The Australian Small Business Blog

Saturday, June 28, 2008

Godzilla (ACCC) vs eBay



While the Australian Competition & Consumer Commission spends a lot of time keeping an eye on the big end of town, every once in a while it takes on an issue of interest to small business. A while ago I wrote an article on the ACCC taking on Google (Godzilla vs Google) where I said that while some aspects of the ACCC case were valid, I thought that the a big part of it was futile.

However, ACCC have now taken on eBay for an entirely different matter, and this time I believe they are on stronger ground.

eBay issued an edict last month that from now on all sellers would have to use Paypal, the eBay owned payment gateway, (except if they use COD). The issue with this is that Paypal charges higher fees than other payment gateways and the ACCC regards this is monopolistic bullying behaviour of eBays clients to force them to use its financial services provider to increase their profits.

Now if eBay did this as a start-up venture, and it was just a condition of selling on their platform, it would not be an issue as there may have been a number of other similar sized auction houses providing similar services, but it did not do this when they were small, as it may have scared off sellers with its higher fees. Instead, eBay waited until they dominated the market before they tried this on.

Initially, eBay was going to ignore the ACCC’s ruling, after all, Australia is a small country, and it did not want its really biggest markets getting similar ideas. However, there has been a worldwide backlash against eBay by sellers on this, and other countries competition regulators took a keen interest in what was happening here which is widely seen as a test case.

The current state of play, is that eBay has realised it can’t thumb its nose at the ACCC and just impose its plan on Australian sellers and will now fight this in court. With the ACCC having tasted blood in some very high profile recent cases, eBay is getting nervous.

Here is an excerpt from an email sent to eBay sellers this week:

Changes to eBay.com.au scheduled for 15 July are being postponed until the review process with the Australian Competition and Consumer Commission (ACCC) regarding its recent draft notice is complete. As previously announced, eBay.com.au is continuing to work with the ACCC to achieve an outcome that benefits buyers and sellers

Changes that came into effect on 21 May 2008, requiring all sellers to offer PayPal, will remain. These changes mean that all buyers have the option of choosing PayPal, the safer payment method for shopping on eBay.com.au. Payment methods that are currently permitted will continue to be allowed on eBay.com.au until further notice. (my emphasis)

How deliberately misleading is this? In the second paragraph they at first seem to be saying you have to use Paypal, and later on grudgingly admitting that you can use other options. Arguments can be made to favour the use of Paypal, making the transaction safer for all, but rather than making this case, it wants to force its customers to pay more.

From a customer service perspective, what does this say about eBay. Would you want to continue to use them if you had a choice?

Go Godzilla!

UPDATE: eBay now forcing people to include Paypal as a payment option and deleting auctions where a preference for another payment option is given. Game On!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.



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