eBay Summer Sale Offer Leaves Sellers Scratching Their Heads About Fees & Discounts
UPDATE 7-24-24
Sellers are now starting to be invoiced for the SPLASH15 Summer Sale promotion and predictably, there is no way to track which orders came from the coupon or audit the charges in any way - it is simply a lump sum invoiced to the seller.
Zero detailed invoice on the charges I just woke up to a $1200 plus charge for hoing this sale
There was a charge on my payments page this morning with the header "Debit for SPLASH15 Seller Funded Coupon". Not recognizing what it was about, I contacted eBay customer help to inquire and found out it was for a coupon promotion I may have joined by accident and for which I could find no record in my account, nor if any sales resulted from it. I find eBay campaigns difficult to understand and not clear about what the costs to the sellers may be.
Other sellers report being invited to a similar coupon event for August and just like the previous event, sellers will be paying fees on the full amount of the sale and will be invoiced for the discounts after the fact.
This part is confusing. The buyer isn't paying full price but I get full price then have to pay eBay back? Seems like they are trying to bilk us for more fees while we make less money. pic.twitter.com/ACYC09KuVv
— 🐮🐮🐮HappyCow Computing🐮🐮🐮 (@gwzcomps) July 24, 2024
UPDATE 5-29-24
Some sellers have finally gotten through to eBay support to get their questions answered about how this Summer Sale deal will work with offers and how to track which orders had the coupon applied (spoiler alert: they can't).
You know it's bad when you have sellers putting their stores on Time Away or asking to be removed from the sale after launch - yikes!
UPDATE 5-28-24
The sale event is live using code SPLASH15 with over 600 sellers participating, but several shared concerns that sales they've made so far today don't designate whether or not the coupon code was applied, so they have no way to track and prepare for how much eBay may invoice them for after the promotion has ended.
I signed up for this. It starts today and I have had five sales so far. As per promotion I am paid in full and any discounts billed later.
HOWEVER, I do not have any indication any buyer thus far has used the promotion. I would think if they did I would be informed so as to prepare for the later charges to my account.
Maybe no one has used the promotion yet and that is why I do not see anything but how will I know which sales will charge me the 15% at a later date. Thanks to who can answer.
Another seller expressed concern that buyers may be able to stack the discount on top of offers, resulting in lost profit margin.
Yes, this is a concern. The promotion does not show up as a coupon code on my promotions page. Nowhere does it say sold with coupon code SPLASH15. This makes me think eBay intends to take 15% off every sale.
I have stopped sending offers just incase eBay wants to take an additional 15% off them which would cause me to lose money on the sale. If my sales increase exponentially, I will be thrilled to give eBay 15%. So far, they have not. I will update later...
eBay has invited select sellers to participate in a seller-funded discount promotion for a Summer sale, but the terms of the offer raise questions about how fees are calculated and whether the deal is really worth taking.
A seller posted a screenshot of the contract they would have to sign to participate in the coupon event in the eBay community with their concerns that the terms appear to say they will be paying full Final Value Fees on the non-discounted total for orders received using the coupon.
eBay is asking sellers to do Memorial Day coupon sale May 28 through June 2nd. It looks like eBay is charging all of their fees on the non-discounted amount!!
Is this correct? That would be crappy.
After reading the terms of the "Ebay May Sale Coupon Promotion", it reads as if eBay will charge it's seller fees on the full amount of the sale, before the coupon is applied, THEN will charge the seller for the coupon amount at a later date.
Do I have this right?!!!
Seriously?! They want us to discount our items to up sales while eBay is picking our pocket and getting fees for $$$ we're not getting to keep?!!! Somebody needs to put the breaks on this horrible business idea.
How many sellers are agreeing to this Promo without even knowing this? This is shameful.
According to the screenshot this seller provided, eBay will be in charge of creating and distributing the coupon codes to buyers and may promote eligible items across the eBay site, in marketing emails, through affiliate links and other placements.
eBay Responsibilities
A. During the Promotion Period, eBay shall directly or indirectly distribute one or more promotional codes (“Coupons”), which shall be redeemable by the qualifying recipient for the discount specified in “Discount” from the purchase price of certain items as specified in “Eligible Items” purchased by the qualifying recipient from Seller.
Seller agrees to reimburse eBay as described in this Agreement for all or a portion of the Discount as described in “Seller Funded Amount”.
B. The Coupons shall be subject to eBay’s Coupon Terms and Conditions (a sample of which is contained in Attachment 1), which eBay may revise from time to time. The Coupons may be used by qualifying recipients during the Promotion Period and shall expire on the last day of the Promotion Period.
C. During the Promotion Period, eBay may, in its sole discretion, promote Seller's listings of Eligible Items, which may include promotion on the eBay Site, appropriate category pages on the eBay Site, through eBay's affiliate’s websites if applicable, and in emails to eBay users.
If the buyer uses the coupon code provided by eBay, the seller will initially receive the full regular amount of the order when the payment is processed and will be invoiced by eBay for their portion of the discount at a later date - however, as the seller above pointed out, the terms appear to state that Final Value Fees will be calculated and paid on that initial full amount, not including the discount provided (emphasis mine).
