TulipTools Internet Business Owners and Online Sellers Community

Overstock has done an amazing job of killing off their auction site this month.  First they made one of the dumbest decisions ever made in the OAI by requiring that "make it mine" price be twice the opening bid, and now they have dealt a crippling blow to volume sellers (defined as anyone who lists more than 300 items). 

Bye bye Overstock

Quote:Greetings Sellers,

I write to inform you of a change we're making in O-Subscriptions.

As you know, various subscription plans have been available to the selling community since March of this year. Since implementation, our average starting price per auction has increased dramatically. We are confident that this resulted from the fact that the subscription's blanket payment causes sellers to lose their incentive to offer low starting prices. While subscriptions with listings less than 300 have a sell-through rate of 7% or more, those over 300 sell-through at a drastically lower rate. As our percentage of closed auctions dropped, sadly, quite a few small merchants (often those with the highest sell-through rates) got lost in the mix and decided to leave us.

As Patrick discussed in a recent message board posting, we need to restructure the O-Subscriptions, and have attempted to do so while keeping an eye on the aspects of our program that you say brings you value.

Although all sellers are still welcome to list unlimited items, effective December 13, 2006 top tier subscription plans (those higher than 300 concurrent listings) will be unavailable. If you are a current subscriber to plans 5-10, your plan will expire on or before December 31 and your account will be credited for the unused portion. If you're interested in participating in plans 1, 2, 3, or 4, please email sellershotline@overstock.com.

I understand that recent site changes may be frustrating. Again, I remind you that our goal is to build a successful auction site that provides our customers a safe, simple and satisfying experience. We believe that allowing some sellers to list countless thousands of auctions with unrealistic starting prices, and correspondingly miniscule sell-through rates, benefits neither large sellers, nor small sellers, nor bidders, nor Overstock. Therefore, we trust you understand this decision.

If you have any questions, please send them to sellershotline@overstock.com. Again, we're grateful for your continued support, and I wish you the best this Holiday Season.

Respectfully,

Stormy Simon

related topic:
Overstock Loses Its boinking Mind: Requires 'Make It Mine' Price to be 2X Opening Bid
http://community.tuliptools.com/index.ph...112.0.html

We'll run 2 more sets of 3-day auctions and then on the 18th we're gone. We've been there since they opened in 9/04

On the bright side  , we'll be cancelling pain in the ass  Marketworks when we pull out of Overstock.  We'll use the .csv bulkloader for Yahoo instead.

A seller on the Overstock boards:

Quote:changing the rules in the middle of the game is not a nice way to play the game. change the MIM rules in the middle of december. change the subcription plans 3/4 of the way through.

Best of luck overstock, my guess is by April these auctions are gone and over, they have no traffic now

We knew they were going to do it--but it still shocked me when I read the news.

Wow.   

[quote author=amy link=topic=6262.msg35911#msg35911 date=1165720737]
We'll run 2 more sets of 3-day auctions and then on the 18th we're gone. We've been there since they opened in 9/04[/quote]

Gone didn't last too long.   We'll be back after the 1st of the year on a Plan 4 (with our higher priced media/video games/audio items.  The low priced toys are still gone from O). They did give us a credit for the entire month of December.

Quote:12/28/2006 credit given due to plan change as a result of policy change. credit:Registration -$39.95

[quote author=amy link=topic=6262.msg38556#msg38556 date=1167443524]
[quote author=amy link=topic=6262.msg35911#msg35911 date=1165720737]
We'll run 2 more sets of 3-day auctions and then on the 18th we're gone. We've been there since they opened in 9/04[/quote]

Gone didn't last too long.   We'll be back after the 1st of the year on a Plan 4 [/quote]

:lol14n:

Our return to Overstock lasted less than a day and we didn't even get a chance to list.  They changed our subscription from a plan 8  to a plan 4 on Thursday and then they sent out this email late last night.

Overstock is beyond f.ucked up.

Quote:Greetings Sellers,

We recently informed you that subscription plans 5-10 will expire on December 31, 2006. However, further analysis has convinced us that the problems arising from O-Subscriptions (specifically, high starting prices, and thus, low sell-through rates) are endemic to all subscription plans, and are therefore detrimental both to your business and ours. As a result, we are ending our O-Subscriptions and have removed the sign-up page. Sellers currently subscribing to a plan will be allowed to utilize it through midnight, January 11. Any unused portions of your plan (including all January subscription fees) will be credited back to you.

