Cornerstone Commercial Supply, a name most of my regular readers will remember from articles in the past year is calling it quits on eBay.
Cornerstone is an established small business with over 30 years of quality service dealing with the public. They offer a unique niche product selection which would seemingly be ideal for eBay. Commercial carpet cleaning products, tools, and machines both new and used.
Just as a small bit of background, let it be known that the owners of Cornerstone Commercial Supply are not rich people. They are the father and daughter team of Richard and Connie Carpenter, they both work every day to survive in this difficult economic environment.
Richard Carpenter has been in the Commercial Carpet Cleaning business for over 30 years and as a distributor for over 12 in his present location. He and his daughter Connie are honest, hard working dedicated people who give the customer a fair shake even when it is not necessary.
I consulted with Cornerstone Commercial Supply to bring them onto eBay as a client of iBusinessLogic in 2007, with the very best of intentions, now I feel as though I owe them an apology for what it is I have done.
It seemed to me to be a perfect match back in the end of 2007. We researched similar product sales on eBay with advanced eBay research tools. This research revealed a steady and growing market for the professional carpet cleaning products, with competition already established and selling on eBay. We had a solid plan and in our view, no other carpet cleaning supplier had approached the niche as we would, with a dedicated and well designed eBay store, a full product line, and very competitive pricing, we felt we had a good chance of growing a nice secondary business on eBay for Cornerstone Commercial Supply.
The store design was completed and a very enthusiastic new seller on eBay was born in January of 2008. Unfortunately, since that first happy day and after the first sale on eBay on January 07, 2008, just about every roadblock to success has been tossed at Cornerstone by eBay, PayPal and to some extent - eBay's buyers. It has been a very rough year for this small business on the Internet.
The trouble began with eBay almost immediately. The system eBay has put in place for new sellers is designed to prevent fraud, understandably so, but as a result it also prevents new small business owners from taking advantage of the eBay marketplace until certain milestones are met. One policy in particular served to slow Cornerstone's growth and stunted their success on eBay - the Feedback requirements.
eBay requires new sellers to have certain levels of feedback to utilize all of the selling options available on eBay. This single requirement prevented my client from establishing themselves as an eBay store which offers a broad range of products to serve the needs of the buying public. Simply because it was not cost effective to place hundreds of items on the site as 7 day auctions only. Fixed price was needed, and feedback is required to sell fixed price. It might be good to know why this policy is still in place, is it more difficult to scam an auction buyer than a fixed price buyer if you are dubious seller? I don't think so.
As you may recall, eBay was pushing fixed price very heavily last year and some say the search results were skewed in the favor of fixed price listings over auction format. We have no evidence of this but I can tell you that Cornerstones listings did not receive the same amount of results as other sellers in the same niche. As a result, it became imperative to get feedback.
When sales were made, the buyers did not bother to leave feedback for this seller, as they have no requirement or incentive to do so on eBay since the feedback system was changed to a one way street in 2008. This fact alone places the entire feedback requirements for new sellers into question in my opinion. When buyers have no incentive or reason to leave feedback for sellers, and sellers can only leave positive feedback for buyers, the system is not on a level playing field. eBay has the capability of verifying the credit and banking accounts of business owners, so why should feedback be part of the equation at this point? This has not affected established sellers as much as it has new sellers on eBay. eBay needs to remember that as established sellers leave, new sellers will be required to fill the void. When new sellers encounter this kind of friction, will they endure the pain or simple find other options?
Cornerstone could not respond by reducing pricing to a level below cost because of manufactures requirements to keep pricing at a retail level. It was a inhospitable start for a brick and mortar business on eBay. (Some will say we could have gotten feedback any number of ways, including low cost recipe purchases and by having friends "buy" imaginary listings, while I did not advise my client to do these things, I did inform him of the possible options, it was a matter of survival. Richard did not want to game the system in this way and continued paying fees to offer products on eBay as auction only listings). Eventually the feedback issue was met by Cornerstone but not without a certain amount of confusion by these small business owners as to what the purpose really is for having these restrictions in place.