Payment
A. When a qualifying Coupon recipient redeems a Coupon for the purchase of an Eligible Item, the Seller will receive payment for the Eligible Item equal to the non-discounted price and final value of Eligible Items, even if a Coupon was redeemed.
B. At the end of the Promotion Period, eBay will then invoice Seller for the total Seller Funded Amount for all the Coupons that were redeemed. Seller will be invoiced for the total Seller Funded Amount for their portion of coupon funding of all eligible sales from forty-five (45) to sixty (60) days after the end of the Promotion Period.
C. For clarification, this Agreement does not change any fees due from Seller to eBay. Seller shall also pay eBay’s fees as set forth in the eBay Policies and any other agreement between Seller and eBay, all of which will be based on the non-discounted price and final value of Eligible Items, even if a Coupon was redeemed.
I've written before about my personal experiences with eBay's Daily Deals program, but it's rare for the public to get a look at what these kinds of special discount deal contracts contain as they typically include explicit language requiring agreeing not to disclose the terms of the deal to third parties.
In fact, the screenshot above shows such language is included in the terms and I won't be surprised if that thread mysteriously disappears from the community as a result.
Unscrupulous sellers who are invited to take part in these types of coupon deals often mark items up ahead of the sale and/or use fake strikethrough pricing to make it appear buyers are receiving discounts when the actual price paid ends up being about the same or in some cases even more than it had previously sold for without a discount code needed.
Liz Morton
eBay is well aware of these shady business tactics employed by big brands like Lenovo, HP and Dyson as well as smaller third party sellers, but they willing turn a blind eye to keep those big brands selling directly on the site and gain a little GMV bump due to the inflated pricing.
Speaking of GMV, the terms in the contract screenshot show that eBay is processing these orders and charging fees at full price to sellers only to be paid back the discounted portion later - which brings up some very interesting questions about how exactly eBay is counting GMV for these orders and where it all washes out in financial reporting.
eBay defines Gross Merchandise Volume (GMV) as "the total value of all paid transactions between users on our platforms during the applicable period inclusive of shipping fees and taxes."
So how does the way discounts and coupons are structured impact the way GMV is counted?
Let's say for example a seller has an item that would normally sell for a total of $100, including shipping and tax.
If that seller simply ran their own individual 20% off coupon using eBay provided markdown tools - the buyer would pay $80, the seller's Final Value Fees would be calculated based on $80 and eBay would count $80 for GMV based on that being the total value of the paid transaction.
It's not entirely clear if it would be counted the same way in a scenario where the seller would be receiving $100, being charged FVF based on $100, and paying eBay back some or all of the 20% discount 45-60 days after the promotion ends - but I suspect it's likely eBay would count that as $100 in GMV if they think they can get away with it.
The timing of this promotional event and payback period is also noteworthy as 45-60 days after June 2nd would push it past the end of Q2, which could be important for quarterly financial reporting purposes.
I've also noted similar GMV shenanigans being played with a recent post-sale offer/price matching feature that eBay appears to be testing - by potentially moving offer acceptance after the point of payment for some transactions, eBay can still count the full amount of the order in GMV even if the seller provides a partial refund to accept a buyer's request to match a theoretically lower price found elsewhere.
Liz Morton
This all comes at a time when eBay has promised Wall Street they will finally be returning to GMV growth by Q3 or Q4 of this year, but CEO Jamie Iannone finds himself in a tough spot as he has also staked his position on abandoning "unhealthy tactics" to buy traffic (and GMV) with frequent eBay funded discounts like his predecessor Devin Wenig used in 2018-2019.
Wenig leaned heavily on sitewide 15-20% "flash sales" off throughout the year, but those promotions proved to be a double edged sword - once buyers get used to receiving discounts, they'll often wait for a sale before making a purchase, creating "one and done" or only occasional buying patterns.
That strategy was considered such a failure that Iannone felt the need to explicitly distance himself from it when speaking to investors in Q2 2021.
We've discontinued legacy tactics that led to low value, infrequent or one and done buyers. Our buyer base is starting to evolve based on this strategy. These high-volume buyers are growing compared to a year-ago and their spend on eBay is growing even faster. This higher-quality mix of buyers increases value for sellers and will lead to improved health of our ecosystem over the long-term...
..This is something that I laid out last July when we talked about the tech-led reimagination as being focused on turning buyers into lifelong enthusiasts on the platform and moving away from the tactics that we had in 2019 what was really just about the number of active buyers even low value buyers or one and done buyers.
However, despite his criticism of those past tactics, Jamie didn't completely abandon them - he's just limited the eBay spend to more targeted categories and pushed more of the costs for other discounts on to sellers directly.
Liz Morton
Regardless of how eBay ultimately counts GMV and accounts for this discount promotion in their financial reporting, it's clearly a winning proposition for them to retain full fee revenue in exchange for floating the discount amount 45-60 days.
But the question remains - is it worth it to sellers to pay final value fees on the full pre-discount amount in exchange for (hopefully) additional visibility and sales volume driven by eBay's marketing efforts?
I don't expect we'll get an answer from participating sellers about how the promotion ends up performing, considering the NDA requirement, but let us know in the comments below if you'd sign up for this kind of deal if it were offered for your business!
