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Sunday

An interesting thing happened to me last week. I was attending eBay's developer's onference. It's a two day educational / networking function for those geeks like me who don't just trade on eBay, but write software to automate the process of putting up listings and doing all those other pesky things you need to do to manage hundreds of auctions each week.

The interesting thing that happened was that I got a job offer.
I'm happily employed, but I'm always willing to at least look at some new and compelling offer. The company that made the offer writes software to manage their own listings (some developers only write the software to sell, and don't do any significant trading themselves). It turns out that this is a very busy company, with a level of feedback that puts them among the very top elite sellers. Well, almost.

EBay's feedback is a pretty simple thing. Every time a trade is completed, both parties get to give the other party a positive, neutral, or negative feedback, along with a comment explaining why. This is where you'll see the famous "A++++++++++ Seller!" types of comments. An eBay member's eBay member's feedback scoreis the sum of the positive feedback they've received, minus the number of negatives. If you look at someone's feedback page, you can see all of the feedback's they've ever received, along with the comments. You can also look at all the feedback they've left for others. The total score is the sum of the positives, minus the negatives, from unique users - multiple feedbacks from the same buyer or seller don't affect the total score.

This number - expressed on eBay as both a raw total and a precentage - is the most important number you will ever see on eBay. It is what tells other users how well you can be trusted. It is no exaggeration to say that this system made the difference between ebay being a nice novelty and it becoming what it is today. EBay has devised a regulatory system that absolutely puts to shame any legal regulatory framework. In fact, the incidence of fraud on eBay is far below that of almost any other officially regulated industry.

So back to my job offer. The raw feedback score is very important - it indicates the depth of a buyer or seller's performance. But the percentage is absolutely vital to the system of trust that is so important to trading on eBay. In the example in the link above (the business I run with my partner, Sally), our feedback percentage is 99.8. Pretty damn good - but not unusual. 100% is rare among sellers with more than a few hundered total feedback, but mid to high 99% levels are common, and anything below 98% is getting a little iffy.

The company that offered me the job had a feedback of less than 89%.

I won't say who the company is, but if you looked at the comments left by their customers, you would find an atrocious record. It's not just a few cranky people who won't be satisfied no matter what, or those making things up to try to scam a refund or somethng. It's scores of people who claim to have been outright cheated. Sure, some of those could have been misunderstandigns, but not the thousands of buyers that this company had complaints from.

Needless to say, I turned the job down. I've found that every company I have worked for treats their customers better than they treat their employees, or anyone else they deal with. I don't want to be treated the way they treat their customers, let alone not quite that well.

After a bit, I became fascinated by what had just happened. Here was eBay's feedback system spontaneously growing beyond it's intended role to influence a transaction that really had nothing to do with buying and selling on eBay. It reminded me of an article I'd written for this blog about how a rational society would treat that "runaway bride" lunatic.

The idea I described there is a form of the old practice of ostracism. Ostracism has gotten a bad rap over the years, partly due to a history of forced participation, but it is the one method of social influence that can be effective even when completely decentralized and absent the use of force. One of the key features is that, when it is voluntary, it is never absolute. The punishment truly fits the crime in that every single person gets a vote, on a continuing basis, and their vote actually counts. If one person decides to give the perptrator a break, his punishment is mitigated to that extent. If the perpetrator is unrepentant, or unwilling to make restitution, he is still free to live his life, just without the benefit of social and economic relations with his fellow man. If he does work to make amends, his punishment is gradually reduced as his efforts soften the hard feelings.

EBay's feedback system, is at its root, a system of ostracism. When Sally and I were starting out, and our feedback score was low, we had trouble selling anything for a decent price. It wasn't that people didn't like us, and wanted to shun us, it was that they did not know if they could trust us. We built up our reputation by selling items we bought at yard sales for a few dollars, and by taking care of our buyers the best we possibly could. As our feedback grew, the prices we could command grew along with it. Now, we can sell very high end items to people across the world who have never met us, and get among the top prices seen on eBay for similar items.

I don't know anything about the performance of the company that offered me a job, but I'd bet that they don't get the prices they could for the items they sell. They're not barred from selling on eBay, there's no explicit penalty for playing fast and loose with buyers' trust. They just don't make as much money as they could. Buyers discount the prices they're willing to pay to offset the risk of dealing with them. Even if only some do, or some refuse to do business with them at all, it still has an effect on their bottom line.

Similarly, they aren't prevented from hiring programmers and other kinds of employees. But in at least one case, it cost them the ability to hire somebody that they wanted working for them. They might now have to settle for someone of less quality, or pay more in salary, than they could have had with me. It's not that I hate them, or want to see them punished. It's just that I didn't want to take the risk of quitting my existing job to work for someone that might (or might not) treat my like garbage.

There's a lot of interesting possibilities in this unplanned and unforseen expansion of the influence of eBay's feedback system. It has always been common to check the references of someone you are considering doing business with, or associating with in some other way. But now, if they are an active eBay user, there is a much more fine grained and easy to use way of doing so.

I wonder if Jennifer Willbanks ever used eBay. Maybe that fiance of hers could have saved himself a lot of grief.

Comments

Interesting commentary.

I wonder how much the Power Seller logo helps or costs.

Those bad guys hut us all in the end I believe.

Sign me as,

1,020 FB score with 100% Positive

Posted by Power Seller at Monday, July 11, 2005 12:01 PM

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