Money Blue Book

Anyone can make money online with eBay by selling products, but you have to be prepared to put in a lot of time and effort doing manual labor, packaging, and shipping goods. If you are willing to put your back into it, you can easily make quite a bit by buying the most popular consumer products from wholesellers and selling them on eBay. So many people claim to offer wholesale lists on eBay, but don’t even bother with them. Their sources are useless and the majority will try to swindle you. It’s a dangerous world out there so first, a few general rules of caution to abide by that will save you plenty of time, money, and headache. Unfortunately, many people disregard these rules every day, and lose thousands of dollars to scammers.

1) Never Buy Products From Anyone Who Wants To Be Paid By Western Union.

If someone asks for payment by Western Union, do not respond to them and avoid them immediately. Their low priced merchandise might be tempting, but it will almost always be a scam. Remember, it is your own responsibility to verify the reputation and legitimacy of the seller. Western Union is not responsible for the non-receipt or quality of any goods or services.

Common Western Union scams include, but are not limited to the following:

1. Seller asks you to pay by Western Union and tells you that the transaction will be safe because you can make the payment out to someone you know, but put the seller’s address on the payment. You are then instructed to tell the seller the money transfer control number (MTCN) of the payment so he can go to Western Union and verify that you have made the payment. Once you receive the shipment, you are then supposed to contact Western Union and change the payment recipient’s name to the seller’s real name so that the seller can pick up the money. It’s a scam everytime because once the seller knows the address or the control number, he can obtain the payment with no problem. Many Western Union agents in foreign countries never ask for proper identification.
2. Seller asks you to pay by Western Union and tells you to make the payment using Western Union’s secret question feature. The way this feature works is the Western Union agent will ask a secret question to whoever is picking up the money, and the person picking up the payment must answer correctly in order to collect the money. It’s a scam everytime because many times Western Union agents, particularly those outside of the United States, do not ask the question, and only care if the person knows the address or control number. Western Union even advises on their website not to rely on the secret question feature.

2) Never Use An Escrow Service Other Than Escrow.com

Escrow is verified and recommended by eBay. Note that Escrow.com will handle transactions in any country in the world, except Romania and Indonesia. Fraud is so rampant in those countries that Escrow.com cannot effectively and safely help you transact with sellers in those countries. What Escrow.com does is ask both the buyer and seller to agree on terms. The buyer must then send the required funds to Escrow.com. Once Escrow.com receives the funds, they notify the seller to ship the goods. Once the buyer receives the goods and confirms that everything is in order, the buyer notifies Escrow.com to release the funds to the seller.

Escrow.com is safe for both buyer and seller because the buyer does not have to release the funds to the seller until they receive shipment and verify everything is correct. It is safe for the seller as well, because even if a buyer claimed non-receipt of the shipment, the seller could provide Escrow.com with the tracking number for the shipment and a shipping manifest showing what was sent and received. In which case, Escrow.com would then release the funds to the seller.

Common Escrow Scams Include, But Are Not Limited To The Following:

1. Seller tells the buyer that they prefer an escrow company other than Escrow.com. The seller gives the buyer the website address of the escrow company they prefer, and indicates that this is the only escrow company they trust. The buyer goes to the website and discovers a cleverly designed site that looks legitimate, with promises of safety and security. It’s a scam because the website is actually owned and operated by the seller or the seller’s associate. Once the buyer sends their money to the so-called escrow company, they will have actually sent their money straight into the hands of the scammer.
2. Seller tells the buyer that they will do the deal securely through SquareTrade.com. It’s a scam because SquareTrade does not act as an escrow service. They do not approve deals or hold funds for anyone. All SquareTrade does is allow eBay sellers to place a SquareTrade seal on their auctions, which shows that the eBay seller is willing to allow SquareTrade to help resolve any future disputes. Anyone who claims that they will use SquareTrade like an escrow service is a fraud. The seller may even send the buyer a spoofed e-mail, one that looks like it came directly from SquareTrade. However, it will be a fake.
3. Seller tells the buyer they will use a shipping service called TNT, and that the buyer should send their payment to TNT, in which case TNT will hold payment until they can inspect and ship the seller’s merchandise to the buyer. It’s a scam because TNT is a shipping company and not an escrow service. They do not hold funds or inspect shipments on anyone’s behalf. The seller may even send the buyer a spoofed-mail, one that looks as if it came directly from TNT, complete with logo and tracking number for the shipment. However, the e-mail will be a fake.

