In a continuing effort to provide all questions and answers that came out of the Summit last week – and the questions asked here on the blog – here is part 2 of the Q&A. This post highlights the ongoing shipping & handling discussion that came out of the “Navigating the Changes at eBay” panel. I’ve also added an answer to an Ink reader’s question (CrunchyPostingGoodness) that I asked while down in New Orleans.
NOTE: If you have already asked a question, please do not re-post it. I assure you I am working on all answers for you. Thanks for your patience…
In the keynote, I heard reference to shipping prices going down and I also notice there is a push toward to free shipping on the site. Retailers can do that but it is priced into the total cost… and I have no problem with that. My question is, we all know you have $5 billion in cash, why not put some of that into subsidies for buyers to help with their shipping costs? [Applause]
Lorrie Norrington: Let me take that one… it will be fun. [Applause]. First of all, I would say that shipping costs are going down – we’ve seen that in the first quarter. As Dinesh referenced earlier, free shipping is becoming increasingly popular on the web and sellers are out there being much more cautious with regard to their shipping costs. They’re being much more accurate when pricing it out. Now, why don’t we just write a big check and subsidize it? Well, eBay isn’t holding the inventory, eBay is having a take rate for everyone of those transactions. If you cover free shipping there would be exactly zero in that transaction. It’s just the way that the economics of our marketplace works. If you’re holding the inventory, you can subsidize free shipping and the economics will work for you. Our approach is to try and find the best possible rates for our sellers and put as much influence on the carriers to guarantee our sellers can get the best possible rates.
Matt Halprin: There is one suggestion I’ve heard that we’ve debated internally on. If we gave a small final value credit for sellers that provide free shipping, since eBay is actually making a little more money on that transaction, that’s something we’ve talked about.
CrunchyPostingGoodness asked: Why isn’t PayPal confirming all buyer shipping addresses for all sellers? Amazon guarantees every shipping address for all of their sellers. I doubt that Amazon can actually verify every address, just like I’m sure PayPal can’t either, however Amazon does assume all responsibility and protects sellers who ship to any address specified by the buyer at checkout. Even if PayPal can not physically confirm every address, it should still provide the seller with the same protection, as if the address was able to be confirmed.
Monroe Labouisse, Director of North American Marketplaces, PayPal, had the following answer:
At PayPal, we agree that we should help protect sellers from fraudulent buyers and we do it today in a variety of ways. One way is that, using new fraud detection technology, we have greatly expanded the number of confirmed addresses for all sellers in our system in the past two years. A second is that we have just introduced expanded seller protection for eBay PowerSellers in the US, UK, Canada and Hong Kong (and in Australia we’ve rolled out seller protection for all sellers), in which, as you suggest, a seller just has to ship to the address provided by a buyer at checkout. It’s free for PowerSellers, no longer has a coverage limit, and addresses aren’t “confirmed” or “unconfirmed” anymore – you just ship to the address provided by the buyer through PayPal. Provide great experiences for buyers, qualify for PowerSeller status, and then along with the many other benefits eBay provides, you can get this protection from PayPal.
Two other things that are worth pointing out, in reply to your comment: 1) contrary to your statement, Amazon does not protect sellers who ship to “any” address provided by a buyer in checkout (I’ll explain more below), and 2) Amazon charges more for transactions at high price points (where fraud is most likely to take place) than eBay and PayPal together charge.
On the first point, it’s more accurate to say that Amazon protects sellers who ship to the address that Amazon “allows” to go through checkout, not that they protect sellers who ship to “any” address a buyer provides. Before allowing a transaction to go through, most payment systems (including PayPal’s and Amazon’s) will check the safety of an address. If an address is considered unsafe, then the transaction may be denied, or the buyer may be required to provide more information to authenticate the transaction. In both cases, a sale may be turned away. And to my second point above, in part to cover the cost of fraud at high price points on transactions it is letting through, Amazon charges you more than eBay and PayPal combined.
At PayPal, we are taking an approach to protections that we think is better for sellers’ businesses. First of all, we do protect sellers on a large majority of transactions. Second, sometimes we let transactions go through that we choose not to protect, but we let merchants know when that is the case and provide them with information they need to decide on their own what’s right for their business. And finally, we charge less at high price points than Amazon – and less than the electronic payments industry in general across all transactions.
