eBays Credibility Gap and Information Asymmetry
eBay recently announced a serious round of changes as mentioned in prior posts on this blog and elsewhere in the blogosphere. These changes included not just fee structure changes, but integral changes to the feedback system and search results structure.
Could these heavy handed changes be the result of eBay trying to resolve its long standing credibility issues? What credibility issues you ask? Seller credibility is a problem on the web in general. Buyers on the web have a very limited amount of knowledge about the seller theyre dealing with unless its a well branded company. Anything less than that and the buyer is missing information about the seller. On eBay this generally is a bigger problem because up until now, sellers have not been forced to do much to qualify themselves.
Steve Woda the CEO of BuySAFE calls this Information Asymmetry which he defines as follows:
one party has more or better information about the product than the other party. In eCommerce and on eBay, the seller clearly has an information advantage over the buyer, and this is information asymmetry.
In the past, this has resulted in a certain level buyer dissatisfaction and lack of trust. For example, if a buyer purchases something advertised as a name brand juice blender and it turns out to be something else, what happens? Aside from pursuing the usual complaint and reimbursement channels, the buyer likely will not shop for juice blenders on eBay any longer.
In the long run, that hurts the eBay marketplace and this may be whats sitting behind eBays latest round of changes. When the new changes are implemented, buyers will have the upper hand in the feedback system and will have better control over non performing sellers. When the new search system is implemented, the sellers with high performance standards will get the highest exposure. Therefore, the scam sellers or poor performing sellers will have a more difficult time getting exposure.
While buyers may not immediately understand the dynamics of these changes on the marketplace, ultimately it could reduce the credibility gap issue for eBay and provide an overall better buyer experience.