3) Always Request That You Pay A Seller By One Of The Following Methods

1. Credit Card – Safe because most credit card companies will refund your money if you file a proper fraud complaint.
2. Escrow.com – Safe because it protects both buyer and seller, as mentioned in Rule # 2.
3. PayPal – Usually safe for purchases under $2,000, because PayPal will let you use a credit card and will verify the seller’s address, banking information, and identity (do not send money to someone through PayPal if they are listed as “unverified”).
4. Letter of Credit (LC) – Basically, this is like using your bank as an escrow service. For example, you can go to your bank and apply for a letter of credit for the dollar amount you need to pay the seller. Your bank will freeze the funds in your account, and issue a letter to you and the seller’s bank verifying that they are holding the money and that they will transfer the funds to the seller’s bank account as soon as delivery of the goods to you is confirmed.

Do Use Bank Wire Transfers Until Identity Has Been Verified and Confirmed

Be very careful with any seller that requests payment in advance by T/T (telegraphic transfer), also known as bank wire transfer. This is a tricky gray area because some legitimate international sellers do require money by T/T in advance. Sometimes it is for a deposit, and sometimes they want the full transaction amount. Before sending money by T/T, make sure you ask for the following:

1. Seller’s full name,
2. Seller’s address,
3. Seller’s telephone number,
4. Seller’s company name,
5. Seller’s business license number,
6. Seller’s bank’s name and telephone number,
7. A scanned or faxed copy of the seller’s identification card or driver’s license,
8. References from companies the seller has worked with before, preferably in your country.

Tell the seller you need this information to run a thorough background check. You can then use a service such as Intellius.com to run a background check on them. You can also hire an international buying agent in the seller’s country to go to the seller’s physical location and buy the items for you in person, and then ship them to you. Most buying agents will charge a reasonable fee to securely buy for you.

Remember, if the seller is legitimate, he will understand your need for verification and will comply. If the seller hesitates, resists, says he cannot delay anymore, or demands that you send payment as soon as possible, you should become very suspicious and perhaps reconsider the transaction. The seller is very likely a fraud. Do not let greed or haste overcome your common senses.

4) To Assure Sellers That You Are An Honest And Legitimate Buyer, You Should Become Verified

1. Obtain a DnB (Dun & Bradstreet) number. This can be accomplished by applying for a credit builder account at dnb.com. Dun & Bradstreet will verify your company information including company name, address, owners, and ongoing debts (credit cards) or lines of credit.
2. Get PayPal Verified – Open a PayPal account. Once you have one, apply to become a verified premier member. PayPal will verify your address and identification by depositing two small amounts of money into your bank account or credit card. Afterwards, you must verify the total amounts that were deposited to prove that you are the owner of the bank account or card.
3. Get an Alibaba Trustpass Membership – See the list of wholesale sources below for more information.
4. If you are in the United States, become a member of the Better Business Bureau Online.

5) Verify The Seller’s Identity

If a seller tells you that he or his company has a website, run a WhoIs check on the website to see if the seller’s name and address match the internet registrar’s record for the site owner. Beware of anyone who doesn’t have a name and address listed in the WhoIs section of their domain, or of anyone who just recently registered the domain.

6) Develop Your Own Private List Of Trusted Wholesale Suppliers

1. Worldwide Brands – Worldwide Brands carries over 4,000 products and they also provide drop shipping services. That means they can ship products directly to your customers, and you do not need to keep any inventory or perform any shipping. They are an eBay Certified Solution Provider, and they are also a member of the Better Business Bureau.
2. NAWCA – (North American Wholesale Co-Op Association) is another fantastic source for over 100,000 products via their 2,000 distributors, many of which can perform drop shipping for you. The NAWCA was founded by a collective of wholesalers and distributors in 2001. Highly recommended for eBay sellers.
3. Ingram Micro – Ingram Micro is the second largest electronics distributor in the world. They offer very good pricing.
4. Tech Data – This company operates a huge electronics distribution center in the United States.

