In theory, this is exactly the type of program sellers have been asking to see for years - a true financial reward for investing in the business practices that lead to a positive buyer experience that results in a buyer returning to the site. By creating a system that allows buyers to anonymously grade sellers, so eBay says, an "honest" feedback system was being created that would not be manipulated by sellers who engage in such things as "retaliatory feedback".
Also in theory, sellers who already describe items accurately, provide good communication, ship in a timely manner, and charge reasonable S&H amounts would immediately see a reward, and those who fell beneath one of the two thresholds would have a goalpost to aim their business strategies towards.
So, after reading post after post about what sellers thought would work back in February, I decided that in order to really know what was going to work, and what would not, we needed to establish a baseline. We needed to, in the midst of great change, remain stable in order to see how eBay's announcements themselves would affect or trend our DSR statistics.
Why?
Well, for instance, on a different topic, there was a buyer who immediately after the eBay eCommerce Forum in Washington DC, contacted us about how he heard we could no longer leave negative feedback. So, he decided it was the right time to leave us a negative feedback on an item he had already returned for a full refund, and demand we pay for the return shipping in order to have it removed.
So, because the knowledge of seller discounts now being tied to DSRs, it was only natural that buyers react to that as well. In addition, once sellers began adopting some of their best practices, which included "coaching" buyers on how to leave DSRs, that too would have an effect.
"Coaching" the buyer is something that I heard from several sellers at the eCommerce Forum, and then on discussion boards afterwards. This includes sending a feedback reminder email that encourages satisfied buyers to leave DSRs because at the time only a percentage (varied by category) left feedback, and only a smaller percentage bothered to leave DSR scores. Some also chose to put something in writing in the shipment, again encouraging buyers to leave DSRs.
But, out of those discussions, one thing came up over and over - the fact that a rating of 4 stars is BAD. You go to a 4-star hotel or a 4-star restuarant, and you are stylin. The phrase "4-star" is almost universally accepted as a statement of excellence. Not on eBay. If you have a 4.0 or 4-star rating, you are going to miss out on discounts, and you may get a call from eBay's T&S about your future on eBay.
So, in order to ensure that a satisfied buyer doesn't actually hurt a seller by giving them what they think is a good rating of 4-stars, the buyer needed to be "coached" into leaving ONLY a 5-star rating IF they were satisfied with the seller. It is absurd that sellers would actually have to do this, but it is almost as if the architects of this program at eBay were ignorant of the concept of what a 4-star anything was outside of eBay. That is obviously not the case (unless eBay people don't go to restaurants or hotels, or shop for them online), so I think this is just another case of eBay plowing forward without fully considering residual consequences, or underestimating their effects and amplitude.
Regardless of feelings on this, it is now the reality, and sellers quickly recognized that in order to survive, buyers would have to be taught that only 5s were good, and that 4s were bad.
I took a different position while establishing a baseline - if we did nothing, and everyone else was educating buyers, then we should probably see an overall rise in DSR scores across the board - even if a particular seller did not change a thing. I am pretty sure this is true because of two things - Laurie Norrington's Keynote Speech at the PeSA Summit in New Orleans on April 23, and our April 30-Day DSR report vs. our long-term report.
Laurie said that the 2008 Q1 DSR results showed that a whopping 30% of Power Sellers qualified for the 15% discount. That was twice what they were expecting.
Laurie said: "And while this is going to cost eBay considerably more money than we anticipated, frankly, it is some of the best money we have ever spent.I disagree with Laurie because I don't believe that a better buyer experience is actually being delivered. I believe that DSR Coaching is actually partially responsible for skewing the numbers higher, and delivering discounts to sellers who may not have actually earned them.So what's happening here... it's simple, the buyer experience is getting better. In fact, the average DSRs for "Communication" and "Shipping Charges" have seen the most improvement. This is an indication - again an early one - that sellers are embracing DSRs as a means for tracking their success with buyers and using them as a tool to deliver a better buyer experience."
Case in point: Our own DSRs. Again, we did nothing during Q1 any differently that we have for years. That would be the same descriptions (literally), communication practices, shipping times (we have always shipped same or next day), and shipping costs. Full disclosure, we charge handling, and feel strongly that we have the right to charge for a service that has legitimate costs.
Our long term DSRs are 4.9, 4.8, 4.8, 4.6. We get dinged on the last one because we charge handling, primarily, but also because we sell to International buyers.
When our 30-Day numbers for April were released, it was no surprise that the efforts of all other sellers to DSR Coach would have a positive effect on us.
So, while we changed nothing, we went up by 0.1 almost across the board for that period narrowly missing being one of those 30% Laurie was referring to who surprised eBay by qualifying. I suspect that people at eBay are trying to figure out why, and am not sure whether they really believe that buyers are now getting a better experience, or whether they know they have a problem with sellers gaming yet another absurd eBay system.
I think what eBay misses over and over is that many sellers are barely profitable beyond their ability to support themselves. Most, like us, work long hours, and frankly don't have the time for an extra task. So, when eBay comes in every year with some huge major change, sellers like us have developed an attitude about whether we will or won't react in the way they expected.
In this particular case, we are not motivated to chase the 15% discount with any major effort. Even by eBay's new DSR standards, we are basically doing everything right. The only DSR where we are lacking is S&H cost. I believe there are only three ways to manipulate that DSR: Coaching, reducing the handling amount charged, or by using the gimmick of "free shipping".
We already know from this short experience that DSR Coaching works, and that the effects by even a few benefit the entire selling community. We will probably adopt the best practice of putting coaching statements in our automated emails, particularly the feedback reminder email. And, we will include something in our packages as well, but probably not until we create a new integrated packing list with shipping label later in 2008.
I am certain this will help raise our averages overall, and may even help us qualify for the 15% discount. Probably right about the time eBay zig-zags and changes the threshold, or does something else that causes us not to qualify.
Reducing the handling amount seems somewhat obvious, but at the same time we have heard of several reports of sellers who use free shipping on all of their listings getting a 4.8. So, we know that in some cases, the low numbers are really a rating of the rising carrier rates, which are directly tied to fuel price increases.
But when we simply analyze the mathematics of reducing handling, it makes no sense to chase the discount. In our case, the 15% discount represents about $260 above the 5% discount. Well, since the handling we charge amounts to several thousand dollars per month, giving back even 10% of our handling amount collected would be more than the value of the discount. Simply put, the carrot is not big enough.
Similarly, if we went to an all free-shipping model, the increase in our fees would exceed the discount, besides the fact that we would lose sales because Best Match still doesn't really reward that behavior sufficiently.
Therefore, we see very little value in spending additional funds, giving back earned handling, or in any way spending our valuable time on chasing the S&H DSR. And, since we already qualify on the others, there is really little to motivate us to change much at all.
I would agree that since we already have evidence of doing what eBay wants (our 100% feedback rating on over 55,000 feedbacks) was not earned by slacking. We have to be doing something right. But, the point of DSRs was to change eBay as a whole in a way to better compete with sites like Amazon. Here is where we can start discussing total failure of the program.
DSR Coaching is leading to Naturally Rising DSRs, and in turn is leading to an environment where sellers who are already getting most of the discounts are not given incentives to change much in their business. I can't see how a buyer's experience is changed by this.
