eBay boss: “not offering PayPal is like buying heroin”

It took only took four minutes before the booing and hissing began and not much longer before eBay vice president Simon Smith was comparing people who didn’t want to use PayPal to drug addicts. APC was there to give you a blow-by-blow account and pictures from the meeting that saw million-dollar sellers specialist cake-tin vendors and proud pornography users united in their opposition to eBay’s plans.

Shirley looks like your typical well-presented middle-aged suburbanite and not at all out of place in Preston a nondescript suburb in Melbourne’s north. Her choice of language as she chats with her friends is therefore somewhat surprising.

“For them to spruik on that this is about buyer protection and seller protection is such crap. It’s purely about revenue. I’m hoping somebody else brings this up.”

They surely will Shirley. It’s a cold Monday night at the Darebin Arts and Entertainment Centre in Preston and several hundred people have gathered to let eBay know what they think of plans to make the company’s own service PayPal the only game in town when it comes to making electronic payments on the popular auction site. When the plans were announced in April a series of meetings was immediately announced possibly in the hope people might calm down before the changes go through in June (assuming the ACCC doesn’t object).

Preston was apparently chosen because a high percentage of local sellers live in this part of Melbourne. At any rate of the four public meetings being held to discuss the controversial change over the next week or so this has the largest registration.

After this event the next major attraction to visit Preston is “Puppetry of the Penis”. Even before the meeting proper kicks off I get the impression quite a few of the attendees wouldn’t mind inflicting some genital punishment on eBay senior management.

The company is doing its best to mollify people by offering a wide selection of pre-dinner snacks including sushi sandwiches sausage rolls and samosas. I nibble on these but can’t help wondering how eBay would feel if people interpreted auction ending times as liberally as it interprets the concept of a 6pm start.

At 6:15 harried-looking staff are still putting eBay pens and notepads on seats in the main hall. At 6:17 some of the sandwiches are taken away. “We want to have some food when they come out” an eBay staffer explains to a confused venue manager.

At 6:25 the masses are allowed in but it’s another ten minutes before things finally get going. Frankly this does not look like a major international company poised for a possibly contentious dispute with its sellers. It looks like opening night for the local school musical.

Eventually the eBay team — regional VP Simon Smith PayPal Australia MD Andrew Pipolo and trust and safety director Alastair MacGibbon — are brought on stage and seated in front of posters proclaiming “Making eBay even safer” and “practice safe shopping”.

Radio presenter Angela Catterns has been drafted in to as she puts it act as a “moderator”. “Referee!” yells someone from the crowd setting the pattern for an evening of interruptions and disbelief. “The idea is that Simon will begin with a brief opening address then we’ll be opening the floor to you” Catterns who proclaims herself a long-time eBay fan explains.

They came they heard they booed

Smith begins by repeating the explanation eBay has been using ever since it announced this change: PayPal is the most popular and safest option for buyers and keeping buyers happy will ultimately produce more business for everyone. “A happy buyer will spend more for the same item” he said to mild murmurs of disbelief.

“Not only are buyers protected on PayPal to a much higher degree they’re much less likely to have a problem in the first place. It was very hard to justify allowing payment through other relatively unsafe mechanisms.” That mention of unsafe mechanisms earns Smith his first genuine boos just four minutes into the presentation. “It does require some adjustment some change and change is generally uncomfortable” he continues over the grumbles.

Then the open mic session begins. “Keep it nice keep yourselves nice” Catterns says to the restive crowd. “This is not an abuse session it’s a Q&A session and I’d appreciate it if you would approach it in that manner.”

The questions in fact start relatively benignly with a seller asking if we’ll see local versions of the PayPal debit card found in the US (no plans says Pipolo) and if the mechanism found Stateside which allows buyers to pay postage charges directly from their PayPal account will be made available here.

That option is a possibility according to Smith. “That’s something we would like to offer in Australia; we trying to figure how to do that from a product engineering perspective. Postage is one of our focuses at the moment.” The next questioner wants to know if goods from overseas sellers who don’t offer PayPal will appear on the local site (no but you can always cheat by using non-Australian eBay site addresses like ebay.de).

But then the narkiness really starts. The next man applauds the company’s gumption for holding the meetings at all — “I think it’s very brave of you there’s clearly a lot of vocal opposition” — but then well and truly sticks the knife in by noting that Smith’s opening spiel mentioned buyers 21 times and sellers just four times. Are there any plans to compensate sellers for the costs they’ll face in making the changes and paying extra fees?

Smith’s answer is by eBay standards quite direct. “You guys are our customers you pay the fees — but what you’re paying for are buyers. You’re paying for the five out of six Australian online shoppers that come to eBay every month. We need to focus very hard on making sure that the buyers have a good experience. That’s why we have an emphasis on the buyers. And we think that the PayPal fees offer good value.” That last remark earns Smith another round of protracted booing.

Another speaker says that since the changes were announced his sales have dropped by a third. “You’re forcing us as sellers to look at other marketplaces.” That comment gets a cheer. Smith responds quickly: “We’ve not seen any decline since we made the announcement.” With that the boos return as loud as ever.

“Unsafe choices”

A common theme from many sellers is that contrary to eBay’s claims PayPal is the most troublesome payment mechanism they’ve encountered. One seller with 4500 transactions on her record says that her most recent experience with PayPal resulted in an unjustified chargeback. Why on earth should she believe that she’s four times safer with PayPal as eBay claims?

