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2009 August | Red Ink Diary

Posts from August 2009.

eBay’s Silent Fee Increase

On AuctionBytes today there is a Letter To The Editor from a writer who signs themselves “Still Hopeful for Success on eBay”. Auntie May would say “Good luck with that, Pal”

I agree with the majority of what Still Hopeful says, neatly summarized in the final paragraph

“To make a long story short…if it’s not right for the seller to make monies on shipping or insurance…than neither should ebay/paypal. There are ways they can segregate the shipping fees from the final sales price, through their algorithms, as an act of good faith and practice what they preach.”

In my view, for PayPal fees it makes no difference where the handling is allocated. We have always paid for payment processing as a percentage on the total transaction and this is industry standard practice. The eBay fees are a different matter because this amounts to a hefty sneaky fee increase.

How hefty?

Click on the spreadsheet to enlarge, it will open in a new window or tab. The ’silent fee increase’ is between 26% and 157% depending on the sales format chosen. In my handy dandy mini spreadsheet the the first set of figures are fixed price with the same item offered at auction below. The auctioned item sold with one bid at the starting price. Postage is $5 throughout.

Industry Standards

In July I bought one pair of jeans from JC Penney, the shipping was $9.45. They were just work jeans, Lee I believe, and by the time they got here they had cost almost $50. They are good jeans but at that price I will need a pay raise to go shovel ‘end product of horses’ up at our ranch. This month I bought three pairs at Costco for what one pair cost at Penneys and they do their job which is to cover my situpon.

Interestingly, at the eBay Store, which was a stand alone website last time I looked, shipping to South Dakota for one key-chain was quoted at $7.

Some little doodad as seen on TV is invariably $7 for shipping and add another $7 for processing the second ‘free’ item. eBay ‘expert’ The Video Professor charges $6.95 to ship his ‘free’ DVD. * UPDATE: as of November 2009 the ‘professor’ now charges $9.95 to ship his ‘free’ video. These are industry standards and buyers pay them daily. If they don’t like it they don’t buy, and many are making that choice as I did with my jeans.

The eBay Standard

Dinesh Lathi, eBay eBay VP of Seller Experience has been pushing free shipping hard since the Spring 2008 eCommerce Summit in New Orleans where he said

“The fact of the matter is that free shipping is the standard for eCommerce now. Sellers who want to meet buyer expectations need to aspire to that. It is our job, the people here on stage, to help you do that. So, there are definite things in the works at eBay that will help you accomplish that. Look for that soon. “

That seed has grown and borne (def. #3) bitter fruit, eBay will soon require that sellers charge no more than exact postage and roll insurance costs and handling charges into the item price. eBay would prefer the percentage of listings with ‘free’ shipping increase from the current approximately 30% to 100%  The sheer hassle of the new policy added to the inherent danger to DSRs may do a lot to accomplish that goal.

Obviously sellers are not delighted by prospect of paying eBay inflated commission on out of pocket shipping costs. There are other considerations too. Where is the incentive to the buyer to purchase more than one item? How can you up-sell when each item must be priced to cover shipping costs as a one off sale?

Insurance

It is indisputable that insurance has been an income producing racket among certain types of eBay sellers for years. By insisting insurance costs be added to the base sale price eBay has neatly mandated an increase to their own revenue stream while squeezing sellers already tight margins even harder to maintain pricing parity.

In the USA most people do not realize that our postage and insurance costs are relatively inexpensive compared to other countries. My friend Kevin in Australia wrote to me:

“I have had two requests for additional insurance charges on items in the $20 to $24 range in the last two weeks. At a minimum of $8.40 for an international transaction, it moves from me taking my risks (as I do - I do refund when claims are made that items have not arrived, after confirming that the buyer has supplied correct basic information - ie: postal address), to me either being rendered unviable or ignoring a valid buyer’s request for an additional service.”

What does the buyer think?

  • 74% of eBay shoppers were ’satisfied’ or ‘very satisfied’ with their eBay experience in Q4-08
  • 71% were ’satisfied’ or ‘very satisfied’ with their experience Q1-09
  • 69% were ’satisfied’ or ‘very satisfied’ with their experience Q2-09
  • What will the numbers be for Q3-09?