The first article I wrote which involved Cornerstone and a less than favorable experience with eBay came long after these initial bumps in the road, personally I was still very much involved with offering eBay up as a great place for small businesses to join the Internet sales bandwagon. It hurt me to write the truth in the following article. Live Help - Communication at eBay - Cornerstone of the Buyer Experience was an article detailing how poorly eBay handled a problem which ended up closing Cornerstone's eBay store down for several weeks without explanation.
Followed by: this article: COMMUNICATION should be open - Not restricted! eBay - Please Read This!
and of course...
The result of all of this bad communication and lack of customer service from eBay towards this small business seller was a pervasive lack of trust for the site or its management from my client. Connie Carpenter especially felt that eBay was going out of its way to limit her business and waste her time. Richard, her father took a more pragmatic view and since they had really done nothing at all wrong he viewed the whole episode as a bump in the road. In the end, eBay did absolutely nothing to help resolve this situation, multiple phone calls only resulted in multiple versions of bad information. We were even told Cornerstone's account had been hacked by Vladuz in Romania. (not at all true but this information came from eBay).
After the issue above was resolved Connie was more skeptical of the entire situation with eBay. She continued to maintain the eBay store with carpet cleaning agents, parts, tools and machines but I could tell she had an uneasy feeling about the entire eBay selling program. After all they had just been shut down for weeks and she had spent dozens of hours on the phone and online with live help trying to resolve the situation. When this resulted in nothing but stonewalling, bad information, and passing the buck to Trust and Safety (who would never speak with her) Connie was just at the end of her rope with eBay.
Richard had not dealt with the phone calls and resulting frustration himself. He works on Truck Mount Carpet cleaning machines and with his customers all day every day. He liked the exposure the eBay store was giving him and the additional calls he received from other states looking for information about his products. Richard really wanted eBay to work and he trusted that all of the issues thus far had been anomalies, that in the end all would work out and his business would succeed on eBay as others had. Richard had not dealt with eBay directly as Connie had and thus his perspective was different.
So the odyssey continued with months of sporadic sales, lots of watchers, some direct telephone calls but no huge increase in sales after the feedback levels were met and fixed price 30 day listings became available. Products were listed in auction format, stores format and as fixed price listings. Shipping was fast and reliable, exclusively with UPS and customer service was top notch. Everything eBay wants in a seller was right there with Cornerstone.
What was the last straw?
PayPal? yes, PayPal... hard to imagine? Not for some sellers, especially not those who have experienced the PayPal credit card charge back scams perpetrated by buyers each and every day on eBay. This is a scam that cannot be guarded against by sellers as they must ship when PayPal accepts payment and lets make that point clear, PAYPAL accepts the payment.
What Happened with PayPal?
Cornerstone listed a $1200 carpet cleaning power wand extractor and sold it directly on eBay in September 2008. The sale went flawlessly, the buyer paid immedately via PayPal and PayPal confirmed the payment. At this point the seller, Cornerstone Commercial Supply has no way to verify the payment and no reason to do so. PayPal said it was good, so they shipped.
The item was sent via UPS with tracking and insurance. Tracking was confirmed and delivery made. The item was shipped to the buyers verified address and was accepted.
No emails, no communication from the buyer at all... except for one thing...
The buyer filed a PayPal dispute. PayPal almost immediately accepted the dispute as valid from the buyer and removed the funds from the sellers PayPal account. This is without a single email from the buyer or any explaination as to why the transaction was disputed at all. PayPal launched thier investigation. Connie at Cornerstone sent PayPal every piece of information she had. She faxed shipping information and the eBay information she called and she followed up. Then she tried to contact the customer who would not accept a single call or respond to any emails.
Lets review -
- Seller places relatively high dollar item on eBay
- Buyer finds item and buys it at a fixed price
- eBay sends buyer an invoice and charges the seller a final value fee
- Buyer processes payment via PayPal - almost the only option on eBay now
- PayPal confirms payment with the seller - Paypal takes a substantial fee for processing same
- eBay insists shipping be carried out within two days of payment via PayPal - otherwise DSR ratings will be severely damaged
- Seller ships promptly with a verified carrier and tracking
- Buyer receives shipment
- Buyer Disputes Charges - Not the shipment - not the product - just the charge.
