Fascinating. EBay is eliminating seller’s ability to give buyers negative feedback. Nicer for buyers, worse for sellers. That’s really the tip of the changes. Amazingly they have noted that sellers leave negative feedback eight times more often than buyers. And it seems like they are going to substitute some more private in house means of giving sellers a way to negatively effect buyer reputations.

I love the PR speak: “Donahoe revealed that eBay will update its feedback system to reinforce healthy, vibrant trading and keep bringing buyers back to eBay.” It appears they have noticed that when buyers get negative feedback they don’t come back.

Markets work if there is a balance of buyers and sellers. So, presumably as market maker eBay had decided it to make it more attractive to buy. This is analogous to how the credit card companies presume the buyer is right and the seller is wrong when disputed payments arise.

Buyer reputation isn’t as actionable as you might think. Sellers must accept bids, even if the buyer has a lousy reputation. Buyer reputation is more important if the buyer is also seller; but that’s pretty rare.

Watching the soon to be CEO of eBay speak to their top 200 sellers at their eCommerce forum is fascinating. This is an elite club, no doubt they account for a huge slice of eBay’s income. He, in effect, tells some of these 200 that they won’t be kicked out of the club. The real meat of what they are thinking is hidden in this talk; though you have to suffer through a lot of organizational change. All that change is a signal of how significant the changes they are into.

For their elite sellers they are setting up very significant carrots and sticks (they call that motivate and reward). They appear to be very concerned about how some bad sellers are causing buyers to flee. Discounts on fees for well behaved elite sellers. Search engine ranking that disadvantages lower reputation sellers, elite and other.

It is interesting that they are setting standards to raise the tone of the market place. This is one of the kinds of standards settings that I find most interesting. For example how the airline industry once agreed to set a floor on exactly how lousy a “sandwich” can be. I’m more interested in the collaborative cases where floors, for example professional ethics, are introduced.