eBayAG Reacts to Free P&P Campaign Criticisms
By Ed | October 7th, 2008 | Category: eBay, eBay SG |Having blogged, in the last 72 hours, here on BuildaSkill about a swathe of “free P&P” based CLDs from eBays around the globe, and raised concerns that the campaign was a fee-grab aimed at sellers adding P&P into their listing price, eBay International AG (via the Singapore team) landed a couple of emails in my mailbox this morning.
As a seller, I’m not happy about the message in them, as an industry observer, I know how to smell a smokescreen when I see one.
The image (above) at the top of the marketing message certainly got my attention after my recent blogging.
Judge for yourself as I transcribe the full email text here -
Offering free postage is a great way to increase your sales. You’ll instantly rank higher in search results and get an eye-catching “Free Postage” logo on your listings too. What’s more, many buyers love the idea of getting something for free, as well as the simplicity of an all-in-one price.
However, do make sure your free-postage offer is genuine, with no hidden costs. Free postage should make items more attractive for buyers and provide a great shopping experience.
Buyers are quick to sniff out sellers who cheat by still charging for insurance and handling, or listing postage, handling and insurance as free, but including these costs in item descriptions instead. This makes for a terrible shopping experience and seriously damages the reputation of sellers.
In our efforts to protect our good sellers, eBay’s Trust and Safety Team will be removing misleading free-postage listings and/or suspending the accounts of errant sellers.
We know we have a great team of sellers here in Southeast Asia who always try their best to deliver great shopping experiences. So here’s a quick reminder on how to ensure your free-postage items are really free, and keep your buyers shopping from you:
Make sure your handling costs are FREE and any insurance charges are reasonable and optional
Make sure postage and handling costs in your item description are also stated as FREEHappy Selling!
Regards,
The eBay Team
My immediate reaction was along the lines of, “Oh great, you and PayPal take nearly 20% of the sale price and now you want us to give away the delivery cost from Asia to worldwide?”. However, I read and reread the message several times, chewing over each paragraph several times, before I spotted what was niggling at me. So here it is …
Para 1 - Charge no postage in the postage cost field and you get a higher placement in search. eBay here is incentivising loading the postage onto the item price, at the same time as deterring it with tranche-based fees for auction insertion fees and all listings final value fees. They’re basically creating a breeding ground for higher sales rates from all-in-one prices.
Para 2 - Classic piece of eBay-speak / spin-doctoring / snake-tongue here. It’s a “don’t do what we reward you for, do as we say” message. Obviously this is geared as a pre-emptive defence against any court summons for facilitating breach of advertising standards laws.
So I’m a seller, and using very rough and round figures, let’s say I’ve been selling with a 50% mark-up on cost on eBay plus a 10% P&P average (I did say this was rough and round). Christmas is coming, I want to cut back hard on admin overheads and man-hours. I decide to switch to a 65% mark-up on cost and ditch separated P&P, listing everything with nothing, nil, nada in the P&P cost field.
Does eBay let me do this? Nope! eBay will insert a 0.00 in the postage cost field and add a nice shiney “Free P&P” icon. That’s NOT what I’m offering, and it’s not what I paid them to advertise. So who’s in the wrong here? In my book, eBay are in breach of their contract with me for modifying my advertising without my authority, and thus changing the message delivered to my customers.
Para 3 - So by exercising the legitimate business strategy above, eBay are now writing to tell me that I am a cheat, liar, fraudster, and basically a thief too? Gee, thanks eBay, you really know how to make a customer feel valued.
And to top it off, as a company that retails nothing whatsoever, you have the gall to tell me what customers want? I’ve been in retail longer than most of your staff have been alive (33 years to be exact), and also owned or managed businesses longer too (it’s 30 years since I launched my first sales-centred business). I’ve also been selling on eBay as a PowerSeller longer than most of your staff have been employed by you.
