eBay Transaction Losses Up 19% In Q3, Mostly Due To Simple Delivery Claims

[valueaddedresource]

Interesting stat from the Q3 earnings call for those who missed it - Transaction Losses spiked a significant 19% year over year with CFO Peggy Alford telling investors it was mostly due to increased consumer protection costs of Simple Delivery, ie. paying out loss and damage claims, as well as some non-specific increase in general buyer and seller fraud.

Alford said on the call: "...and then lastly Transaction Losses were up 19%. A lot of it had to do with our higher consumer protection losses that were due to the ramp of the UK managed shipping program as well as some unfavorable fluxuations in buyer and seller fraud. This is an area that fluctuates quarter by quarter but nothing really concerning in the trends."

So I suppose that answers the question of whether the carriers or eBay are taking on the cost of paying out claims (clearly eBay is at least paying some of it from their pocket) and it also might shed some interesting light on recent reports around here that some buyers are only getting partial refunds on SD damage claims. 

[custom-giftsuk]

How did you go about making the website?

[custom-giftsuk]

Simple Delivery is guaranteed to make money for ebay. There is no way it cannot unless the refunds for SD missing are so great that it outweighs the money it makes from evri, to which if evri isnt paying ebay back for losses thats a wierd contract for ebay to enter into.

Also my guess is that it's a vast amount of buyer fraud. The number of INR cases we get where buyers claim they didnt get their items is silly, even with tracking and pictures showing such. ebay CS often just give up for buyers and give them a refund irrespective without any defect or charge to ourselves so the money comes out of ebay's funds.  Buyers even admit to getting their items in INR cases or through messages but they "deserve" a refund and to keep their item - which is the current favourite response from "buyers"

[1956glyn]

In relation to your first paragraph.   A friend of mine owns a very large company and a while back struck a deal with Evri.    Very very cheap rates BUT that included a no compensation clause so yes that may be the deal they have struck.   It was a set rate per item no matter how big or small the parcel.

They ended up losing so many items that contract was not renewed.

[4_bathrooms]

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@1956glyn wrote:

In relation to your first paragraph.   A friend of mine owns a very large company and a while back struck a deal with Evri.    Very very cheap rates BUT that included a no compensation clause so yes that may be the deal they have struck.   It was a set rate per item no matter how big or small the parcel.

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I'm fairly certain eBay cannot claim any compensation from Evri nor Royal Mail other than the cost of the label should the item not be delivered. You're absolutely correct, that's how these bulk shipping contracts work - a discounted average weight rate is charged for all items based on the volume of items sent. eBay would have calculated how much money they would make from selling the labels to private sellers with a loss rate factored in for INR/arrived damaged claims; the chances are eBay are still quids in even if the loss rate is slightly higher than they predicted.

[custom-giftsuk]

Dear god... what kind of eejit would enter into any contract with evri or RM with zero compensation, knowing full well what the reps of both companies for losses are? 

That... well... might very well be on point for ebay but surely someone did a profit/loss examination based on random samples of orders - basic due diligence.

[pegr-834437]

Issue with this is you wont be able to really know the cost of benefit of it till at least a year or 2 down the line when they have moved the goalposts a few times, increased the prices more than the standard royal mail/Evri increase and stopped giving out refunds to every account without them needing to send back the broken item.

eBay have all the figures for inr or arrived damaged from their own system and I'll give them some credit that they would have known it'll increase with the new system being so open to abuse, I bet the price they pay is incredibly low so whilst it may look bad now it'll probably work out ok for them.

[1956glyn]

Well when the set rate is as low as £1 per item.....i guess a lot of companys can and do take the risk.

[4_bathrooms]

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@custom-giftsuk wrote:

That... well... might very well be on point for ebay but surely someone did a profit/loss examination based on random samples of orders - basic due diligence.

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eBay wouldn't have needed to do an examination of a random sample of orders; they already had all the data they needed.

When it comes to Simple Delivery I actually believe buyers are less likely to falsely claim INR or to falsely claim that an item arrived damaged as a buyer making such a fraudulent claim is now making it against eBay rather than the seller. Being blocked by a single seller in the process of obtaining a freebee is one thing but permanently losing your ability to use the MBG in the first place and/or being NARUd is another. 

[4_bathrooms]

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@1956glyn wrote:

Well when the set rate is as low as £1 per item.....i guess a lot of companys can and do take the risk.

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It certainly seems to work for eBay UK's largest seller.

[bravergrace]

"No compensation" clauses have one big unknown - when there is a system error affecting tens of thousands of parcels.  This happened on October 19th with Evri - a large batch of Simple Delivery labels had a fault which misrouted the parcels back to the seller.  The sellers were instructed to either send out a replacement item immediately, or else wait till the item was returned, get a new label and send it again.  

I chose to "send it again".  eBay hadn't bothered to tell my buyer about the problem, leaving me to explain why the tracking showed "seller has cancelled this delivery" and "item was delivered" - followed by a new label with tracking that didn't work at all, and a twice-sent item that still hasn't been delivered.  Buyer opened a case, eBay refunded them.

This was a trivial bill for my item - but it must have cost eBay a pretty penny in total.  

As for eBay banning buyers who make too many INR claims, yes, they may do this.  Or they just charge them double for "buyer protection" - or introduce a "no claims discount" for buyers who don't make claims.  There's more than one way to kill a cat.

But eBay underwriting INR cases will concentrate their minds.  I've noticed that the few items I've sent by Simple Delivery have a high INR rate, exclusively with EVRI.  Perhaps buyers are more willing to claim (falsely or truthfully) against eBay than against sellers.  Perhaps it's because (on my business account) I only use Royal Mail, and  they rarely lose stuff completely.  

[gjalp]

My FIL died and my husband was made redundant more or less at the same time and he needed to keep his mind busy so he taught himself coding and did the entire website from scratch. He then sorted out hosting and a payment system along with all the legal requirements. It was a love/hate relationship for quite a while 🙂 it was quite a long project

[santlache_sales]

This is hilarious and have they only just worked this out ?

ebay's Flagship Policy, "Your item or your money back guarantee" is so open to abuse and fraud that people here have been saying this ever since they introduced it....

Yet ebay have just woken up to it, and because of this they are now punishing good exemplary sellers by holding your money for 31 days before releasing it.

Time to ditch this platform as a business