Hitting the panic button – eBay’s looming Duplicate Listing Policy (DLP) – impact and 9 strategies to survive

October 15, 2010

ChannelAdvisor ChannelAdvisor By ChannelAdvisor

Panic_button
eBay has recently launched what they are calling the New Product Shopping Experience (NPSE).  As pointed out in a the three part series that we recently wrapped up that starts here, duplicate listings really spoil the experience.

Thus, we think that the NPSE is driving eBay to implement a new policy called the Duplicate Listing Policy (DLP for short).  In this post, we’ll cover some background on the new policy, highlight our concerns about the policy and finally leave you with 9 strategies to help you prepare for and deal with the fallout from the DLP.

Background on the duplicate listing policy

On 9/21/10 eBay announced the DLP here and that it will roll out in 35 days (12 days from the time of this post )  on October 26, 2010.

Basically, what is going to happen is starting October 26th, eBay is going to:

  • Automatically delete any listings that they believe are duplicates (people will be able to also submit reports for duplicate items so there will be some chaos here as sellers competitive report each other).
  • Sellers will be refunded listing fees
  • eBay has been very cagey on this next part – after some unknown period of time, if sellers continue to list duplicates, eBay will dish out unspecified punishments for unspecified periods of time.  In the last 10 days eBay has been dishing out suspensions more than I’ve seen in the last three years, so I suspect this is going to be very aggressive.

The policy is extremely long, complex, and aggressive. You can read the details here.  Talking to sellers, there is a TON of confusion about the policy.  Here are some of the common topics that have come up:

  • Items that are different condition will not be considered duplicates
  • Duplicates will be scanned across a seller with multiple seller IDs
  • This policy is fixed-price format only (for now) – some conspiracy theorists believe this is a plan to essentially get people to list more auctions where eBay has significantly jacked up the listing fees (in other words a hidden fee increase).
  • If you have a product with fitment (fits multiple models) you can have five listings for that SKU, but they all have to be significantly different.
  • Yes this applies to Motors and Parts and Accessories
  • Note: When eBay deletes listings, it will keep the one with highest BestMatch and delete the lower BestMatch listings.

Why we are very concerned (and you should be too)

When John Donahoe took over eBay, he instituted a policy that there would be 2-3 releases a year that impact sellers  (vs a hodge podge approach) that would be pre-announced with 60 days notice.   This brought some much needed sanity to the platform after a period of 2-3 years of constant monthly change.  It has also allowed third party partners to plan, implement features for when they come out and support eBay’s direction vs. constantly having to change directions.

Here we have a policy that breaks all of those guidelines:

  • Announced out of cycle at the end of Q3
  • Implemented at the very last minute of Q4 before the holiday selling period
  • Only 35 days notice given
  • Impacts all sellers, some can be impacted severely even if they are not truly selling duplicates
  • No APIs available until the 11th hour, no sandbox or testing available to third parties.
  • We’re asking various folks at eBay about the policy and getting wildly different answers from every department.

Any one of these bullets is worthy of concern — all of them together are causing us to hit the panic button.  For example, at ChannelAdvisor, our software needs to know if/when eBay deletes a duplicate.  We have little to no visibility into this from eBay and given the rush job applied to this feature, what we do have, we are very concerned won’t work reliably.  The upshot?  Software like ours (including eBay’s) will be confused about what is live and what is not – thus inventory is tied up in orphaned listings.  We won’t even know why the listings were deleted. In short – total chaos.

Here’s another example of how poorly this has been thought out.  In the consumer electronics category, some of the largest sellers run refurbishing businesses.  They take in items such as cell phones, refurbish them and sell them.  Here’s the challenge – they may take in 2000 iPhone 3G’s in a month.  they list them all as used or refurbished, and each listing has the same price, but different picture and maybe slightly different long description (e.g. this unit has  a scratch, this one is missing a case, etc.) .  Based on what we’re seeing eBay is only going to allow one used iPhone 3G listing per seller – essentially putting this entire business model at jeopardy.