Though we have eliminated O-Subscriptions, we are excited about other changes we are coding up now. By March, 2007, Overstock.com Auctions hopes to have released a classified ad platform, bid cancellation capability, and the revival of 1-day auctions. We are confident that these site enhancements, along with the O-Subscription changes, will add value to the bidder experience and, ultimately, to your business.

Should you have any questions, please direct them to sellershotline@overstock.com. We appreciate your support and wish you the best in 2007.

Respectfully,

Meghan Tuohig - Director, Auctions
Patrick M. Byrne - CEO, Overstock.com

http://auctions.overstock.com/cgi-bin/au...AGE=static&pagenum=166533

Question #2:  what happened to the brand new head of auctions Stormy Simon (see signature in announcement)?

Thread with Patrick Byrne announcing the changes and sellers reacting:
http://forums.auctions.overstock.com/vie...hp?t=16274

Listings were running in the 300,000-340,000 range before the first MIM announcement earlier this month.  Today there are 148,490 listings.  Great job of killing your site Overstock.

Quote:Hmmm, sounds just like that OTHER place, except the OTHER place has traffic. The Subscription plans were the one thing Overstock offered that the OTHER place didn't...

Quote: I also cannot afford the fees (which I cannot even recall how much they added up to) to continue to list my high-end designer items. There is just not the traffic here at Overstock Auctions yet for us sellers to rely on a high number of customers.

In the midst of making changes, until more traffic is drawn to this site (as a viable and vibrant alternative to eBay), I can't see how too many (if any) sellers here can afford to list their items for sale. We'll keep paying a lot of insertion fees for no action.

Quote:Unfortunetly, my sell through rate will not cover the listing fees here any more than it did on E-bay.

Quote:It's become quite apparent, that the only Overstock sellers of any concern or value to Overstock Auctions, are the mega-seller "Enterprise Merchants". Ironically, that OTHER auction venue, huge as it is, seems to be more attuned to the needs of the small individual seller.

Quote:They have cut the throat of the small sellers with this latest move.

Quote:Patrick, I personally feel the agenda for a few months was to squeeze out most sellers and make this a Merchant Auction business for the big companies and your own returns. Could be why the tab name changed recently from Auctions to Merchant Auctions.

Patrick posts:

Quote:Hello,

I am sorry to see the discontent, though it was not entirely unexpected. I will address a few points raised:

1) No, we are not turning this into an auction venue for ourselves. Yes, for some months we were auctioning some of our returned product of here. But we stopped that about two months ago, not wanting to compete with you.

2) People complain about traffic. The sad truth is, we now have about 5 times as many page views/auction as we did a year ago, a number that (I believe) runs about 60% of eBay's page views/auction. Auctions from last year that had this many views were closing at much higher rates than we are now experiencing, that is, a closing rate about 6-8 times what we are now experiencing.

3) What happened to make this year different? The best explanation I can form is that when we started subscription plans, some people started thinking "Well, it is now essentially free to list here, so I might as well list stuff, set it with high starting prices, and though I won't sell much, when I sell something I'll make big margin off it." This is confirmed by the fact that our Average Order Size spiked as soon as we began subscriptions, and that our take-rate (that is, our total fee revenue as a percentage of sales) is actually higher for subscription plan sellers than non-subscribers. This data sure points in the direction that subscription plans make it rational to sell fewer, higher margin items. But overall, it means we have too many products set at unreasonably high starting prices (until recently, they were often accompanied by a MIM 5 cents above the starting price).

4) This change is not intended to favor the big sellers: in fact, it should help the smaller sellers. 2/3 of our sellers do not use subscription plans anyway. They list about 5% of our auctions, but for 2006 their auctions had a closing rate of 30.6%. I believe that rate is roughly comparable to eBay's. More to the point, it is a high multiple of the closing rate experienced by our subscription sellers, who list the other 95% of our auctions.

5) What should it tell me that people who pay fees to list (still 1/3 less than eBay's) get a closing rate north of 30%, but those to whom listing is close to free (subscription plans) get such a tiny closing rate? It tells me that, in general, those on subscription plans are setting their prices high and hoping for the occasional sale. This is not true of every individual, of course, but in aggregate, it is true. I see no other way to explain the data above.

