Australians were informed yesterday, 9th April, by a broadcast news report that PayPal-only was the new policy on ebay.com.au

The new policy was reinforced by adding an article on the website of National Nine News with the title of “eBay Narrows Payment Options“.  In the article, eBay Oz Trust & Safety Head, Alistair MacGibbon said, “When you crunch the numbers and you look at the disputes that have occured on the site you get to see some really powerful differences between between how people pay and what happens.  For example, you are four times less likely to have a problem on eBay if you pay with PayPal than all the other payments on the site, like direct deposit.”

Whether that is true or not is open to speculation and scorn.  eBay are notoriously secretive about such metrics and the results of investigations they conduct into disputes between trading partners, or against individuals.  Having a rolling “score sheet” somewhere on each site would go a long way to restoring user confidence in such statements.

This is especially true when this seller’s experience has been to never have a dispute where buyers have paid by cheque, postal order, bank transfer, or by any of the six non-PayPal online payments services we use.  

Yet via PayPal, our dispute ratio over the last six years was less than 0.3% prior to this year, and since the end of January 2008 has risen to 2.3% – obviously something is happening at eBay or PayPal to encourage buyers to initiate disputes, but that’s another story.  Numerically, in the last six years, we’ve had an average of 5 to 8 PayPal disputes from eBay buyers per year in total, but in the last 3 months, this has risen to 4 to 6 per month.  We haven’t changed how we do business or service our orders.  Clearly something else has changed somewhere else in the transaction chain.

Perhaps this explains why PayPal began offering Aussies the best and most flexible seller protection policy of all countries in late February? 

It may also explain why they have now also increased buyer protection from AU $3,000 maximum total claims per year, to a whopping AU $ 20,000 per year.  I’ve been in offline, then online, retail long enough to know that when you make an offer like that, there are some people whose attitude will be to ensure they use all of that protection, every year, regardless of how spurious their claims.  After all, they’re entitled to it, so they’ll make sure they use it and get it.

Naturally, it didn’t take long for the Australian discussion boards to light up with protest at the changes, and in a heavily culled eBay Australia Round Table discussion thread, the general mood was one of disgust, and declarations of leaving eBay in favour of using Oztion.  LiveWorld must have been working overtime according to some of the posts it still contains.  These declarations (of leaving eBay) came from both buyers as well as sellers.

It took until midday today (10th April) for eBay to announce to their members, what the press had been covering for 24 hours already – shocking communication eBay, that’s a DSR rating of 1.0 – and they did so via a forum post drawing attention to a minutes-old Announcements Board announcement. 

eBay “Pink” Daniel tried to explain what happened – “The reason for my post is to explain why media reports started to appear over night, ahead of the official announcement to the Community.
Given the changes announced today are significant, we decided to brief the media yesterday under embargo that was supposed to end this morning (a media embargo is a request to a reporter that they do not publish a story until the embargo is over). It’s disappointing that embargo was broken by a few media outlets over night.
eBay’s intention was that the Community be the first to hear news, unfortunately this did not happen.
While eBay regrets that many of you heard about the announcement from the media and not us, we needed to brief the media on these significant changes because not all eBay members come to the boards or look for an Announcement Board Post to look for new developments and the media is often the best way to get important news out to as wide an audience as possible.”

That’s all fine and dandy Daniel, and as a journo myself, I’m not happy that another of this profession leaked pre-embargo.  However, you should have been able to predict such hostile press reaction to your “embargo” given the general media reactions to all eBay PR this year.  It was rather naive of you to expect this to have a lid kept on it.

PayPal is not trusted downunder.  Any form of exposure of banking or bank plastics information onto the Internet is seriously frowned upon by Australians in general, and as the country has a good collection of fast, cheap, and efficient, offline payment services, many buyers and sellers still pay and collect offline for a lot of their eBay transactions – in many stated cases (by posters in the thread above) long-serving buyers and sellers have still not opened a PayPal account and conduct 100% of their payment activity offline. 

Another trend that emerged in that thread relates to a strong nationalist viewpoint, with many declarations that the users prefer to support Australian companies, which is why they intend shifting to OZtion rather than be forced into using PayPal, regardless of whether it limits their buying choice, or damages their sales volume.  This is a “Ratner effect” that both eBay and PayPal seem to have not factored into their planning.

