Do As I Say Not As I Do says eBay

ITs an amazing thing. We have had free shipping pushed down our throats for three solid months. eBay InkBlog had a post in June about a survey for PayPal conducted by comScore from March 25 to April 18, 2008. This survey has been previously offered as supporting VP, Seller Experience Dinesh Lathi's statement at the PeSA Summit on April 24th 2008 "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."
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Reading the press release on the survey it quickly becomes obvious that the survey was of online shoppers in the U.S. who recently abandoned the checkout flow on either a large or small merchant Web site, not on eBay.

The sub heading on the press release blares High Shipping Fees and Unexpected Costs Are Most Common Reasons for Checkout Abandonment More than one in five shoppers didn't complete purchases because their preferred payment option was not offered on the merchant's Web site.

Maybe eBay needs to go back and study their own survey, or read the press release.

I visited the newly refurbished and redesigned eBay Store this morning.

The first surprise was that this is not an eBay store. It is a stand alone website which seems very strange.

On the whole prices really aren't that bad. I carefully read the entire customer service page which contains the FAQ's, privacy policy and contact information. There is a toll free telephone number and an email address, neither of which would be permissible on eBay.

What payment methods can I use at The eBay Shop? PayPal is an accepted method of payment. We also accept Visa, Mastercard, American Express and Discover.

The only shipping methods are FedEx and UPS, this surprised me but did not delight because they are the two most expensive methods of shipping to my home state.

I chose a nice keychain for $4.95 and proceeded to register as part of the checkout. Not your standard eBay checkout, this was a shopping cart. I think the eBay store owners would enjoy having a shopping cart too. I used my South Dakota business address and to my surprise shipping on my one little keychain was $7. Changing to my Hawaii address the shipping was $29.20.

I abandoned my cart. Yes I did.



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And The Point Is?

A good advertising campaign not only motivates the customer to the final purchase but educates the buyer tn the benefits of shopping at the advertisers venue. eBay Australia seems a bit confused, and if they are not confused I certainly am! The theme of their latest advertising campaign is no longer the tacky and suggestive 'doing it with lots of people but using protection' (adolescent sniggers all round) now we have Big Game Bargain Hunters Shop on eBay. Here is the video:



The supporting 'print' ads one and two seem to be pushing the buyer to buy anything as long as it is cheap and has free shipping.

The CEO of eBay, John Donohoe has expressed a dislike of the 'flea market' atmosphere on eBay and the entire trend on the U.S. site has been away from that. All recent promotions, discounts and benefits have been aimed at large volume commodity sellers, the upper tier PowerSellers. Comparatively low volume sellers have borne the full weight of fee increases and been disadvantaged in search through the DSR component in Best Match. We were told quite bluntly by Lorrie Norrington, eBay President, to gear up and sell more if we wanted to share in the largesse. Is eBay Australia traveling in the opposite direction? If so, why?

The motivation for free shipping is very clear, we all know there is no such thing as free shipping, shipping is a service, sellers pay for shipping, that cost has to be factored into the sales price for the seller to remain in business. If shipping is included then eBay will take a cut of that too, twice, once in FVF and again in PayPal fees.

Insertion Fees in Australia are 30c for an item starting under 99c. A gallery picture will cost an additional 59c. Final Value Fees are 5.25%, PayPal is 30c plus 2.4%, therefore, rounded up, eBay/PayPal's take on an item which sells for 99c would be $1.20. As far as I can determine it costs 55c to mail a letter weighing less than 250g (approximately 8oz.) Assuming our 99c seller got the item free he/she is already hock deep in red ink, never mind overhead. I am told that due to the devaluation of the US$ the exchange rate is almost identical.

If you are selling internationally it is important to remember that there are now International Visibility Fees, extra PayPal fees and that PayPal has recently very quietly started gaming the exchange rate. More on that later.

My message from the advertising is that eBay is trying to apply pressure to sellers to reduce prices. What I can't understand is, why? eBay does not own the items for sale and the higher price a seller gets, the bigger eBay's fees... so why the big push?

Our Australian friend Kevin says:

Am I wrong to think that such marketing strategies encourage lower prices? Yes, this has been underlying theme of much that I have said in the last few months, but it seems if anything to be becoming more blatant. If buyers are actively asking for free shipping, as eBay tells us, why instruct more of them on how to find that at the expense of finding every other auction on eBay - surely those that are demanding free shipping are already searching for it specifically? Why encourage bidders to search only for items with a price under a dollar, to the extent of teaching them that if it already has a bid, it is too dear? For eBay, who has no stock cost to carry, the mark-up percentage is fine, but as I have asked before, if you try to force the sellers into accommodating this mindset, how can they sustain a viable business model.

To me this is all skewed wrongly and in the long run unsustainable to everyone (EVEN ebay) - does anyone else see it this way, or do you see these as clever marketing strategies?

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