Ebay buyer protection fee? Genius move or own goal?

[darktints]

I've got a lot to unpack about ebays recent performance so please scroll on if long stories bore you.

So I've seen a couple of threads on here about the new buyer protection fees but other than a couple of tiffs between the "die hards" and the "have nots", no one seems to be making much about ebay's strategy in all of this.

Although ebay has a good market share, increased competition from freebie platforms such at Facebook MP, Vinted and other apps clearly had them spooked and coupled by the drop in active users they have expeienced since their peak in 2018, has led to ebay making some radical changes.

So back in October 24, ebay removed selling fees for private sellers which personally I thought was a genius move. Take a short term hit in cash flow to rejuvinate the active user base thus bringing more people back to the platform. After all, the more active users you have, the more opportunity you have to sell them stuff, right?

Now they have just announced the new buyer protection fee system, which I do understand why its here. Afterall, supporting customers who used your service for free is a hard pill to swallow, especially for the finance department who care little about customer base and repeat sales and are more focussed on "did we cover our bills this month"?

Where I come stuck with this new direction is that if you are trying to attract more active users to your platform, adding a surcharge to any purchases they make not from a business account will surely keep these kinds of users on the freebie platforms, thus completely undoing all of ebays good work back in October.

Like it or not, the second hand goods market is highly price motivated and only works when costs are minimal. I believe in the long run, this "robbing Peter to pay Paul" approach will not lead to increased user activity and ebay will become bogged down in the same (albeit very slow) death loop of hemeraging active users.

This obviously has no effect on businesses who sell on ebay (well not in the short or medium term at least) which is where ebay no doubt makes the majority of its money. But buyers who are minded to haggle over a £1 difference on a £3 item will not want to be paying 75p + 4% on top of second hand goods.

With platforms like Amazon offering a more streamlined shopping experience for buyers of new goods, and Facebook and others offering essentially a free shopping platform for used goods, ebay seems to be working its way into an uncomfortable middle ground being the jack of all trades and master of none.

If you got this far, thanks for your time. This is not a rant or a leaving announcment, just my observations.

[darktints]

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@lucy_farmer wrote:

2500 listings? per month??

  I think that's pushing the boundaries of being a 'private seller'. I know some people have enormous collections of coins/stamps /records etc but good collectable things are usually worth more than 99p. (auctions really don't tend to go above the starting price these days).

If you've got 2500 things that you're happy to put the effort into selling at 99p a go, in one month, you'd need to put in 'business-level 'of work time to get it done...

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Having been previously a busisness seller and now a private seller, 2500 listings is way too much in my opinion. If you are moving that much product, its clearly work and not clearing out junk. Personally I think they should have just limited private sellers to 100 listings per month. Anything more and you should register as a buisiness seller, that way ebay doesn't have to monitor accounts so much (and take flak for when the frequently miss people flouting the rules) and real private sellers get access to the best possible service.

Win/win I'd say.

[moldosgifts]

Prepare yourself for the attack from collectors with thousand of listings.

Good luck to you

[lucy_farmer]

'If you are moving that much product, its clearly work and not clearing out junk. '

Absolutely.  A 'business-level' of time spent sorting out that lot....

[darktints]

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@moldosgifts wrote:

Prepare yourself for the attack from collectors with thousand of listings.

Good luck to you

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Collectors who claim to have held it for 3 generations and in no way was the boot sale they went to on Sunday relevant to this argument 😅

[papso22]

 I do see how these changes are having a really big impact on genuine collectors who have become used to downsizing their collections on ebay.  Many of these are high volume, low value sellers, which isn't a feasible selling pattern on the 'new ebay' that is coming.

Mind you I am astonished just what some people purport to collect!

Perhaps there needs to be an ebay offshoot for collectors, with a different fee structure, but then ebay would have to have a way of identifying genuine collectors and they can't even weed out genuine private sellers from the fake ones

If it wasn't run by ebay then it might work. 

[magpiecorner1]

Are you a collector?  Collections of 'up to' 2500 items are far from unusual, three of my collections each amount to over that figure. 

I don't think that's the point anyway.

I think the purpose is to entice private sellers to take a gamble and sell the old eBay way, when the majority of items started at 99p auction.

Few businesses could survive, much less thrive, on this model.  They need to recoup buying price, selling costs and overheads, and make a profit on top.  So they need control.  99p auctions are uncontrollable.

If the private seller was concerned that he had exceeded the new HMRC 30 items and £1700 rule - or whatever the figures are - or that he should be registered, what's to stop him registering for self assessment within 5 months of the end of the financial year, putting all those sold items on the books at the selling price (which is the market price), claiming for all the expenses he has incurred anyway, this making a business loss, then claiming a tax refund via sideways loss relief.  Ref HMRC BIM 33630.

Of course, HMRC is likely to chuck out the claim as one of the badges of trade is to make a profit, though he could get away with it for a few years, because HMRC and whoever came up with those selling figures has created this mare's nest.

[papso22]

HMRC could do more than just chuck out such a tax claim made by a genuine private seller, they could hit the seller with penalties for false or inaccurate documents (tax returns).

[magpiecorner1]

I buy thousands of items at auction.  Auctions are dying because nearly everyone, and particularly private sellers, start their auction at high - buy it now - prices.