OZtion, with 247,710 members and 450,000+ listings (as of 10 April 08) certainly seems to be doing well, and potentially doing to eBay Australia what TradeMe.co.nz did to eBay New Zealand.

Launched on 1st January 2005, OZtion is the anti-thesis of eBay.  Their “about us” info states quite clearly that they set out to be different, “by keeping our sellers happy“.  It also states, “… we focused on quickly innovating with new technology, constantly looking for new ways to ease the pain of buying and selling online.  Rather than waiting to perfect new features in our lab, we listened to feedback from our users, and began to rapidly enhance site features. On a weekly, sometimes even daily basis.   We listened to our members, and OZtion rapidly transformed.”

Such statements immediately remind me of the UK’s eBid, with whom OZtion are now in competition in Australia, via eBid.com.au, and this in turn brings me back to the dilemma of eBay competitors regarding competitive fragmentation.  Like the UK and the US, Oz has a healthy 3rd-tier collection of online auction sites, with no real 2nd-tier players other than eBay and Amazon’s national sites – both benefitting from parental size to be regarded as Tier-1 sites. 

Whilst I am intensly fond of eBid, the nationalist sentiments expressed in the eBay threads are a severe threat to them in Roo-land.  eBay does need taken down several pegs – desperately urgently – in order to wake up their management to the self-destruction path they are treading, and in that light, it would be on OZtion that I would pin my hopes for Australia being another Antipodean eBay-slayer.  As the fight rolls north-westward, in Singapore and India, I would back eBid 100%.

Aussies are an admirable people when it comes to kicking eBay in the nuts as hard as eBay tries to kick them.  In 2006, following the shops-in-core fiasco, and the fee hikes that went with it, a mass movement of sellers took the matter to the media and the Australian Federal Government.  eBay, in part, had to back down.   Maybe that was what led to the Australian press breaking eBay’s announcement embargo?

Now the call-to-arms has gone out to leverage the ACCC (Australian Competition & Consumer Commission) with many eBay buyers and sellers openly stating in eBay forums that they will be doing, or have done, just that, since the mainstream media broke the news yesterday.

In particular, the news is being pushed towards a complaint of “Third Party Forcing” (TPF), which according to the ACCC website – Third line forcing is a specific form of exclusive dealing prohibited outright by the Trade Practices Act.  It is not subject to the substantial lessening of competition test.  It involves the supply of goods or services on condition that the purchaser buys goods or services from a particular third party, or a refusal to supply because the purchaser will not agree to that condition.

Initially, yesterday, the ACCC was telling callers that the eBay-PayPal decision did not constitute a TPF situation because PayPal is fully owned by eBay.  However, both buyers and sellers persisted with calling in complaints on exactly this line and adding to the ACCC’s knowledge of how eBay and PayPal are seperate entities within a corporate conglomerate.  By close of business day (Australian East Coast time) today, powerseller suemoki reported that “I just spoke to ACCC – they are looking into it right now and will have an answer for us tomorrow. I kind of got the impression that the more people call them, the more they will sit up and take notice!”

Another poster reported that alternative payment processor PayMate are organising a petition of some sort, and another reported that the New South Wales Trading Standards Authority were on the case.

Looks like eBay-PayPal have opened a can of worms, or should that be a nest of snakes, in Australia?

As I’ve repeatedly blogged here, buyers and sellers in other countries should not be complacent about eBay announcing that the PayPal-only policy is solely for Australia, with no plans to announce similar for other markets. 

They did exactly the same as the pilot site for compulsory PayPal (plus others) in all listings.  AU was also a test-bed for Feedback 2.0 and DSRs, as well as for a compulsory shipping cost in all listings.  More recently it was the testbed for the recoverable TKO’d listings policy, and for the hidden bidders system – piloting both the scheme for bids over $200, and then the all prices version.  Australia also led the way in banning digital delivery goods, and was the first to have the “Misleading & Discouraging Payment Policy” that are now both rolling globally.

What eBay trials on Australia today, is imposed on the rest of the planet tomorrow – watch for customer support robots arriving at a help desk near you soon.

Ed