Buyer and Seller Community Portals - There are excellent wholesale deals to be had here, but because these sites are part of the unregulated wild, wild west of international wholesellers, you have to be extra careful and vigilant in sorting the diamonds from the rough. There are definitely more scammers here than legitimate sellers. Be careful:

1. Alibaba – Alibaba is a well trafficked source for wholesale buyers and sellers to connect on the internet. You should check this site frequently and sign up for trade alerts for whatever you are buying or selling. Your priority should be to deal with Alibaba companies that are Trustpass verified, although that in of itself is not always a sure guarantee of reliability. You can also become an Alibaba Trustpass member yourself. For a small fee, Alibaba will have a third party credit agency contact you to verify your name, address and company identity. Once you are an Alibaba Trustpass member, you will have more credibility, and sellers and buyers alike will take you more seriously. However, do note that scammers are everywhere. Please read my personal scammer experience for more insight.
2. Exporters Singapore – Similar to Alibaba, but this site requires all members to pay a fee after a 30 day trial period. This method helps to keep scammers out.
3. Power Source Online – Power Source Online is a computer parts trading exchange for dealers, brokers and services companies. You can find cheap computer parts and components for resale.

Note: The rest of the communities listed below are similar to Alibaba, with less traffic, but it is advised that you review and join as many as possible to maximize your opportunities.

1. Global Sources
2. EC 21
3. Rusbiz
4. EC Plaza
5. Importers
6. Trade India
7. Offer 21
8. Fuzing

I used to sell products on eBay as a money making hobby and even once attempted to make a side business out of it. It wasn’t easy trying to make profit while at the same time avoiding all the internet fraud and scams out there. While I eventually decided to pursue other ventures, I had a friend who continued to dabble in eBay auctions. Soon enough, he had successfully turned what started out as a one room operation to an impressive one man eBay business machine that engulfed his entire basement. Everytime I stopped by his house I was always startled at the sheer number of brand new Dell laptop and ThinkPad boxes stacked in piles throughout his basement that overflowed into his unoccupied garage.

Through his closely guarded network of online connections (he never disclosed them to me), he was able to secure excellent wholesale deals on hot electronics like laptops, desktop computers, and handheld PDA’s for sale on eBay. His racket continued for several years to my continued amazement as I wondered how he managed to stay so consistently profitable despite rising eBay fees and heavy online competition. One day I finally turned to him and asked him if he was reporting his eBay earnings as taxable income on his federal income tax. He simply smiled and changed the subject. Obviously, the answer was no, thus exposing the secret to his profitable eBay success – tax evasion!

Frankly I don’t really blame him for withholding his eBay profits from the Internal Revenue Service (IRS), although I wouldn’t have done that myself. The subject of eBay tax enforcement has been murky for years, mostly due to the lack of proper paper trails and the undeveloped legal area of online auction income. However, the IRS has been recently making moves to crack down on eBay powersellers and auction proprietors to compel the reporting of all business profits. The IRS has also set its taxation efforts on other popular online auction sites like Amazon and UBid, as well as other online hobby market networks like Etsy. I suppose it was about time the almighty IRS dealt with the issue of online auctions.

The IRS Struggles To Compel eBay Sellers To Divulge Their Taxable Earnings

When it comes to reporting their sales income to the IRS, eBay sellers currently operate on the honor system. However, this honor system has resulted in a significant shortfall of under-reported and untaxed auction earnings. Currently, eBay does not report seller stats or submit sales records to the IRS unless it is honoring a subpoena request for information. Many amateur and aspiring eBay entrepreneurs have been able to work the eBay tax loophole for some time and avoid having to pay tax on their profits. It’s a risky game of tax evasion roulette, but the lax enforcement has allowed it to persist for some time.

Recently, the federal government and the IRS has begun to put pressure on major online auction retailers like eBay to cough up user information and sales records, and has even introduced legislation to require market hubs to report personalized sales activity. Of particular taxation concern are the millions of auction sellers who consider eBay as their primary or secondary source of income but fail to accurately report their earnings. Obviously this effort is going to encounter much resistance from sellers and even the auction sites themselves since new tracking policies will undoubtedly result in higher tracking and record keeping costs. The prospect of requiring sites like eBay to track user information based on individual Social Security Number will obviously have the usual online privacy advocates up in arms.

While this taxation crackdown may bug a few eBay sellers, the requirement to report auction income and taxable business earnings is nothing new and has always been around. It’s just only until recently that the IRS finally decided to work harder at plugging up the tax gap to stem tax evasion activities. Mandating the implementation of tools to enforce tax compliance already exists in most employment sectors and the IRS believes the new frontier of online auctions should be no exception.