I buy from a number of business sellers who do well starting at 99p, but they are always gambling, I get a fair amount of stuff from a major business seller on 99p start auctions at around or below silver scrap price, though I'm not looking for scrap.  I do know he is buying way below scrap and more than half of his items have no residual value, so overall a cracking business model.   

99p auctions would sell well, and bring new buyers to the site, imho.  EBay will have the figures from the German site to support or contradict this opinion.

[wysiwyg_steve]

I read several posts by a Business Seller on an eBay forum recently who was gleefully proclaiming that Private Sellers finding it more difficult to make a profit with the new policy was a good thing as it 'evened out the playing field'.  I'm reminded of the idiots who, upon seeing other people getting more money for doing the same job, will complain that the other person should get the same pay as themselves rather than making the case for getting themselves more money.

[darktints]

Next time you see these sellers gloating, show them this picture of active users declining on ebay. Losing active users since 2018 despite online retail sales increasing 4 fold in the same time period.

[dch2112011]

Some great points made on why auctions succeed or fail - from a buyers perspective, thanks for the insight.

[vjbuystuff]

I never use auctions to sell items, i know what they're worth, what they cost me, and, how much income tax i need to pay on the profit made.

i do wonder if the highly variable income (and risk ratio) from auctions are part of the problem for eBay in the modern world of online retailing, and, if the buyers protection fee is part of ebays way of mitigating the perceived risk of auction sales for  buyers.

[magpiecorner1]

Where did I say that the accounts would be false.  In my scenario there is no false accounting.  

The time limit for registration for self assessment is October of the 2nd year.

If you put your own goods into your business or company you put them in at market value on the day you place it in the business.

As a business you are entitled to claim all costs of the business.

If you made a loss in a financial year as a sole trader, you can offset that loss via sideways tax relief.

All of the above are rules HMRC have introduced, they can hardly penalise someone for following their rules, surely.   I imagine that they can though suggest it is not a business venture, due to the fact it doesn't meet one if the badges of trade, BIM 20205 / BIM 20210.

[asleepingdragon]

I don't sell any more on eBay but I buy just about everything other than food on here and a lot of craft/toy related things.

For me the postal cost is normally the deal breaker.  Years ago postage costs were vastly different from item to item.  Nowadays everything seems to cost well over £3 to post no matter how small, and yes I know it's postage and packaging and postage prices have gone up.

The "standardised" high postage costs that presumably are going to get even higher with "Simple" are more off-putting to me than a selling fee being shifted from sellers to buyers (because we all know that's what this is)

[asleepingdragon]

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@papso22 wrote:

 I do see how these changes are having a really big impact on genuine collectors who have become used to downsizing their collections on ebay.  Many of these are high volume, low value sellers, which isn't a feasible selling pattern on the 'new ebay' that is coming.

Mind you I am astonished just what some people purport to collect!

Perhaps there needs to be an ebay offshoot for collectors, with a different fee structure, but then ebay would have to have a way of identifying genuine collectors and they can't even weed out genuine private sellers from the fake ones

If it wasn't run by ebay then it might work. 

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I'm a "collector" of various things - why do you assume people "purport" to collect things in this unpleasant tone?

I often see stuff on eBay on a browse and start a new collection on the strength of that, does that make the items that bring me pleasure to have invalid?

What an utterly strange take on people who you don't know.

[asleepingdragon]

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@magpiecorner1 wrote:

Are you a collector?  Collections of 'up to' 2500 items are far from unusual, three of my collections each amount to over that figure. 

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Thanks for this.  I'm amazed people apparently think you can only have one or two of things if you collect.  I was starting to think I had poor impulse control or something. 😀

[papso22]

If someone who is not a trader uses sideways loss relief to claim a tax refund on what are actually private sales, then the tax return would be an incorrect document potentially liable to inaccuracy penalties.

[papso22]

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@asleepingdragon wrote:

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What an utterly strange take on people who you don't know.

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What an utterly strange response to my post!

The reason given by many private accounts for the volume of sales, is that they are selling off a collection.  Yes I have doubts that is what they are doing, and these doubts are impacted by the things being listed and sold as collections.  I am entitled to that opinion. 

[dch2112011]

Collectors fall into a rather muddied area when it comes to HMRC assesment, a collector selling off an entire collection individually or as an entire collection is potentially disposing of personal items and collectively they may be construed as disposing of a single asset when added together.

However  a collector who actively buys and sells eg buys a few items, keeps some and sells some could be construed as trading, also a collector who swops items with another collector is construed as trading.

Another consideration is that if a collector regularly sells items from a collection rather than occasionally simply on the basis that they have a large collection may also be classed as trading as it is a regular income generatimg pursuit . 

If a collector continues to collect and regularly sells from that collection but  also adds to the collection is in essence trading.

Should collectors be worried - time will tell as to whether HMRC have the resources or the will to make inquiries based on the data supplied to them  and whether they interpret the way collectors sell and buy items  as trading - remember money does not necessarily have to change hands to be classed as trading, hence 'payment in kind' be it a free lunch or swopping an item !

[vjbuystuff]

HMRC only care about the numbers, the type of items being sold is largely
irrelevant to them.

if a collector is making profits from sales which combined with another
income, say a pension, and it takes them over their tax free allowance
(£12,150) then income tax is due to be paid, irrespective of whether that
person is a collector or not.