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Party Crashers (or 'Who invited these clowns?')

Reputation Wednesday is an ongoing series of essays about reputation-related matters. This week, we look at some of the possible effects when unanticipated guests enter into your carefully-planned and modeled system. This essay is excerpted from Chapter 5.

Reputation can be a successful motivation for users to contribute large volumes of content and/or high-quality content to your application. At the very least, reputation can provide critical money-saving value to your customer care department by allowing users to prioritize the bad content for attention and likewise flag power users and content to be featured.

But mechanical reputation systems, of necessity, are always subject to unwanted or unanticipated manipulation: they are only algorithms, after all. They cannot account for the many, sometimes conflicting, motivations for users' behavior on a site. One of the strongest motivations of users who invade reputation systems is commercial. Spam invaded email. Marketing firms invade movie review and social media sites. And drop-shippers are omnipresent on eBay.

EBay drop-shippers put the middleman back into the online market: they are people who resell items that they don't even own. It works roughly like this:

  1. A seller develops a good reputation, gaining a seller feedback karma of at least 25 for selling items that she personally owns.
  2. The seller buys some drop-shipping software, which helps locate items for sale on eBay and elsewhere cheaply, or joins an online drop-shipping service that has the software and presents the items in a web interface.
  3. The seller finds cheap items to sell and lists them on eBay for a higher price than they're available for in stores but lower than other eBay sellers are selling them for. The seller includes an average or above-average shipping and handling charge.
  4. The seller sells an item to a buyer, receives payment, and sends an order for the item, along with a drop-shipping payment, to the drop-shipper (D), who then delivers the item to the buyer.

This model of doing business was not anticipated by the eBay seller feedback karma model, which only includes buyers and sellers as reputation entities. Drop-shippers are a third party in what was assumed to be a two-party transaction, and they cause the reputation model to break in various ways:

  • The original shippers sometimes fail to deliver the goods as promised to the buyer. The buyer then gets mad and leaves negative feedback: the dreaded red star. That would be fine, but it is the seller-who never saw or handled the good-that receives the mark of shame, not the actual shipping party.
  • This arrangement is a big problem for the seller, who cannot afford the negative feedback if she plans to continue selling on eBay.
  • The typical options for rectifying a bungled transaction won't work in a drop-shipper transaction: it is useless for the buyer to return the defective goods to the seller. (They never originated from the seller anyway.) Trying to unwind the shipment (the buyer returns the item to the seller; the seller returns it to the drop-shipper-if that is even possible; the drop-shipper buys or waits for a replacement item and finally ships it) would take too long for the buyer, who expects immediate recompense.

In effect, the seller can't make the order right with the customer without refunding the purchase price in a timely manner. This puts them out-of-pocket for the price of the goods along with the hassle of trying to recover the money from the drop-shipper.

But a simple refund alone sometimes isn't enough for the buyer! No, depending on the amount of perceived hassle and effort this transaction has cost them, they are still likely to rate the transaction negatively overall. (And rightfully so – once it's become evident that a seller is working through a drop-shipper, many of their excuses and delays start to ring very hollow.) So a seller may have, at this point, outlayed a lot of their own time and money to rectify a bad transaction only to still suffer the penalties of a red star.

What option does the seller have left to maintain their positive reputation? You guessed it – a payoff. Not only will a concerned seller eat the price of the goods – and any shipping involved – but they will also pay an additional cash bounty (typically up to $20.00) to get buyers to flip a red star to green.

What is the cost of clearing negative feedback on drop-shipped goods? The cost of the item + $20.00 + lost time in negotiating with the buyer. That's the cost that reputation imposes on drop-shipping on eBay.

The lesson here is that a reputation model will be reinterpreted by users as they find new ways to use your site. Site operators need to keep a wary eye on the specific behavior patterns they see emerging and adapt accordingly. Chapter 10 provides more detail and specific recommendations for prospective reputation modelers.

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