), eBay reports Q2 results.  Tomorrow, Amazon reports as well.  We'll have a detailed analysis on the results here and on Amazon Strategies.

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This twitter session contains non-GAAP measures relating to the company’s performance. You can find the reconciliation of those measures to the nearest comparable GAAP measures here.

This twitter session may make forward-looking statements relating to our future performance that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the third quarter of 2009, and anticipated future stability and growth in the Marketplaces business unit.

Our actual results may differ materially from those discussed in this call for a variety of reasons, including, but not limited to, the impact of recent global economic events and the global economic downturn; foreign-exchange-rate fluctuations; changes in political, business, and economic conditions; the impact and integration of recent and future acquisitions; the impact of divestitures; our increasing need to grow revenues from existing users in established markets; an increasingly competitive environment for our businesses; the complexity of managing an increasingly large enterprise with a broad range of businesses, our need to manage regulatory, tax, IP and litigation risks (including risks specific to PayPal, Bill Me Later and the financial industry, and risks specific to Skype’s technology and to the VoIP industry); and our need to upgrade our technology and customer service infrastructure at reasonable cost while adding new features and maintaining site stability.

You can find more information about factors that could affect our operating results in our most recent annual report on our Form 10-K and our subsequent quarterly reports on Form 10-Q (available at http://investor.ebay.com). You should not unduly rely on any forward-looking statements, and we assume no obligation to update them. All information in this twitter session is as of July 22, 2009, and we do not intend, and undertake no duty, to update this presentation.

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eBay reported second quarter 2009 earnings results a few minutes ago. Second quarter revenue was $2.10 Billion (a $97.7 million decrease year-over-year) . Net income on a GAAP basis was $327.3 million ($0.25 per diluted share), and non-GAAP net income was $478.6 million ($0.37 per diluted share).

eBay Inc. generated $730.7 million of operating cash flow during Q2 and free cash flow during the quarter was $602.3 million.

I will once again live-blog the earnings call on our Twitter feed (http://twitter.com/ebayinkblog) at 2pm PT this afternoon. You can follow along to the earnings call here.

Cheers,
RBH

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VH1’s “Divas” series does not come around so often but when it does it makes me want to break out my sequins and belt out a tune. Today it
was announced that the divas-in-training were taking to the stage: Miley Cyrus, Kelly Clarkson, Adele, and Leona Lewis. Me likey. The cross-genre blend, non-stick figure physique(s) and the young blood is refreshing.

*Photos licensed to: Photorazzi.com

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If you have met Matt Rogers, you will know that he is a driven and dedicated individual with big ambitions for his start-up, Aroxo.  He is going to need all his determination to take on the big boys, amazon and eBay in the marketplace business.  I was skeptical to begin with, but having met him, I think he might just do it.  Over to you Matt.

Please tell us about Aroxo – how did you get the idea

Aroxo is a totally new and unique marketplace that helps buyers and sellers for products and services negotiate with each other. Aroxo’s model is buyer-driven.

The buyer creates what we call a Want-it Note, this tells Aroxo sellers what they want and they price they want to pay. They then receive offers from sellers and can either buy straight away, or negotiate with the seller.

For sellers we’re an entirely new channel to market enabling them to sell stock in volume, whilst allowing differential pricing to be achieved and managed on mass. We’re finding that a lot of our negotiations are affectively price matches, enabling a seller who would otherwise have lost a sale to a competitor to ship some stock and take a margin.

The potential market for the platform is huge. We are currently deliberately restricting it to consumer electronics whilst we build scale and users. Aroxo will be rolled out to wider markets once we have built traction and brand recognition.

Taking on eBay and amazon is something between difficult and impossible – discuss!

eBay and amazon are locked in a battle at the moment. eBay is fighting more and more for the fixed price business, and amazon is trying to grow its business by bringing more sellers onto their platform through their Marketplace.

In the meantime they are ignoring their users.

Both amazon and eBay are riddled with knock-off grey products from overseas. Their search basically doesn’t work (green ipod on eBay returns no Ipods, let alone anything green, and MP3 Players on amazon returns no iPods and a large proportion of Chinese knock-offs).

These are both amazing businesses, but amazon’s product catalogue is a mess and eBay’s user experience is very poor.

This is fertile ground for start-ups who can really focus on solving the needs of the customer:

1. Product discovery
2. Amazing prices
3. Easy to use
4. Ease of integration

We’re laser-like focused on these to deliver value to buyers and sellers by focussing on nothing but these.

I see integration as the key here, how do merchants upload their inventory to Aroxo

We’ve done a lot of work in this space to make it really easy for merchants to sell through us.

We do three things to make the merchant’s life easier. Firstly they can import their entire stock feed using our live feed import. We process everything in real-time and the entire catalogue is usually live within a few minutes of upload. We also support a wide range of different feed formats.

Secondly, we handle a lot of work-flow for them. We help them track payments, print address labels (if needed!), manage pre-sales and post-sale customer enquiries, feedback and manage their account. We do this using an easy-to-use “task list” that brings everything together in a clear list. Do the job on the top, and then come straight back to the list.