When Do Proceeds From An eBay Auction Sale Have To Be Reported As Taxable Income?

From the amateur seller who considers eBay to be nothing more than a hobby, to the heavy traffic Powerseller who runs his or her operation as a profit generating business, no one really wants to spent the time to report earnings as income if he or she can help it. However, the IRS instructions make it clear that all sources of income can be taxed, which includes everything from online auction profits, and income from gambling activity, to even illegal “business operations” such as drug dealing and prostitution.

Even if the eBay seller makes a few sales here and there as a hobby, the IRS requires all income to be reported – this includes wages, salaries, tips, gambling winnings, money found on the floor, sweepstakes earnings, business income, and yes, eBay earnings (both hobby and business). The hobby or business nature of your eBay income only becomes an important factor when determining whether your eBay losses and operation costs may be used to offset your eBay income as a business deduction.

The correct question to ask regarding taxability is not necessarily the frequency or dollar amount of the transactions – but rather – did the eBay auction activity result in a net profit? For those who use eBay or other internet auction sites to sell old stuff that’s been piling up in your garage, you probably don’t have to worry about paying income taxes on the proceeds since the cost (the basis) usually exceeds the selling price. Under current tax law, an individual who sells an item online and collects more money than its original purchased value is expected to report that money as income on his or her tax return. Items whose original purchase basis value cannot be determined is typically valued at $0 under current tax law. Thus, it’s advisable for all eBay sellers to get in the proper habit now of retaining their purchase and sales records. You never know when the IRS will flip the switch and go nuts with the eBay seller tax audits. It’s only a matter of time.

Why Does It Matter If Your eBay Selling Is A Hobby Or A Business?

All eBay online auction sellers have a duty to report their earnings and to comply with tax law obligations to avoid an IRS audit. For most casual eBay hobby sellers who occasionally run the online equivalent of the garage or yard sale, they usually are not obligated to report their sales. That’s because for most online garage or yard type sales, the items sold are usually personal household items purchased over the years and used. As such, the resulting selling prices are almost always lower than the original purchase basis price. The exception occurs when the item for sale has appreciated in value. Even if the transaction was intended to be a simple online yard sale, if the item being sold was something like a set of rare baseball cards that had appreciated in value in excess of the original purchase price, the resulting earnings must be reported as taxable income.

The hobby vs. business debate matters when it comes to self employment tax obligations and tax deduction benefits. If the eBay operation is properly regarded as a business, the taxpayer may be entitled to business deductions to write off operating costs. Whether the eBay seller will be treated as running a business will depend on his or her intent to generate profit. Activities such as visiting pawn shops for resale bargains like my friend used to do will likely be seen as demonstrating business intent. Furthermore, when the individual is running a business operation that results in regular profit sales, he or she may also be obligated to pay self assessed quarterly estimated tax payments through Form 1040-ES.

If you lose money pursuing a hobby, you cannot deduct your hobby loss from other income, but you can deduct your expenses up to the amount of your hobby income on your tax return. A hobby loss is a miscellaneous itemized tax deduction, and as such, only the total that exceeds 2% of the adjusted gross income may be deducted.

For more information regarding the differing IRS treatment of hobby and business related activity, check out the IRS explanation. The IRS also provides a good tax information resource for online auction sellers.

I often work on the computer late into the evening and most of the time I keep my television set on as background noise. Usually there isn’t much programming going on in the wee evening hours – that is, except for the inescapable torrent of Girls Gone Wild commercials which seem to flood their way onto the airwaves after midnight whether you like it or not. The other types of shady programs that seem to craw their way onto my TV screen at night are the sleazy late night infomercials selling all sorts of silly products from male enhancement pills, to expensive audio tapes on how to get rich quick while working in your pajamas. While some of the commercials are tastefully done, hyping somewhat useful products like fruit juicers or portable infrared ovens, most them are repetitive scams designed to get you to part with your money fast.