In other categories you have problems too:

  • Apparel – While eBay has varations, the adoption rate as a % of listings is still pretty small.  Here’s an example of 1.3m listings that should probably be variations (list the size or colour in the title vs. a child listing).  All of these sellers need to change by 10/26.
  • Motors / Parts and accessories – As with apparel, eBay has a great feature here called fitment, but the adoption is abysmal.  This duplicate listing policy is going to totally sideswipe P+A sellers that haven’t adopted fitment.
  • Other categories – If you think things are tricky in apparel and parts and accessories – there are literally hundreds of categories where eBay hasn’t rolled out fitment and variations where they really should be there.  Cell phone accessories, video game accessories, printer cartridges, digital camera accessories are some examples of categories that should have fitment.  Many many many more categories need variations. There aren’t variations for different colours of iPods for example.

Some may argue: “Scot, it’s easy to poke holes in things, how would YOU have done it?”  Well, thanks for asking.

Here’s the ‘right’ way to implement this policy:

  1. Fix parts of the site that require duplicates because the site functionality is insufficient (archaic). eBay is half baked at best on variations and fitment.
  2. Stick to the pre-determined seller release schedule.
  3. Give sellers 60 days notice
  4. Do not, never, ever, no matter how much you feel you need to, make substantial changes in Q4.
  5. Instead of basically setting a trap by allowing sellers to list duplicates and, delete them and then suspend the seller – eBay should block sellers from listing duplicates at all at listing time.
  6. Address the concern for the refurbished business model, by allowing an exception or field for these sellers to provide a unique sku number or serialization information.

Unfortunately, we are stuck with DLP (unless eBay rolls it back after launch because of the back-lash – we’ll have to wait and see – keep your fingers crossed), so we have developed nine strategies to help you survive and hopefully thrive after this policy hits.

Sellers fall into one of four buckets. Before reviewing the strategies, be sure to identify which bucket you fit into:

  1. Sellers that aren’t impacted at all – You don’t have any duplicate listings or anything that could be construed as duplicate.  You utilise variations and fitment in your categories so don’t list items that vary only by sizes, colours or any other attributes individually that will be picked up as duplicates.  Congrats – you can stop reading now and get some sleep 😉
  2. Sellers that are minimally impacted – You may have < 5% of your listings that are impacted due to some categories without variations/fitment, but they are smaller for you.  Also, you may have duplicates you didn’t realise when you utilise strategy 1. My advice to you is to make double sure you are not impacted and keep an eye on things as we hit 10/26 to make sure you didn’t under-estimate the impact.
  3. Sellers that have a lot of duplicate listings that are true duplicate –  We’ve seen some sellers with 20-60% duplicates.  I assume they have duplicates because they have data that indicates that it ‘works’ (drives more sales because it takes up more shelf space in BestMatch) or maybe I don’t know and they are actually unique. BestMatch actually is designed to discourage this behaviour.  Sometimes these duplicates are intra-seller ID and other times across multiple seller IDs.  Keep reading, these strategies can save your business.
  4. Sellers that have a lot of duplicates, that are not true duplicates – We’re really worried about this as we are seeing many sellers in apparel, P+A, electronics, any kinds of accessories that are probably going to be the ‘dolphins caught in the net’ in this policy.  Keep reading, we hope we can help you save your business.

9 strategies for dealing with the DLP

And now without further delay are ChannelAdvisor’s 9 strategies that we have been brainstorming with customers to help deal with this new curve ball that eBay is throwing deep in Q4.

Strategy 1 – Run the eBay duplicate-finder tool ASAP, but don’t trust it totally

eBay has provided a utility that you can run up until the release of DLP to let you know how many duplicates you have.  The utility lives here:

http://pages.ebay.com/sellerinformation/news/Duplicatetable.html

(Note – this utility requires you to login to your seller account)

What we have found is this utility doesn’t identify many duplicates that eBay says will be duplicate, thus we think the tool is not as aggressive as eBay plans to be.  It also doesn’t work across accounts as eBay states the policy will operate, so it is not close to the policy in this regard either.

So we recommend that you run the utility, and then run scenarios that are more aggressive.

Also the tool is for finding out if you have any false positives (where the tool thinks you have duplicates, but they aren’t).  If you have false positives, check out Strategy 4 for ideas on how to resolve this.

