You honestly wouldn’t believe the amount of e-mails and calls we get from people who have bought Ebay LED lamps and ended up with terrible experiences. Well to be honest, this comes as no surprise to us at all as, on the whole, these two selling platforms have a huge amount of seller manipulation evident and offer very little protection to buyers.
I shall explain.
We all know that thousands of products are bought and sold successfully on Ebay, on a daily basis. In fact I personally sell unwanted items from my home and office (usually under orders from my better half) on Ebay and it works very well. Where I don’t think a platform like Ebay works very well is for products with incredibly long lifespans, such as LED Lighting.
The global nature of Ebay means that a person in say China or Korea can sell LED light bulbs to consumers in the UK pretty much anonymously. They can make claims about their products performance, lifespan and guarantee and mix this with a very low price. Very tempting for someone looking to switch their traditional lighting to LED isn’t it?
The problems that consumers who buy these products face are:
a) Often the performance is nowhere near the claimed figures.
b) The lifespan of the product won’t be accurate and in the majority of cases will probably fail within 2 years (actually you’d be doing well to get over a year)
c) The guarantee is pretty much worthless. If you have a problem with the product within the guarantee period, you try getting the person in China or Korea to honor it. If Ebay gets a lot of complaints, they will shut the seller account down, but they just appear again with a new seller account. It’s almost impossible to police.
d) It’s cheap. Yes, it is and it’s cheap for a reason. It’s made of poor quality materials, put together by unskilled workers working in terrible conditions (or it’s the products that failed quality control from another factory), and there is no R+D, no design and no testing of the finished product. That’s why it’s cheap. With a product like this, honestly, it could fail at anytime.
e) Ebay seller feedback. This is a big one for me. I was explaining the above points to someone recently who told me the seller they had bought from on Ebay had nearly a 90% positive feedback rating and how could I explain that. Very easily I told him. All the smart sellers needs to do is make sure the buyer is happy with the brightness of the light and make sure the product works for a week or two. That is all that is required for someone to issue that person a positive feedback rating. What happens after that, (quick drop off in performance, failure of units, flickering) goes largely un-reported, such is the nature of buying and selling process of Ebay.
Now I am not saying that all sellers of LED products on Ebay operate in this manner. What I am saying is that you wouldn’t believe how many sellers on Ebay do operate in this manner and that when looking at buying an LED product on Ebay, you should take extra care and do more due diligence that usual.
Groupon is very different from Ebay. You still get exaggerated performance and lifespan claims but this is actually a problem within the entire industry rather than just Ebay + Groupon.
The biggest problem with Groupon is price manipulation. The way I’m led to believe the Groupon model works is that the retailer is effectively discounting their product or service by 75%, the consumer gets 50% off and Groupon takes 25%. Now that’s a huge mark down that very few companies can afford to do and those that do are usually making a significant loss in order to acquire new customers.
This system can however be manipulated into a seriously profitable strategy. Let me explain;
Say you are an online LED retailer, you find a new LED Spotlight you would like to sell. It currently doesn’t have a retail price, as you haven’t set one. So an opportunity arises to make the retail price of this LED spot artificially high, say 80-85% higher than the buy price of the product. You then advertise it on Groupon by discounting it by a whopping 75%, appearing to give away the deal of the century, yet you pocket 5-10% off every bulb you are selling. With the selling power Groupon has, that can add up to a huge amount of profit for the LED retailer. Some retailers have claimed to sell between 50,000 and 100,00 bulbs through Groupon.
But it doesn’t finish there, a lot of the time, the LED retailer has T&C’s saying the products you ordered through Groupon can take between 1-2 months to arrive. Why you might ask? Well that’s because the LED retailer has no stock of the LED Spots they have sold. Why should they tie their money up in stock when they can make an order for the exact amount of stock they need, after their Groupon promotion has ended and use the customers (your) money to fund it. They then simply repeat this process over and over.