eBay Wisely Bans Google Checkout
eBay made a lot of noise today with the announcement that they are banning sellers from requesting payment through Google Checkout.
eBay is banning sellers from requesting payment through Google Checkout. The online auction giant updated its Safe Payments policy this week to add Google’s new payment service, Google Checkout to its list of online payment methods not permitted on eBay.
I’ve been reading all day about how this is such a big mistake for eBay. I disagree, and I’m obvioulsy in the minority but I don’t think this will have any negative effect on eBay.
No one is going to stop selling items on Ebay simply because they can’t accept Google Checkout, and that’s really the bottom line. Because eBay has such a monoply in the online auction space sellers don’t really have much of a choice. They can either list their stuff on eBay and sell it, or not. Do you honestly think anyone will boycott eBay because they can’t accept Google Checkout? Maybe if Google Checkout had the market share that PayPal does but they don’t, and they never will. Or maybe if there was an alternative to Ebay but there isn’t.
Cameron Olthuis is the Founder of
I totally agree with you. This is just Ebay’s way of showing who really has the power in the ecommerce checkout service. If they made the decision to support Google Checkout, I think that would undermine the purpose of their purchase of Paypal.
The only way that Google will be able to get Checkout to a relatively equal plain as Paypal is to offer some form of incentive to get people to use it over Paypal. This could come in several forms, most probably a cash-back rewards program like most credit card companies do, or in reduced fees for sellers, or both. If they were to offer the rewards program, then I could see customers asking for a Google Checkout option, but as it is right now, it isn’t worth the consumer’s time to setup yet another profile on yet another site, to give people money.
What I really see happening with Google Checkout, is that the people on Ebay who do wish to support it, will just do it themselves, rather than using the integrated Paypal features that are offered by Ebay.
I really liked PP for a long time. But just recently PayP refused to refund a dispute I had with a seller. The item total came to $25.27. It had free shipping but they refuse to refund to me even thought the seller has been suspended and received lots of negative feedback. The jerks at PP only sent back $0.27 of the $25.27. They shot me some crap bout if it’s not over $25 but it was.
I may need to look into anothr avenue for buying & selling on Ebay.
Fred - I agree Paypal is a huge pain in the ass for more reasons than one. I can’t blame you for looking for other avenues, I’d be pissed off in your situation as well. Hopefully Google Checkout will force them to rethink they way they do business.
Uncompetitive actions do not equal wise decisions. Your contention is that people will continue to use eBay, regardless of this decision. While your primary platform is true, your supporting statements are questionable.
Do you honestly think anyone will boycott eBay because they can’t accept Google Checkout? Well… Yes… Not only have I transferred funds out of paypal, dropped my eBay store, and will close my account… But I have sold my stock in this company. These actions are because of their (eBay) behavior, not because Google Checkout has any domain influence (and let’s be honest… they won’t notice my pulling out…).
I think the lash back consequence is that eBay’s response to Google is that they have created a situation where Google needs to respond. How Google will respond is up in the air. However, eBay has created a weakness in the fact they have supported the anti-competitive behavior that is going to force the hand of another entity that in theory has created a competitor that could enter their market space, not only with underground support of people who disagree with eBay, but with a model that could compete with their services.
If eBay wanted to make a “Wise” decision, they would accept Google checkout payments. While allowing some small competition in their paypal space (I must say that googles service currently sucks), they could have encouraged incentives to use paypal, and made it more difficult to utilize the Google payment method. They could make money from people who want to utilize the additional service and limit its use in the market while not creating possible contention with their ultimate domain power eBay proper.
In my opinion, not only was this a bad decision for eBay, but it has shaken my confidence in their decision process. Ultimately their stock has hit their lowest point in more than 1 year (and a 5.6% drop immediately after this news), which I would suggest is a direct relation to this news. In the coupling of other bad decisions on the part of this ‘monopolistic’ company, their new market position, their poor decisions, and their direct attack on another company has created the perfect recipe for a competitor that has the ability to launch an effective response. I truly hope that you eat crow for stating this is a wise decision. (Not because I am attacking you, but its time for corporate bad decisions to roost where they belong.)