Strategy 2 – If you sell different items with unique used/refurb condition, you are in trouble , make changes ASAP

As mentioned, we are very concerned about sellers that have used/refurb items.  To eBay these will be duplicates because they tend to have the same title (iPhone 3G), condition (used/refurb)  and general description.  These sellers need to look at a combination of strategies and options:

  • Strategy 1 to see how bad the damage may be
  • Strategy 4 – keep reading
  • Strategy 6 – keep reading
  • Strategy 8 – you may need to resort to auctions and change your pricing/economics accordingly

If none of these strategies work, you can do your best to roll up all of your different models into one listing and put in some less specific descriptions such as:

“Due to eBay policies, we are not able to list every iPhone 3G individually with pictures and descriptions.  You are bidding on a phone that we have inspected and may have minor scratches, and other signs of use, but we guarantee will have all the parts……”

Unfortunately, I believe this change on the eBay side is going to decrease buyer satisfaction and with the high bar of DSRs and eTRS, so this business model is going to suffer some unintended consequences.

Sellers should be able to describe their products in as much detail as possible without fear of being suspended for doing the ‘right thing’.

Strategy 3 – Educate everyone in your company because suspensions are coming

Our sense is eBay is going to be aggressively enforcing this policy and since it is so new, we expect a lot of sellers to have high rates of duplicate listings at the beginning followed by repeat infractions for a while after the DLP release.   The worst possible thing that can happen to an eBay business is a holiday suspension.  Be sure that all of your employees know about the policy and that repeatedly listing duplicates, even by accident, can and probably will result in result in suspension by eBay.

Strategy 4 – Significantly vary/differentiate items that are not actual duplicates, eBay may have ‘false positives’ and take action

As mentioned in Strategy 1, we are concerned that eBay’s automated algorithms are too aggressive and may flag your items as duplicate when they actually are not.  If this should happen, take the following actions to vary your non-duplicate listings as much as possible to avoid accidental flagging, deletion and suspension:

  • Change the title as much as possible – put a sku number, size and completely different working if possible.
  • Change the price and shipping and handling.  We know that eBay won’t look at the price when looking for duplicates, but it can’t hurt to help with any human involvement.  For example, for a $15 item, you may try $15 with $0 shipping and $12 with $3 shipping in the non-duplicate item.
  • Change the detailed description as much as possible.   Vary the number of images and the description.  Include a table that details how different the items are.
  • Although eBay is going to look across different seller IDs, for some sellers multiple IDs can help with the differentiation strategy – in ID1, list things with one image and free shipping and have the title include the SKU.  In ID2, have two images, $4.95 shipping, different look and feel to the descriptions, etc.

Strategy 5 – Say goodbye to multiple accounts and testing

Many sellers utilise multiple accounts for a number of different reasons.  Some sellers sell one type of product in one ID and a different type in another (e.g. books and DVDs).  Other sellers use different look and feel to appeal to different audiences (e.g. a female-oriented look vs.  a male-oriented look).  Finally a lot of sellers utilise multiple IDs to test different strategies.  They’ll utilise a second or tertiary ID to test free shipping, new products, different return policies, different shipping carriers, etc.  This allows sellers to run parallel A/B tests without changing or risking their primary business.

The DLP strategy is the first that looks to be aggressive at a) identifying multiple accounts and b) associating them together with one seller’s business.

As eBay has increased their trust initiatives, they have gotten exceedingly efficient at identifying related IDs. This is important for detecting and stopping very bad behaviours like shill bidding, feedback manipulation, etc.

I suspect eBay will use the same techniques to identify multiple eBay seller IDs.  This system can also have false positives. We’ve seen eBay accidentally link these accounts and take action and later have to undo that when it is proven the accounts are not actually related.  Some of the data eBay has to look for multiple accounts includes:

  • Internet Protocol (IP) addresses
  • Physical addresses
  • Payment information (bank account, credit cards, credit card addresses, bank accounts, bank account addresses)
  • Phone numbers
  • email addresses
  • names and contacts on the account

I’ve seen this situation for example.  Two brothers have different eBay businesses.  They share a warehouse, but have different bank information, paypal accounts, phone numbers, etc.  eBay detects the address of the warehouse is the same or that the same IPs are used to list to eBay and connects the accounts.  Brother1 is suspended for whatever reason.  Brother2 is also suspended because the accounts have been incorrectly connected.