I understand, and regret, that this change is not for everyone. Those who have listed hundreds (or thousands) of auctions, and gotten closing rates in the single digits, are not going to find it reasonable to list hundreds (or thousands) of auctions while paying listing fees for each. Maybe they will list no auctions. Maybe they will list a dozen, and enjoy 30.6% closing rates too. Maybe by eliminating the 95% of the auctions that have such low closing rates, then those 2/3 of our sellers who list smaller numbers of items while paying listing fees will see their closing rates go from 30% to 50% (because 95% of the competition withdraws). I do not know where the new equilibrium will settle. I just know that the current equilibrium is not benefiting any of us. And I have to expect that the new equilibrium will be a more attractive one for buyers (fewer auctions, more enticing starting prices), and hence, more attractive for the smaller sellers who remain.

While I understand if the subscription plan sellers decide to leave, and hold no hard feelings, I respectfully suggest that if you have been listing 1,000 auctions, just try listing a couple dozen without a subscription plan. I bet you sell more than you did before anyway and it may even be cheaper. But if this is not worth your time, I understand, and thank you for giving us a try.

In all cases, I wish you a healthy 2007. And for the 2/3 of sellers who are not on subscription plans (who I think will be excited to see 95% of the competition dry up), and for the subcription plan sellers who are willing to try making a switch, I wish you the best of luck in all your auctions.

Respectfully,

Patrick

Patrick again:

Quote:Hi. I forgot to address, "Overstock Merchants." We did that because we had shopping customers telling us that they had not realized that they were not buying from Overstock when they bought at auction. They thought (they say) that they were buying directly from us, as though we were uBid. I tried looking at it from their point of view, and decided that it was true that when one surfed through our shopping site, and saw the "Overstock Auctions" banners, if one were new to the place one had to come a long way into auctions before being explicitly informed that the sales were from third parties. On the other hand, I do not see how someone could have gotten through a full auction process and not understood that the purchase was from a third party, and that our auction tab was a C2C site.

But that is what they said. So we changed the name on the tab to, "Overstock Merchants," to reduce any confusion. Nothing sinister. Some folks are so cynical: we change the name of a tab and it is a reflection of some ulterior motive I cannot even anticipate being attributed until it is. The craziest of all is the stuff about how this is all about Big Sellers. Yes, we love our Enterprise Merchants. But in general, the changes wwe have instituted are overwhelmingly in favor of the smallest sellers. They are getting 30.6% cloising rates. We are trying to make you all like them.

I'm curious: do the other guys across town tell you this much about what is going on behind the scenes?

Patrick

Patrick again:

Quote:Yes, I plan on giving more notice going forward. Stormy, Meghan and I have been acting so abruptly because auctions had been speeding down a cul-de-sac and we needed to do some quick fishtails to get it turned back in the right direction.

With this change, I think the last of the major changes are complete. We will want to see where they equilibria settle, and then can get back to incremental changes.

Here is a question: tell me who MIM benefits (sellers or buyers), and why?

PMXB

Patrick again:

Quote:I certianly would never want to stab you in the back, and I appreciate your many closed auctions. The problem here is closing rates: maybe instead of a seller posting 1,000 auctions, and selling a dozen or two, a seller will post 50 auctions, and sell half.

The most off-based comments here are the ones that ascribe selfish mercenary motives to Overstock for this change. In fact, our motives are selfless mercenrary motives. That is, we think that you and we can do better with this change. I promise you: it is not that our "take-rate" for suibscription plans is hurting us and we want to roll people on to (allegedly) more expensive listing fee system. It is that the closing rates of subscription sellers are, in general, so low, they are smothering an auction site, which hurts Overstock, the non-subscription sellers, and the subscription sellers alike.

Patrick

PB Wrote:Hi. I forgot to address, "Overstock Merchants." We did that because we had shopping customers telling us that they had not realized that they were not buying from Overstock when they bought at auction. They thought (they say) that they were buying directly from us, as though we were uBid.

Patrick is right about many buyers not realizing that they were buying from individual sellers.  I can't tell you how many buyers we've had over the years who thought Overstock would automatically charge the credit card they had on file like Amazon and uBud do.

PB Wrote:They list about 5% of our auctions, but for 2006 their auctions had a closing rate of 30.6%.

When the under 5% sell through rate of the other 95% of us rises to 30% I'll consider paying your high listing fees but I don't see that ever happening.  The site wide sell through rate was not 30.6% before they introduced subscription plans--it wasn't even 10%, and so trying to blame the site's low sell throughs on subscription plans is ludicrous. :