John - Wow, thanks for the long comment. Good stuff!
I stand by my orginal statement that I think it’s a wise business decision. It’s also nothing new, just standard procedure for eBay, just because it’s Google doesn’t mean they should make exceptions. Google doesn’t deserve any special treatment in comparison to any of the other online payment services.
Unfortunately you’re right, they won’t notice you’re missing. And that’s the problem. I’m not saying I like eBay, because I don’t, and quite frankly I hate Paypal. Putting my personal feelings aside the problem really is that eBay literally has a virtual monopoly for the online auction space.
I still don’t understand how inviting competition into your home is a good business decision and you’re comment doesn’t do a good job of convincing me. If you ran a bar would you allow people to BYOB just to get more customers in the door?
Cameron,
Maybe for a little clarification… Let me re-write your bar comment to more accurately reflect the situation that I am trying to describe.
Let’s say you own a bar, and your bar is huge… Several stories high and caters to all different kinds of people (one floor for the punks, one for the ravers, one for the sports fans, and one for the 80s freaks etc…). Your bar works on the philosophy that you drink all you want and then pay for your services on your way out the door, and let’s say you have 5 exits from your building.
Now let’s say that you have no real competitors (except maybe one or two mom and pop bars in the area). Now a large organization that has hundreds of thousands of members says they want to allow their members to pay for your services using their special credit card. Keep in mind that this is the same company that handles 50% of your advertising.
Now you know that because of your success, many of those members are also your members because you have large market saturation. So, while allowing this company to pay for your services on their special card, this will not bring you a lot more business and will undercut your sales. So let’s assume that your profit on any sales in your bar is 15%. However, using this special card your profit is only 10%.
Now let’s take into consideration that your bar has suffered from only nominal sales, you are still making a profit, but sales have been slipping over the last year. Additionally, one of the complaints about your bar includes the attitude of customer service when people checkout from your bar.
So, the bar example so far is not perfect, but has a few of the dynamics that exist in the eBay scenario.
Now, let’s evaluate a black and white scenario about the decision to accept the special credit card.
Scenario 1. You tell this company that you will not support their credit card, as you do not wish to loose that 5% profit… That’s your hard earned money, and that company has no business in your organization. You know that some of your customers will be unsatisfied and some are hardcore supporters of this special card, but in reality there is no other good bar in the area. So if you don’t want watered down beer, and you want more than one pool table, or if you want to listen to the “hot” bands rather than the downtrodden country twang bands… you still have to go to your bar.
- This is not exactly your statement, but in my opinion a representation of it in the bar scenario. If it were my business, I would have all of the feelings in Scenario 1. Now let’s try scenario 2.
Scenario 2.
The one advantage that you truly have is the fact that this is your bar. The possibility of the special credit card may have the impact of members who were upset at your customer service coming back to try again. Also, having this outlet does not upset the company that does your advertising and wants more of your business. (Because they can “accidentally” place your advertising in the wrong place, or more simply and directly choose not to advertise for you anymore.)
The most imminent threat is that a lot of your success is due to the fact that people don’t have an equivalent choice to your bar. And ultimately mom & pop bars have been unable to build the capital to provide a competing service because you are clearly the leader. If you upset this large corporation, they will think.. fine… since I am making a move in this direction and you don’t want to work with me… then you are working against me. Now you have a motivated company who has the capital to build a bar across from you, but more importantly they are the source for many of your customers.
So, by owning the bar, you can make some guidelines. My example would include the following; Allow the special credit card transaction only at 1 of the 5 exits, so if everyone wants to use the special card, then they must sacrifice by waiting in line. (This will put a limit on how many people will want to exit via this door). Second, you watch this company’s behavior. They will have paid for top of the line experts to analyze how they can best utilize their one door (of course they will keep an eye on making the customers happy). It is possible that they find a solution to the dissatisfaction in your service on checkout. You can leverage your competitors’ success by implementing their best strategies in your policies. If your competitor fails… they will only promote your own checkouts, and eventually pull out of your business.