- PayPal removes entire payment from sellers account
- PayPal conducts 90 day long "Investigation"
90 days of suspense culminates in PayPal returning a verdict in favor of the buyer. Keep in mind, the buyer never once said that they did not receive the product or the shipment so UPS insurance will not cover this. The buyer also did not state that they did not make the purchase on eBay. What the buyer said is that they did not "authorize" the charge on their credit card. In effect, the buyer claims they did not authorize the charge but still received the product has not returned the product, has not been directed to return the product by PayPal and will not answer any calls or emails from the seller. The buyer has stolen the merchandise with PayPal's blessings and help. PayPal will not elaborate about what their "investigation" revealed but they have no problem in insisting that the seller is responsible.
Cornerstone is dumbfounded by this turn of events. They paid fees to PayPal to process and verify authorization on this payment, they followed the rules and they shipped a quality product. Cornerstone paid for the item, the shipping, insurance, and fees to both eBay and PayPal and they get what in return? The privilege of paying not once for a stolen item but twice because they are without the goods and the payment.
Richard and Connie Carpenter no longer feel that they can trust the business environment on eBay. They both tried very hard to understand the various problems that have been presented over the last year by eBay and now PayPal but this last 90 day torture test was the end for them. They can not trust PayPal to accept payments and verify them and if you do not accept PayPal payments you can not do business on eBay. The eBay system has failed this small business.
I am in complete agreement with Richard and Connie's decision to walk away from eBay. While I know that eBay works well for many sellers it also has become less hospitable for new small business sellers like Cornerstone Commercial Supply.
eBay is a very complicated and diverse marketplace with numerous minefields and seller traps to avoid. Small business sellers like Connie and Richard, who sell high dollar items need more protection from PayPal and less restrictive rules from eBay. If eBay insists PayPal be the only form of payment, they must make that payment golden. When sellers like Cornerstone can not trust PayPal to make good when PayPal makes the mistake of not verifying the credit card of a buyer, a process the seller has no access to or responsibility for, then they can not trust PayPal and thus can not sell on eBay.
iBusinessLogic has already started a new website for Cornerstone Commercial Supply. We have not developed the site out completely but now that the client will have more time to devote to the stand alone website we will be working on this aspect of the business more. One plan would include moving the eBay inventory to Bonanzle and integrating that inventory into the Cornerstone website explained further here: Bonanzle Shopping Cart Solution.
In many cases, especially in the past, eBay was the most effective way to bring small business to market on the Internet. In this case, with many different variables and reasons it just has not proven to be the best solution for Cornerstone.
Today it is even more important for small businesses to establish themselves online with their own web site presence. Simply placing all of your faith and trust into one huge outside venue like eBay or Amazon is not a smart business decision. If your business model works online, it should be established with its own URL and website. Control of your brand, your product, your sales and your customers then lies in your hands, not with someone else.
I hope to update my readers with the transition of Cornerstone to Bonanzle (if we follow that plan). We already know through previous experience that Bonanzle is a very friendly, Search Engine optimized and easy site to manage. As a shopping cart solution it could not be easier for a small business to utilize. Payment options include Google Checkout, PayPal, Checks, Money Transfer, or almost any form of payment available. When these attributes are combined with the advantages of having a stand alone business website with the freedom and control necessary to present your business as you want your customers to see it, we feel the solution fits the need of small businesses.
I am personally saddened by the turn of events between Cornerstone and eBay. It was largely my advice that sent Cornerstone on this path yet they do not blame me for these events or the result. As such I cherish the trust this client has placed in me to help them find the best way forward and the am inspired by the clients understanding that I could never have predicted all of the various changes and oddities that eBay has thrown at them in the last year.
We will bring Cornerstone the success they deserve online - it just wont be on eBay.