Exposing Money Making Get Rich Quick Infomercials

When most people have gone to sleep, the roaches come out to play. The vast majority of late light commercials fall into the slummy get rich quick category. Most are slickly produced sales pitches for useless packages containing rehashed literature and DVD tapes about how to earn big bucks flipping houses, dabbling in cash flow notes, or making money on eBay. Of all the late night infomercials, the one that really sticks in my mind is the so-called Shortcuts to Internet Millions gimmick being hawked by a guy named Jeff Paul. It’s not the fact that he is selling information that can easily be read and obtained online for free that makes me mentally nauseous and annoyed, it’s the gratuitous visual sales tactics that he uses to sucker gullible consumers into buying his promises of money making fortune. His commercials are full of ridiculous and extremely misleading assertions. Simply after watching his commercials for a few minutes, I felt my own IQ slipping down a few notches.

Without a doubt, it’s mostly the targeted male viewers, who despite their better judgment and gut instincts, still blindly succumb to the song of the financial siren. I guess many men find it hard to resist the message and promises of making millions when they are being flirtatiously whispered by beautiful curvy women surrounded by other attractive visual displays of lavish pools, opulent mansions, and luxury vehicles. Despite a world where society and the media continue to be pressured toward political correctness, in the world of advertising and product promotion, several sad truisms still ring true – “there’s a sucker born every minute” and “sex sells.” Much of these tactics are keenly and specifically demonstrated by the Shortcuts to Internet Millions infomercials.

Here are five of the more exploitive (but very effective) infomercial tactics used:

1) The Use Of Flirty Female Hosts To Mesmerize and Make The Sale – Without a shadow of a doubt, the use of sexual imagery is very effective at capturing the attention of the mostly male target audience. For the record, I want to make it very clear (to minimize email complaints), that I am moderately liberal in my social views. I don’t think there is anything wrong with women dressing up the way they want in real life. I have no problem with that. What I have a problem with is the use of this sleazy and blatant form of exploitation and allure to sell a product that frankly has nothing to do with the associated imagery – something I feel insults my intelligence.

The Shortcuts to Internet Millions infomercials feature two noticeably attractive and perky hosts, Kelly Britz and Tina Milano, as they gush and chat about how much money they are each making on the internet using the program. They go on and on about how it’s so easy and magical, and how all their (presumably very attractive) girlfriends are all logging on and getting into the online affiliate money making business without so much as breaking a sweat. Right……

The attempt at sexual innuendo is not even subtle. It’s not merely two attractive women sitting on sofas having a pleasant discussion about their unbelievable passion for internet marketing. We are talking about two very, very, very prominently endowed women bearing their bare cleavages, while gushing about how easy it was for them to make thousands of dollars a week through eBay with just a few mouse clicks – without having any knowledge or prior experience with computers or the internet. It’s like Jeff Paul swiped two girls from the preceding Girls Gone Wild commercial and handed them microphones so they can blab away about how they magically made money on this thing called eBay. Wearing extremely low cut tops as they chatted away on screen, the stereotypical bombshells offered zero credibility in my eyes and likely in the eyes of most serious consumers as well. However, in a warped way, their mere presence got my attention and likely the focus of many male viewers, and sadly, perhaps even luring a few into handing over their credit card numbers to order the ridiculous product.

2) Obsession With Associating Everything With Magic – Why do they insist on making the attractive female hosts seem so naive and brainless? “Do you really know how your e-mail magically appears on your computer screen?” one of them quizzes. The female genius then offers a few more “magical” references, concluding her powerful and persuasive argument of, “If you can type on your keyboard and click your mouse you can do this.” By golly, she’s right!

In the world of the Jeff Paul Shortcuts to Internet Millions’ infomercial, everything seems to magically appear – especially with the program’s so-called “3 Clicks To Cash” process. You type in your information and voila, your new business website “magically appears on the internet”. You send an email, and the words get “magically sent”. You don’t even need to do any work or online promotion because money will just “magically get earned” and checks will “magically come flying to you”. After all, the internet is just one magical fairyland where everyone magically makes money right? Try telling that to all the multi-million dollar dot com startups that went bust in 2000.