Alastair MacGibbon who seems to specialise in tortured analogies after a recent clanger on A Current Affair relating to seatbelts is quick to respond. “I cross against the lights occasionally and I’ve never been hit by a bus but that doesn’t mean it’s a good idea.” Predictably that gets an even louder boo making the generally unflappable MacGibbon almost lose his cool. “You can boo and hiss all you like I can just tell you the simple facts.”

Unbelievably though this isn’t the most ill-thought-out analogy of the evening. After some unresolved arguments over the size of fees and whether eBay deliberately makes it hard for people to exchange bank details a speaker pipes up just after 7pm with the core question of the evening: “How come we are now longer able to offer freedom of choice to our buyers?”

Smith first points out that most ecommerce sites don’t offer the luxury of choosing between a bank payment and a credit card but that fails to quiet the restive crowd. “What about democracy?” someone yells out. Smith’s next response is perhaps not the wisest under the circumstances: “We’re not allowing people to offer unsafe choices just like in this democracy you can’t go out and buy heroin on the streets.” Telling customers who care enough about your company to attend a public meeting about its future that their rejection of a payment system makes them the moral equivalent of drug addicts is not likely to endear you to them we’d have thought but then we are but lowly journalists — not masters of the online auctioneering universe.

Porn and pinatas

A welcome moment of comic relief comes when an older gentleman in a long jacket explains that he wants to be able to make purchases which will arrive at his house in a “plain brown wrapper” without the details appearing on his credit card lest his wife sees them. Amidst so much corporate spin having a proud pornography user explain why PayPal isn’t always a good idea is a welcome relief. Why shouldn’t buyers like himself have a choice he asks? “If they wish to take the risk be it on their own heads.” Smith’s response is predictably unpopular: “The issue is people don’t make an informed choice.”

Pipolo concurs with the next questioner than the policy of enforcing PayPal but allowing buyers who pick up goods in person to pay in cash has created a rather large loophole in the company’s buyer protection scheme. “It is something we are looking at — I agree it’s an anomaly.”

To avoid getting hit with chargebacks for undelivered goods under the buyer protection scheme sellers must be able to provide proof of postage but one seller complains that no-one at eBay customer service seems to be able to say what constitutes effective proof. Using registered post is apparently the answer but how is that supposed to work for volume sellers who have parcels picked up directly? For large sellers eBay is considering introducing some sort of “courtesy credit program” to recognise that a fraudulent non-delivery is unlikely Pipolo tantalisingly suggests though he offers no further details.

Our old friend Shirley stands up and says that she willingly acknowledges that eBay has a business imperative: why can’t the company? “You are all about increasing your revenue. Be honest about it!”

Her question (Catterns has become a tad frustrated at the number of people offering criticisms rather than asking questions) is whether this approach will go worldwide. Smith again regurgitates the company line that this is an Australia-only scheme but may be copied in other countries.

The next questioner Steve says that he makes a million dollars a year in eBay sales and pays more than $100000 in fees. “Things have been good for me but I fear that eBay’s going to take a turn for the worse. There’s going to be a change.”

His question also touches on a recurring theme for the evening: most sellers haven’t experienced the claimed four-times-as-many-problems-with-other-payment-methods that eBay constantly proclaims. Why is the typical seller experience so much different to what eBay says is the norm? eBay’s answer — possibly accurate but hardly satisfying to this crowd — is that their individual customer sample size isn’t big enough to be representative.

Many of the question askers have seemed upset but for sheer frustration the tale of the cake tin takes some beating. A woman who specialises in selling cake tins recounts angrily how she was hit by a chargeback fee from a German buyer who purchased a tin but claimed to eBay that she never received her “pinata”. Not only was the claim unjustified she said but eBay charged her $25 simply to allow her to appeal the claim.

The collected eBay executives deny all knowledge of any fees associated with disputes though several people sitting near me are quick to proclaim “That’s happened to me too”. MacGibbon suggests the case of the pinata and the cake tin should be reopened for investigation and asks that she talk to someone outside afterwards. But the management collective fail to satisfy her with an answer to her other question: “Why can’t I service [non-PayPal customers] just because you tell me I can’t?”

By now most pretence of asking questions has disappeared. “The problem may be you don’t trust your buyers and sellers another seller announces. “You’re treating us like little children. We’ve got an independent adjudicator here tonight but that’s about the only independence I’ve ever seen at eBay. You hide your customer service line!”

With just five minutes to go Smith makes a belated appeal to the collected mob acknowledging that they are unlikely to be a massive source of fraudulent transactions. “The problem is not the people in this room — the problem is the thousands of people not in this room. We’ve had to make hard choices to protect the people in this room.”

He also acknowledges that this may impact the size of eBay’s community but once again rules out any fee changes. “In the short term at least I think we’ll probably take a hit but we have no plans to change our pricing. We believe that the sellers will see a healthier faster more vibrant growing business in the long term and that is their reward.” And then after less than an hour of questions it’s over.

Presumably nobody was assuming that this evening would go quietly. Anyone who cares enough about eBay payment options to go to a Monday night meeting was unlikely to feel neutral about the subject. But eBay probably didn’t help its cause by consistently failing to offer a justification for reducing choices for sellers and buyers beyond offering its standard and tired line about security. It also needs to give up on the analogies to “help” customers understand why they need extra PayPal fees foisted on them — they come across as either ridiculous or insulting.

Shirley certainly would take a lot more convincing. “They can lose 25% of their customers and their attitude will be ‘who cares?’ because they stand to gain so much more in financial terms” she’d remarked before the event got underway. Somehow I doubt anything that got said would have changed her mind — or anyone else’s.