Finally, we’re very flexible with the payment systems which the seller can support. Any seller who accepts either Sagepay/Protx, PayPal, Google Checkout and telephone orders and take payments through Aroxo. We’re adding Worldpay support in soon too. The money goes direct into the seller’s account, and so can be passed through their own preferred fraud prevention tools.

An entirely new seller can be up and selling on Aroxo within 30 mins.

How has the service been doing so far?

Great! Since we’ve launched we’ve already won a number of awards for our technology, including:

• Winner: Techcrunch Pitch! 2009 sponsored by UKTI
• Winner: UK’s Hottest Start-up 2009, London Business School, Technology Summit
• Nominee: Techcrunch Europas. Best start-up 2009
• Finalist: The Next Web, Europe’s Most Promising Start-Up

At Aroxo we’re building out our seller base. We’ve already got tens of millions of pounds worth of stock on the site and handling plenty of sales, but we’re always on the look-out for more and more sellers.

If you drop us an email to seller@aroxo.co.uk not only can we help you get integrated, but we can throw in enough Aroxo credit for free to last you for a few months of selling on Aroxo.

Plans for the future?

We’ve got a lot of new features – for buyers and sellers – in the pipeline. The main areas we’re focused on are detailed above. The next major release you’ll see will be around making Aroxo’s product discovering stand out from the crowd, really help buyers find the right product for them.

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Eight finalists chosen to compete for $25,000 to grow their eBay business

The eight finalists, two in each of the four categories, were selected based on their perceived business challenges and obstacles, clarity of business plan, passion for using eBay and appropriateness to the contest’s theme. 

Each of the four challenge winners will receive a $25,000 business grant from eBay, as well as marketing services and support from eBay; runners-up will each receive a $5,000 grant.

If you would like to vote for your favorite, go to: http://sellerschallenge.ebay.com/.     Even if you are not interested in the challenge, I suggest you watch the videos as several of them are a good lesson in businness focus and niche marketing. New sellers who are struggling with figuring out what to sell will find the videos very helpful.

There is also a link on the page with tips for writing a business plan that readers may find helpful.

Here are the finalists with their eBay usernames. You may want to look at their auction listings to see what and how they do what they do.

Current or Former Members of the U.S. Armed Forces

Thomas Costello Jr. “tmctechnologies”

·        Member of the U.S. Marine Corps Reserve

·        Sells used computer equipment and components that wouldn’t really be able to be sold anywhere except eBay

·        Lives in Chicago, IL

Jesse Carmona “jessesrm”

·        Runs a nonprofit group called the Whittier Baseball Club 3.0 and uses eBay to raise funds and buy equipment for the group, which aims to help student athletes afford equipment and succeed in school

·        Lives in Whittier, CA (20 miles SE of LA)

Individuals or Small Business Who Have Not Sold on eBay

Tori Nichel “torinichel23”

·        She is a women’s fashion designer who would like to establish her online presence through eBay

·        Lives in Brooklyn, NY

Sam Widman “samuelw”

·        Is in the process of starting a company called “Recycled Cycles” using eBay as his store front to sell cleaned up motorcycles the buyers can “fix up”

·        Lives in Albany, GA

Part-Time Sellers Wanting to go Full-Time

Ryan Michelle Pugh “livclean”

·        She sells a variety of products she really believes in and that she thinks help people “live clean,” such as nutrition supplements, healthy chocolates and resistance bands

·        Lives in Las Vegas, NV

Silas Martine “smmbmm”

·        After being laid off last month, Silas is looking to join his wife, Bertha, as a full-time seller on eBay

·        Their video features their adorable son who is six and expresses how much they need more space to keep the business growing (his closet has been taken over)

·        Lives in Lakewood, CA (20 miles S of LA)

Full-Time Sellers Wanting to “Go Big”

Janell Anderson-Ehrke “grow_nebraska”

·        Grow Nebraska is a nonprofit that seeks to maximize the state’s entrepreneurial and small business spirit

·        She would use the funds to help grow the program, which is a major conduit for Nebraska-based artisans/producers to sell their products

·        Lives in Holbrook, NE

John P Eastman “thelistener”

·        Sells vintage audio electronics and accessories

·        He is hoping to further grow his business and be able to give back to the community more

·        Lives in Wells, Maine

See Also

• Learn How To Sell on eBay With The Complete eBay Marketing System
  our flagship printed training manual teaches you how to start and run a profitable eBay business

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Let me let you into a secret, I’m a bit cheap.  Superman had Kryptonite, I have freebies.  In these times of recession, I thought I would share a few of my money saving ideas.  These are specific to business, but are applicable to just about anyone.

Keep Rent Cheap

My office is in the Truman Brewery, Brick Lane, East London.  My unit is cheap as it does not have any windows.  Units with windows cost twice as much and are baking in summer.

Use Voip Phone Systems

I run my business using voipfone, an internet based phone system.  Each number costs me £1 per month as opposed to £10 with BT.

Outsource work to India

I have save £1000 by outsourcing development work and product listing creation to the Far east.  Use sites like eLance to find good, cheap workers.

Cash Back Credit Cards

My credit card pays me 1% cashback on everything I spend.  This year I stand to get several thousand pounds for doing exactly nothing.

Google Apps

I use Google Apps to run my company intra net and email for free.

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