3) The Joke That Computer and Internet Illiterates Can Still Become Online Millionaires – I’m sorry to burst the combined delusional bubbles of Jeff Paul and his two babes, but making money on the internet requires a lot of computer and internet knowhow. Getting started online is easy – anyone can start up a basic template website. But to truly become a successful online entrepreneur requires substantial amounts of trial and experience, as well as committed dedication towards effort and learning, whether it be with eBay or any other online medium. It can be done but the process requires skills beyond mere flipping through a few book pages or clicking a few mouse keys to get your simple turnkey website on the web. To successfully promote your site and make money, you have to rank high in the search engines, particularly Google, which is a competitive and time consuming task. It requires that you not only roll up your sleeves, immerse yourself in the subject, but also dedicate lots of time to developing the business. No one makes money on the internet overnight. Those who think they can will be taken for a magic carpet ride that ends nowhere. If we were to buy into the program’s sad and misguided logic, then even computer newbies like my mom and dad could easily become internet millionaire tycoons with just a few instant mouse clicks.

4) The Idea That You Don’t Need To Have Your Own Line Of eBay Products Because You Can Easily Make Money From Drop Shipping – It’s so sad that people fall for this particular sales pitch. Drop ship products are merchandise that the manufacturer agrees to ship directly to the consumer without the merchant having to take possession for shipment. The fallacy is that it is lucrative and allows anyone with a website to make a ton of money. The reality is that drop ship products are the absolute worst when it comes to profiting from eBay sales and making money online. Sure it’s convenient, but because there is little buying risk to you as the eBay merchant, the so-called wholesale prices you obtain are not really wholesale at all. As such, profit margins are virtually non-existent and in fact, after eBay fees and transaction costs, you will almost always lost money or simply break even if you’re lucky.

Furthermore, most of the drop ship products are items that already face saturated competition on the internet and eBay, further driving down the selling price and negating any profit potential. Most of these drop ship products are also pretty lame and you will almost never find any hot products like top of the line electronics for drop shipment. To truly get eBay wholesale product prices, you need to buy in huge bulk from the manufacturer, which obviously requires tremendous upfront capital investment and the unavoidable carrying of substantial inventory risk.

5) The Sales Gimmick That Revolves Around the Giving Away Of Free But Traffic-Less Websites – The Shortcuts To Internet Millions program seems to be feel that they are providing the buyer a great offer by giving away ten supposedly free websites as incentives. The reality is that most of these sites are template turnkey sites that can be easily and instantaneously cranked out and given away – a million of them at a time. Without organic internet traffic, which takes weeks, months and even years to build, they are useless.

Do the hosts ever talk about how the new website owner is going to successfully drive online traffic to the site? Of course not. Because if consumers knew how much work they would have to put in, they would lose their greedy interest. Free websites are worthless if you don’t have the knowhow to generate links and build online traffic. Big companies spent thousands and millions of dollars promoting and advertising their sites all over the web. Do you think a simple consumer with 10 free template websites is going to somehow trump them all and rake in the sales overnight? Of course not.

There is a reason why although thousands of new online entrepreneurs jump onto the internet money making bandwagon every second, only a tiny percentage of them ultimately survive. Internet success takes a massive amount of online advertising and social link building to generate traffic. It takes a lot of time to investigate, research, and learn from others as well. Having a new commercial website without traffic, even one given to you for free, is nothing more than taking on a piece of trash. Even if the infomercial promised you a thousand free websites – all you would be getting in your possession, without weeks and months of computer training and internet expertise, would be a thousand heaps of trash – nothing more.

My Recommendation If You Really Want To Make Money Online Or Become A Successful eBay Entrepreneur

For one thing, you should stay away from the late night infomercials. Watch them for the eye candy entertainment whatnot, but don’t even think about buying products through those late night shows. With the wealth of free information that’s available on the internet, there is no need to buy the information from some late night salesman. Please don’t be gullible and let your sense of greed cloud your better judgment. If you want to learn something about making money on the internet or want to know more about internet marketing strategies, you are better off following the blogs of proven online entrepreneurs such as John Chow, Darren Rowse, or Shoe Money. You’ll learn more about affiliate marketing, online blogging tips, and search engine optimization tactics from them than from any product toting guy or hot female hosts on TV. At least you won’t have to deal with the subsequent and continuous upsell attempts to get you to buy more expensive package upgrades, paid training, or costly mentoring services prevalent among these get rich quick infomercials. If you must throw your money away, buy one of those As Seen On TV Magic Bullet fruit blenders or something.