Para 4 - Ahhhh, so now we get to it. It’s the next salvo of the “clear the market for the big boys” barrage. Knowing that small and medium sized sellers simply cannot afford to eat the shipping charge (especially international P&P costs), you’re going to let loose a search and destroy execution squad to weed out all those pesky persistant customers who insist on giving you money every day. Roll over Mom & Pop, Big Brother is on his way. So who feels their listing will be safe on eBay after you’ve paid for it to be there?
Para 5 - Great bit of forked-tongue buttering there, but …
Para 6 - Seems to me that this one is contradicting para 2 just a little bit. It certainly contradicts para 4, and the messaging about insurance costs is definately a Catch-22 head-scratcher. Is it a “gotcha” or an escape route to maintaining profitability per transaction?
I’m seriously worried about their insistence that HANDLING costs must be free. Salaries have to be accrued somewhere in the sale total - even if you’re a one-person business working from home - so exactly where in the transaction do they want sellers to make enough to pay themselves or their staff. The handling costs are routinely where most businesses of all sizes turn their post rooms into a “profit” centre to pay overheads for that department. They’ll be telling us next that making ANY profit creates “a terrible buying experience”.
OK eBay, no problem. Message received, loud and clear.
I now understand your corporate strategy very clearly. JD’s grand masterplan is to have no buyers or sellers at all, no staff or premises (other than a nominee shareholder desk in a lawyer’s office somewhere), and for the directors and shareholders to live off the interest from the massive cash reserves without having to run a business at all.
Hey that’s a great idea - Trust eBay, the biggest Trust Fund for the least trustworthy trustees.
Hey Amazon, hang on a mo’ … I’d like a word with you about being a seller …
Ed
I’m not sure I understand the problem here. My understanding of the eBay text is that you can’t claim 0.00 or free shipping and then require buyers to pay additional handling or insurance costs that you don’t list in the shipping and handling fields (other than optional insurance costs). If it’s all wrapped into your item price, it’s no one’s business but yours as to what the breakdown is of your profit or handling charges.
It’s possible I’m misunderstanding this, but that’s how it reads to me. Of course, eBay also encourages people to makes their prices lower - interesting doublespeak from a company who keeps raising their prices.
Hi Tula,
OK, maybe I spotted something that no-one else did. Try thinking it this way around …
All this year, on different eBay sites, at different times, eBay have introduced capped P&P costs in different categories. Several times, in announcements, or blogs, or forums etc, various eBay staff have claimed that one of the determinants has been looking at the average P&P charged by all sellers (or a weighting of the average). Fair enough you might think?
OK, let’s look at another “seller watching” that’s been mentioned a couple of times. In Selling Manager Pro, sellers can input actual product cost and actual P&P cost. eBay then provides a tool to calculate profits net of those costs and eBay fees, for sales per product SKU or per transaction. Now suppose they’ve been monitoring what sellers have been inputting?
Now put both of those together with para 4 of their email above, and what you have is a search and destroy squad armed with data from averaged sold P&P, plus seller input product cost and P&P costs.
So poor Sid the Seller is running an experiment to find the optimum price for a widget. In a simple example, he tests separate and inclusive P&P. In one listing he offers $10 all-in, and in another he offers $7 + $3 P&P. Now eBay does want him to sell at the all-in price (more FVFs for them), but the P&P Police decide that in the $10 listing, he’s misleading the buyers because P&P shows as $0.00 and is therefore not truly offering free P&P. BANG - listing pulled, or seller suspended.
They don’t have to use identical listings to do that comparison, just similar items in the same category.
… and as we all know, it only takes one neg or neutral feedback to become an SNP Dolphin (on the UK site at least). Plus we all know how unco-operative eBay are to their paying customers over false VeRO claims, etc, etc, etc.
Hope that helps you to see what I was driving at?
Ed
Hmm, I suppose they might be taking that tack, but I don’t give them that much credit for cleverness
I don’t use SMP, so my cost and profit margins are known only to me, therefore I don’t worry about that as far as my own pricing goes. It never would occur to me that eBay would find pricing like in your example to be deceptive. I would think they would be happy with higher item prices, since they get more FVF, but who know what kind of backward thinking they are employing these days.