eBay have declared war on arbitrage sellers around the world. Arbitrage is the practice of listing products on eBay that you don’t yet own. When an arbitrage seller wins an order they place a corresponding order on another marketplace or with an online retailer entering their buyers shipping address.
Arbitrage is at best a dodgy business, it’s robbing the buyer of any warranty as they aren’t the registered buyer with the genuine seller shipping the product. At the same time, as genuine sellers often include despatch notes, they are opening the seller up to poor feedback if the arbitrager orders the wrong product by mistake. Sellers who discover that arbitrage sellers are scraping their Amazon listings to sell on eBay have very little in the way of defences – often the first time they’ll discover the arbitrage is taking place is when their Amazon metrics start to suffer.
Arbitrage sellers in recent times have made use of Amazon Prime to get free shipping and many have signed up to Amazon Business to obtain better pricing – both of which are technically against Amazon’s rules.
Another major problem for buyers is that when they place an order and the arbitrage seller is unable to source it, arbitrage traders have no compunction about simply cancelling the order leaving a terrible buying experience. They also have various ruses to lie about why they are cancelling the order, normally recording it as cancelled at the buyers request to avoid poor seller metrics.
Many arbitrage sellers are blatantly breaking the law as they trade from overseas but pay no VAT in the UK. As their products are often technically shipping from within the UK then they should be registered for and be paying VAT.
It’s hard to find a good reason for arbitrage sellers to be allowed to trade, although they’ll often claim that they’re filling holes in eBay’s inventory. Mostly they are bottom feeders offering terrible customer service, no support or warranty, illegally avoiding VAT and taxes and adding nothing other than higher prices than consumers otherwise need pay.
Last week eBay updated their drop shipping advice page on eBay to emphasise that whilst drop shipping is acceptable arbitrage isn’t. Drop shipping is where you have a formal supply agreement with a supplier who guarantees to ship a product on your behalf when you place an order. Arbitrage is when you have no supply agreement with the supplier but purchase a product as a consumer when you get an order and have it shipped direct to your customer. eBay’s page has changed to clarify that drop shipping is allowed but arbitrage isn’t.
“Drop shipping, where you fulfil orders directly from a wholesale supplier, is allowed. However, listing an item on eBay and then purchasing the item from another retailer or marketplace that ships directly to your customer is not permitted.”
– eBay
eBay also lay out new consequences for arbitrage traders
“Make sure you follow these guidelines. If you don’t, you may be subject to a range of actions. We may limit, restrict, or suspend you from buying, selling, or using site features. All of your listings may be removed, displayed lower or not shown in search results, without refunding any or all applicable fees. You may also forfeit special account status and discounts.”
– eBay
If eBay are successful in the war on arbitrage sellers then very few will be displeased. Sellers who’s listings are abused will be happy. Buyers will stop receiving terrible service. The only people who will care are those who have built a business based on arbitrage selling and those who create and sell arbitrage software.
This isn’t a new step by eBay, they have already routinely been waging war on arbitrage sellers and dumping their listings to the bottom of search. Their latest announcement simply notifies sellers of the consequences already taking place. We believe that eBay are already monitoring users of the known arbitrage automation software solutions and if they see a seller using such a tool are likely to automatically demote their listings in search.
14 Responses
So “eBay have declared war on arbitrage sellers” because they have “updated their drop shipping advice page”.
Not exactly declaring war is it? They already had rules in place that drop shippers ignore, it has also been said that sellers have reported arbitrage sellers in the past and eBay have done nothing.
Sellers like barracauk have comments like “received package which had an invoice for £8.95 from amazon got charged £16.45” on their negative feedback, it would be easy for eBay to search for the word Amazon in the database filtering for negative feedback.
But with 34,158 seller score and an overall positive feedback of 99.3% most customers are happy to pay for overpriced items.
From eBay’s viewpoint:
They have 202,433 items for sale
They have Positive Feedback of 1,220 in the last month indicating they have sold 3500-5,000+ items in that time
They use the Sponsored listings feature, giving eBay more revenue than other sellers.
They have higher prices giving eBay more revenue than other sellers.
From Amazon’s viewpoint:
They potentially buy 3500-5,000+ items a month through Amazon earning them a lot of money with little hassle.
Multiply the above by 10 / 20 / 50 /100 and there is very good reason for eBay NOT to do anything.
I agree with the above. These people are just ripping us off and our customers. However ebay do not seem to be that bothered.
There needs to be an efficient reporting mechanism for arbitrage, and strict penalties. They are diluting the buyer experience on eBay and harming honest hardworking retailers.
Every item returned to Amazon because a customer realises they can get it cheaper from a legitimate source hurts our metrics and could ultimately get us suspended from Amazon.