If there’s one group of zealots you never want to upset, it’s the eBay sellers. Ever since eBay announced several key changes to its pricing and feedback policies over a week ago, eBay sellers have been flipping out and storming the discussion forums to express their outrage over the impending doom and gloom. A great number of them have become so upset that they’ve banded together to plot a futile boycott of eBay’s auction services around the February 20, 2008 launch date to protest the new fee hikes and feedback policy changes.

Here is an overview of the key controversial eBay pricing and system changes that have sparked such emotional reactions as well as my own thoughts on the matter. You can view the actual eBay price structure changes (here).

1) Listing Prices Will Be Reduced But Final Value Fees Will Be Increased
The new eBay pricing changes will cause up front listing costs such as Insertion Fees and Fixed Price Listings to be reduced. This upfront listing fee reduction is to encourage more listings since eBay auctions have been stagnant for years now as auction interest has waned. Although it used to come at a small cost, eBay now plans to make Gallery picture listing free – a nice free addition that will save a few cents and dollars for some, but it’s basically a trivial bonus. It’s nothing that will greatly benefit eBay sellers, but with the way eBay has been cleverly marketing the changes by plastering the “lower fee!” mantra everywhere on its fee changes announcement, it’s clear eBay wants to make the listing price reductions a big deal. But I don’t think they are – the savings are paltry and unsubstantial.

Of course, as a profit driven business giant, eBay is not a charity, so with one price drop it’s obviously bound to raise prices elsewhere. To counter the listing fee reduction, eBay plans to jack up the Final Value Fees. Unfortunately, the increase in Final Value Fees will probably become the biggest profit killer for many eBay sellers – dramatically cutting into their profit margins. Insertion prices were never all that high to begin with so reducing them isn’t providing much of a cost savings for sellers. It’s always been the Final Value Fees that have chomped into the bulk of seller profits.

2) Sellers Will No Longer Be Able To Leave Negative Feedback For Buyers
Another substantial change in eBay’s new feedback policy is that sellers will no longer be able to post negative feedback or comment about their buyers in the future. The original purpose of the innovative eBay feedback system was to retain a history and honest record of member experiences for the future benefit of all prospective buyers and sellers. However, in the last few years, the system has deteriorated and become broken, because most buyers have grown afraid of leaving honest and accurate feedback for the seller due to the fear of negative feedback retaliation.

Even as an occasional eBay seller, I can attest to the existence of negative feedback retaliation. After the completion of every auction, as the seller, I would always solicit the buyer’s feedback submission before I would submit my own. This was to preserve my right and ability to retaliate with negative feedback if the buyer arbitrarily or unreasonably posted negative comments to my seller’s profile. Obviously without the ability to submit negative comments for the buyer, my options as a seller would become more limited as I would become subject to the whims and demands of unscrupulous buyers. To remedy this problem, eBay would need to do a better job of policing seller and buyer complaints. To protect sellers, eBay has indicated that it plans to regulate the system better against buyers having badly and has indicated plans to retroactively remove all neutral and negative feedback left by a particular buyer should the buyer’s account ever be suspended for eBay program violations.

As an eBay buyer, I wholeheartedly applaud the feedback changes. While I don’t agree with the pricing changes, I think the feedback policy modifications were sorely needed and will go a long way in improving buyer confidence in the accuracy of future eBay feedback ratings.

3) eBay Powersellers Will Become More Powerful
Under the new eBay policy changes, the most reliable and trustworthy Powersellers will enjoy new perks including greater Final Value listing price discounts up to nearly 15% off depending on their additional detailed seller ratings. Also, eBay intends to offer those high volume sellers that maintain an excellent customer rating greater exposure among the auction listings by providing them higher visibility under its Best Match search results. Of course I think this greater exposure for the most trusted sellers will help improve overall buyer experience by rewarding good sellers and encouraging good behavior. This one is actually a good improvement.

Final Thoughts About the eBay Policy Changes and Threats Of Boycott

Despite complaints about the new policy changes, the truth of the matter is, most eBay sellers can’t afford to lose their eBay business traffic. Any boycott would hurt the individual strikers more than it would ever hurt a multi billion dollar company like eBay. While there is no other online auction service that can even come close to the reach and traffic scale that eBay can provide, there are a few growing and viable alternatives out there like Amazon and Craigslist, that some dissatisfied eBayer sellers are starting to turn to. Amazon has indeed enjoyed great success lately despite its more regulated selling policies. Whether this continued success will be at the perpetual expense of eBay remains to be seen.