I believe that eBay has become fat on the cow due to their success. Their decision in my opinion is based on fear over something that they do have control over. However by accepting the Google Checkout, the success of Google will lead to eBay’s success, and the failure of Google would be the success of eBay also. If Google’s success becomes too great, then an increased transaction fee to Google may be in order (carefully selected to not be too great to make it worth Googles’ while to build their own “barâ€Â). You can even go so far as to ‘upgrade’ your checkout system and claim that the more effective transaction method is justified and the transaction cost to Google must increase. Just the more profit for you.
This clarification is more verbose as my first statement expected other people to think the same way I do in order to truly understand my meaning. If you are still not swayed, let me know why so I can understand better.
Thank you.
John,
There’s a hole in your theory… eBay isn’t going to get any new customers if they choose to accept Google Checkout. There is no reason for them to allow it, but there’s a downside if they do.
John, why don’t you just go ahead and say it… Google are big enough to start their own auction site to rival eBay, and you can bet that it would be massive and hurt, if not ultimately kill their established rival.
Cameron, do you not understand business? Just like you don’t wanna upset Microsoft, you don’t wanna upset Google either. eBay could be making the biggest mistake of their so far short lived success.
I love eBay, and I love Google. Business is business, and they both got shareholders.
May the best business win.
Guy.
Guy, I don’t believe Google could start an auction site that would be successful or rival eBay, look at their attempt with Google Base, it’s gone nowhere. With the exception of a few services just about everything Google’s released has done nothing. Time will tell but I still believe this was a smart move by eBay and have seen nothing yet that proves otherwise.
I checked out “Google-checkoutâ€Â.
The overall process seems to be very easy but exactly that makes this solution very vulnerable. During checkout there was no security question to make sure that I’m indeed the owner of the Google account or the associated Credit Cards in that account. Of course I used my username and password but because there are so many Google sites, using the same username and password, it is very easy to loose your login information on a hijacking page as you might not check the url for Ad-Words or Gmail every time you log on as those services never had the possibility to shop with your Credit Card.
Now because you have one account and login information for all it is quite possible that hackers will try to get your login information from any Google service out there! Even worth is the fact that the hacker can change the password without any problem. The owner of the account might not even get any information about the password change as the e-mail is sent to the according and hijacked Gmail account.
Because of this HUGE security risk I would not recommend using Google checkout!
Please checkout the http://www.thebilliondollarpatent.com as s-registration solution that Google should have implemented in their service to make it solid and secure. This solution is requiring a third credential called TAN to make sure that ONLY the owner of that account is able to shop online even in case the account is hijacked.
I hope that everybody is aware of the security issue with Google checkout and will inform Google of a better solution!
Thanks and be safe;-)))!!
Cameron,
“There’s a hole in your theory… eBay isn’t going to get any new customers if they choose to accept Google Checkout. There is no reason for them to allow it, but there’s a downside if they do.”
Sorry for the delay in my response. In regards to the hole in my theory, I think I was clear in stating “this will not bring you a lot more business and will undercut your sales.” In addition I outlined several reasons for them to allow it. I would be interested to hear the downside if they accept Google Checkout. There would be an impact on how much eBay will profit, but there are other benefits that make up for it (free professional feedback on another business model, a value adding partner in driving sales and advertising etc.).
In regards to the Guy vs. Cameron statement, I would suggest that you are both correct. Google Checkout currently sucks and may go nowhere. However, if anyone is going to make a change in the current market situation, Google has enough money to throw at the problem until they get it right. They have the ability to learn and dynamically change with the environment if they so desire. I must say… Google Search, Google Earth, Google Groups, Google Language Tools, GMail, and Google Pack all have had a successful impact on the market. They do have some failures, but their stock price is a clear indicator to their success in the market.