In short – you should plan on eBay aggressively getting rid of multiple account sellers, so start planning for a one ID per seller world sooner rather than later.

Strategy 6 – Leverage different conditions 

In talking to many sellers about the impending DLP launch, several that have accessory type products that are new and limited to 5 listings each plan on also listing additional makes and models in ‘lower conditions’. For example, you have an printer cartridge that works in 20 different models.  You can only list 5 in each condition (that category has three conditions), so you list:

  • 5 new – Models 1-5
  • 5 Used – models 6-10
  • 5 unspecified – Models 11-15
  • (maybe list the next 5 as auctions to get 100% coverage)

Now at least the seller can list 15/20 (75%) vs. 5/20  (25%) or 3X as much.   This may seem weird – listing new items as used, but eBay is definitely not going to look across conditions for duplicates, so you won’t run afoul of the DLP.  Neither buyers or eBay are likely to complain when they are under-promised (used) and over-delivered (brand spankin’ new).  Of course, you shouldn’t go the other way – selling used items as new.

In other categories you may have even more conditions like ‘new other’, ‘refurbished’, ‘for parts’, etc.

Strategy 7 – eBay Motors Parts and Accessories sellers need to move to fitment ASAP

This goes without saying, but eBay P+A sellers are going to have to make some dramatic changes with the DLP.  First, they need to adopt fitment ASAP.  Each fitment listing maxes out at 300 manual fitments and sellers have to hit that max before they can start to utilise the ‘5 allowed duplicate’ listings.

Many sellers have found the fitment hard to adopt and are planning on doing it at their leisure. The DLP moves up this timetable substantially and will put many sellers in a jam.  The sooner you can adopt fitment, the better.

Strategy 8 – Apparel, sporting goods and home and garden sellers embrace variations, or suffer the consequences.

As with P+A, in the apparel category sellers have had access to variation style listings, but still haven’t adopted it. If you go to any apparel category and search on sizes such as XL for men’s clothes, or size 10 for shoes and what-not.  My rough estimate is a 50% adoption of variations.  That leaves literally thousands of sellers that are going to need to stop listing the old fashion way (a listing per size/colour/variation) and collapse those into VSLs or face deleted listings and suspensions when DLP rolls out.

Strategy 9 – Time to get back to auctions?

I think over time eBay will also eliminate duplicates from auctions, but for now there is a window of opportunity here where they are not doing that.  So to avoid problems with the DLP, you can consider running what are essentially fixed-price auction listings if fixed-price is important to you.  The obvious downside to this strategy is the extra cost.  Let’s say you are selling a $75 item:
  • Fixed price listing fee will be $.03 and FVF will be 12% of 50 and 6% of 25 or $6+$1.50=$7.50 which is a 10% take rate
  • Auction listing fee will be $1 plus .50 for BIN and FVF will be 9% or $6.75 for a total of $8.25 (assumes 100% conversion rate – usually you will see 20-30% on auction listings or lower), so you could be looking at more like $10 in listing fees or $10/$75 = 11-13% take rate.

So you are looking at an effective 10-30% price increase if you have to switch to auctions from fixed price at that average price point.   If you run true auctions with a low starting point, you can get closer.

The potential upside is that you won’t have to worry about the DLP and some sellers are finding that BestMatch is substantially favoring auction listings, so you may find the extra cost pays off in higher velocity.

This strategy highlights the unintended consequences this policy is likely to have:

  • More auction listings that are really fixed price listings (high start price with a BIN)
  • Sellers will have to increase prices $1-5 to cover the additional bump in the fee
  • Wasn’t eBay trying to get more fixed-price listings to the site?

Conclusions – a lot to get ready for, we’ll keep you posted, let us know your thoughts in comments.

I realise there’s a lot to digest here – we introduced the DLP, shared our concerns and then presented 9 strategies to get your gears going on some possible ways we are thinking of to deal with this policy.  Unfortunately you only have until 10/26 to get in motion and it is imperative that every seller understand their risk with this new policy as we think a good 20-40% of sellers are going to have substantial exposure.

If you think of any other strategies, have questions about the policy or other insights, please share in comments – we are all in this one together!

SeekingAlpha Disclosure – I am long google and amazon. eBay is an investor in ChannelAdvisor.