I made £20k profit in December doing arbitrage, enough money to look after my child
I offer good customer support, I pay VAT
This article is nonsense seem from a lib point of view and tamebay only focusing on the negatives
Not sure I understand the logic in going after arbitrageurs (and not drop-shippers).
It strikes me as a solution looking for a problem. What behaviours are the bad arbitrageurs exhibiting in the marketplace? Go after those behaviours, not the supply chain choices that sellers make.
eBay needs to win by offering superior selection. That means a focus on presenting all legitimate offers and doing whatever it can to inform buyers about any wrinkles.
It then needs to spend a serious amount of internal time on making it easier to buy, where it is woefully inadequate.
Just like eBay item location misrepresentation this gives eBay a BAD reputation.
I think they must had had a bad Q4 and have now, belatedly, decided to clean up the site of ‘bad actors’.
It’s very welcomed.
All we need now is the following resolved:
Overseas (mainly Chinese) VAT evaders
Sellers selling counterfeit items
Seller selling unsafe items
Item location misrepresentation
to name a few.
It does annoy me that when I search for my listings in Ebay very often they are buried under alot of other listings that have been sponsored, by arbitragers, offering my item which they are purchasing from Amazon (very often from me) whilst doubling the price. I don’t see how in the long run this good for the consumers and therefore ebay. Stopping arbitrage should be fairly easy to stop 95% in one go, just look for any store with 10’000s or 100’000s with small percentage of sales, especially if they are registered seller outside of the Country, and presumably do the same thing on all the other ebay sites. However, I believe they will only get rid of Arbitragers that don’t use sponsored products, provided they pay enough to Ebay in fee’s they will keep them.
I think someone is getting Arbitrage mixed up with Drop Shipping, two different techniques. Your first sentence is incorrect. Drop Shipping is the practice of listing an item for sale that you don’t own. Arbitrage involves leveraging the differences in product prices between one marketplace an another.
In the long run Ebay are losing since lots people think ebay is much expensive than amazon so less people buy on ebay
plus why do we need 10s of the same item just all copied from amaozn it make very hard to but anything
and as a seller on both is crazy that i sell some think for 6 pounds on amazon and these nut jobs sell for 10 to 11 pounds and we also sell it on ebay for 6 pounds so we do not them and ebay should close them down and ban them for live,
And look at there feedback you will see what hell they are to lots of buyers
And if you want to see some think cool look and google trends from 2004 to date and you will see ebay want up till nov 2012 and then drops like mad and amazon going up and up and now has overtaken ebay so
ebay make before its to late
Don’t get sucked into this argument eBay need drop shipping because it makes them millions and Amazon need the drop shippers to buy there goods if either company stop this then there share price will be hit hard so the investors get involved NOT good. look if people are to lazy to shop about for prices on products then that’s there fault not eBay or the drop shippers fault everyone is just trying to make a living .end of
Andrew it right, the definition of arbitrage is used incorrectly in the article. eBay is just old and outdated. If it would do the same as Amazon and start opening warehouses where people could store their actual inventory like Amazon does then it would be a real game changer. There will still be those who look for loopholes that’s just the way society is.
eBay could, if they wanted to, block every single application using an API to eBay that’s well known in the drop shipping world but they don’t. They have control over pulling the plug on all those applications at any given time. However if they did, they know they would lose millions of dollars in sales and have their stock holders in an uproar. Not a good idea when we are near a market crash anyway. Some people will drop out but the big players won’t until they are forced. This is the same thing that happened to Amazon FBA and arbitrage but we bought the product from big box stores on sale and then marked the price up on Amazon. So Amazon’s prices are NOT lower. People just don’t do the research or have the means to always get the item at the lowest price.
I’ve been looking at strategies to move away from this by finding legitimate wholesalers who drop ship but so far its been a challenge and they know it. That’s why people do what they do.
I’m not providing my customers with bad service. None of them have complained and all left positive feedback. They don’t care where the product comes from as long as they get what they purchased. My 100% feedback shows it because they always mention the lightening fast shipping and that the product was exactly as described with exclamation points. They are happy.
Even if all these products were my own and I had purchased from a wholesaler and shipped to Amazon FBA so they could process, eBay could say nothing because I own them before shipping. Amazon allows this practice. I just chose to hire someone to house my inventory rather than it being in my garage or spare room cluttering up my house.
eBay’s can’t tell you where to store your items that’s ludicrous. There are warehouses all over the US that do nothing but store and ship products for sellers.
eBay is just behind the times and they just don’t know how to control what’s going on in the marketplace. It won’t stop anyone unless eBay takes massive action and stops tip-toeing around the real issues.
Most of these arbitrage sellers don’t have a clue about the products they sell. All they are interested in is a few percent they make on each item they sell. What happens when a customer wants to know more information about the product that is not in the listing?
Or if a electrical item were to develop a fault and cause major damage to a house. Who’s liable then, the business the customer bought the item from? The business who shipped the item to the customer?