eBay Live trip report

I dropped in on eBay Live in Orlando for 24 hours. This was
the second annual convention that eBay has put on. At the April workshop on
reputation systems we held at MIT, Peter Kollock from UCLA, as well as Brian
Burke and Amjad Hanif from eBay had encouraged everyone to attend if they
wanted to get a feel for the culture and the passions of eBay members,
especially power sellers.

Feedback Session

I timed my visit around the session on the feedback forum
that Brian organized. Amjad reminded the audience of the recent move to display
percentage of positive feedback, and presented some of the changes in
preparation, which are mostly user interface changes to the “scorecard” page.

Most of the session was Q&A from the floor. All the
questioners were high volume sellers (of the first 20, only one or two had
scores below 1000). The number one concern was “unfair” negative feedback,
usually from new members who are unfamiliar with the norms of working out
problems and leaving negative feedback only for unresolved problems, and from
non-paying bidders who retaliate after receiving negative feedback. EBay is
unwilling to make any editorial judgments about feedback, lest it be held
legally responsible for all the feedback content. One of the recent changes
they’ve made is to add a “think about it and confirm that you mean it” screen
between submitting negative feedback and having it posted.

I think there are two problems with the official and
community encouragement to resolve disputes before leaving negative feedback.
First, patterns of mild dissatisfaction are not recorded, so lots of useful
information is lost. Second, sellers have become overly sensitive any negative
or even neutral effect because it is so rare. If negative feedback were given
5% or 10% of the time, on average, then sellers would worry about keeping their
percentage down, but wouldn’t be as concerned about any particular feedback.

In the past founder Pierre Omidyar has urged the community
to give more negative feedback and I agree.

There was also discussion about making the feedback
scorecard better reflect the total number of transactions and/or repeat
business, rather than just the number of distinct transaction partners who had
left feedback. In the analyses I have been doing with our data set from 1999, I
have switched over to treating trading partnerships as the basic unit of
analysis rather than treating feedbacks (or transactions) as the basic unit of
analysis. With my approach, eBay might show that a seller had 300 partners; 160
of them gave positive feedback at least once and 2 gave negative; 83 of them
were repeat customers; the average number of transactions per partner was 1.5,
for a total of 450 items sold. Later this summer, I’ll be analyzing my 1999
data to see whether percent of partners that gave any feedback is correlated
with percent of feedback that is negative (I suspect it is), so that percent of
partners with no feedback might be a good measure of the not-thrilled customers
that’s more reliable even for small numbers; it’s hard to get reliable
estimates of low-prevalence events like really negative experiences.

In the slightly longer term, Jeff Taylor from eBay said they
are considering displaying the percentage of positive feedback from a recent
time window rather than or in addition to the percentage for the entire
history. Several research papers recently have pointed out that if the entire
history is used, as a seller accumulates a large number of feedback the
marginal impact of an additional positive or negative feedback goes down (it’s
impact on the percent negative, or on Bayesian updating, goes down), and thus
the incentive effects are reduced (Dellarocas, Wood). Of course, judging from
what I saw at this conference, the incentive to avoid negative feedback is
mostly a psychological one for sellers, not based on its impact on sales, and
may be quite strong in any case. Thus, the move to display a percent positive
based on more recent history seems like a good one. I would suggest, however,
that it be based not a time window (last six months) but on a transaction
window (last 200 trades, or partners, or feedbacks, depending on what the unit
of analysis is).

Reputation Research Opportunities

Sellers seemed to think that the problem of clueless new
buyers is worse today than it used to be. It would be interesting to do a
comparison over time to see if newcomers are more likely to leave negative
feedback than they were a few years ago. I talked to eBay’s data analysis guru
(but whose name I didn’t catch) whose hypothesis was that it wouldn’t be
different.

While wandering the convention floor, I came across a couple
of potential research opportunities. Square Trade offers a “seal of approval”
to sellers who get their identity and credit checked and commit to using Square
Trade’s dispute resolution procedures. They have data on which they’ve done
preliminary analysis comparing sellers who’ve signed up to see if they get
higher prices or probability of sale after signing up. It would be interesting
to subject that data to rigorous analysis.

A company called Andale (pronounced Ahn-da-lay) was one of
seemingly dozens of providers of tools for high volume sellers. In addition to
auction listing services, they have a “Research” product that tells sellers
things like how they’re doing compared to other sellers in the category, and,
using historical data, what’s the best day and time to have an auction end.
They also have counters for tracking how often pages are viewed and calculated
“sell-through” rates. It would be interesting for feedback researchers to see
if better reputation is associated with higher sell-through rates. As with
other measures of buyer response to reputation such as bids and sales, there
are many possible confounds to contend with.

EBay’s Vision: global, level playing field

I went to a general Q&A session with Meg Whitman and
other top execs. This was partly a love fest. One comment from the floor was
“we’d all like to give you 10,000 positive feedback.” Whitman answered a
question about “how do you avoid burnout?” by saying the eBay staff got their
energy from seeing all the members who were using the service. (This seemed to
be somewhat true, incidentially. Though some eBay staff I had dinner with were
a little weary after a day of interactions with members/fans, they did seem to
have a sense that their jobs were meaningful, moreso than their previous jobs
working at the likes of 3Com or Apple.) Apparently, I missed the real love fest
on the first morning. They flew in Weird Al Yankovich in the corporate jet
between his Thursday and Friday night concerts in the Midwest to sing his song
about eBay.

I heard two interesting comments from Whitman in this
session. First, their direction is to go global. They already have 11% of their
transactions crossing international borders (so she said; sounds implausible to
me) and they want to try to enable anyone to do reduce the barriers. Second,
they want to make sure to keep a level playing field for big and small sellers.
She said that their past special deals with Disney, for example, were probably
a mistake in hindsight and they wouldn’t do it again.

I missed founder Pierre Omdiyar’s appearance. I’m told he
reiterated his view that, “Most people are basically good”. This is, of course,
contrary to economists’ assumption that people are basically self-serving.
Perhaps it goes partway toward explaining what Richard Zeckhauser and I have
called Yhprum’s Law, that systems which shouldn’t work sometimes do.

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About Paul Resnick

Professor, University of Michigan School of Information Personal home page
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