I can’t speak for the average buyer but quite often free shipping doesn’t work for me. I  look at the total cost, how much to get the item in my hand from the seller. For commodities I don’t always go for the lowest price, I am willing to pay more to a seller who is friendly and professional. If an item ships ‘free’ most of the time I am simply paying more.

Crystal Ball Department

The Crystal Ball Department contains no facts. Educated guesses, gut feelings and opinions work here.

Where is all this going?

  • There will be a sharp decrease in traffic as the new and improved Best Match launches in September.
  • Historically traffic has taken months to recover from Best Match changes.
  • Last quarter is not a good time of year to run that risk.
  • I think many smaller sellers will give up on eBay.
  • Some medium sized sellers may not survive past the holiday season.
  • Very large sellers (ChannelAdvisor client sized) will probably survive, they have teams of researchers working on their behalf.
  • Selection and choice will decline further as merchants move off the platform.

What do you think?

Y’all come back!
Henrietta!
Full disclosure: I am an ex-eBay seller currently selling on my own website and Bonanzle.com

Updated Los Angeles Fire Map 9/1

New map updated September 1st

View Los Angeles County fires north of La Canada Flintridge, Altadena in a larger map


BaySpeak to The Max

California's eBay ID great-ca-garage-saleIn the news recently, the State of California has chosen to sell surplus property on eBay and Craigslist to raise money in what the Governator, Arnold Schwarzenegger has called the Great California Garage Sale.

Just what you have always wanted!

As of Saturday 29th August 2009 the Great California Garage Sale has sold $57,849.09 on eBay in the last fifteen days, mostly vehicles but some small pieces of seized jewelry too.

Click the thumbnail to enlarge. As a long time eBay user I can see some serious policy violations in this successfully sold listing shown at left. I understand that not all eBay sellers are equal, but I do have some questions one of which has already been non-answered in a sublime (def. #2) display of BaySpeak by that silver-tongued devil, eBay’s mostly suave and occasionally debonair spokesman Usher Lieberman.

  1. In the 207 word description 37 pertain to the item being sold. The balance describe a live sale at another location and include a link to an off eBay website. The specific eBay rule violated may be seen here. It says “You may not include: Links to websites or pages that offer to trade, sell, or purchase goods or services outside of eBay  . . . . Violations of this policy may result in a range of actions, including: Listing cancellation, Limits on account privileges, Account suspension, Forfeit of eBay fees on cancelled (sic) listings, etc.”
    Why was the listing not canceled?

    Usher Lieberman, an eBay spokesman, said that referring customers to a sale off the site is indeed a policy violation, but “we’re sensitive to the position the state finds itself in, and we’re happy to be helping them to raise the profiles of some items that they have for sale.”

    Lieberman also said the state’s return policy notwithstanding, if a customer purchased an item that was not as described, eBay would refund the money and pursue the issue with the state.

  2. The listing states clearly, in 18pt bold red “If you are the winning bidder, please contact us first to arrange payment. For accounting purposes, we prefer not to accept PayPal.” The specific eBay rule violated may be seen here. It says “Sellers aren’t allowed to make statements like: Contact us for payment information.” . . . . Violations of this policy may result in a range of actions, including: Listing cancellation, Limits on account privileges, Account suspension, Forfeit of eBay fees on cancelled (sic) listings, etc.”
    Why was the listing not canceled?
  3. The State of California is known to have serious fiscal problems, so serious that since July 2, the state has issued 327,000 IOUs totaling $1.95 billion. Will eBay accept an IOU for payment of fees?
  4. Did former eBay CEO and prominent Republican gubernatorial candidate Meg Whitman’s political ambitions have any influence on the special treatment seller great-ca-garage-sale received in immunity from the stated consequences of proven listing violations?
  5. Did eBay simply not notice the listing violations?
  6. Do eBay employees who format the eBay help pages have access to a spell checker?

Y’all come back!

Henrietta!

Saturday Silliness - Workplace Fun

There really truly are two videos on this page. If they fail to load and you are looking at a blank page please hit the refresh button and that should fix it!

Thanks to Dan Wilson for this one:

Y’all come back!

Henrietta!