eBay Australia has posted a survey for buyers and sellers about perceptions of free shipping and how postage costs impact purchase decisions and sales performance.
We are conducting a survey to learn about the impact and perceptions of free shipping for both buyers and sellers on eBay. This feedback will help us understand how postage costs affect purchase decisions and sales performance of sellers.
We aim to use this feedback to optimise our free postage options and policies to create a more positive experience for eBay buyers and sellers.
The survey starts by asking if you are primarily a buyer, a seller, or both. Selecting the "both" option reveals some interesting details about how eBay views the subject and changes they may be looking to make in the future.
Buyers are asked questions like:
- As a buyer, how important is the availability of free shipping when making purchases on eBay?
- Have you ever abandoned a purchase on eBay due to high shipping costs?
- As a buyer, how would you compare eBay's shipping costs to our online competitors?
- How likely are you to make larger purchases on eBay if free shipping was offered on orders over a certain amount?
- As a buyer, would you be willing to pay a higher price for a product if it came with free shipping?
- As a buyer, what price point do you believe it is reasonable for a seller to offer free shipping on eBay?
- As a buyer, have you noticed any pricing differences between items that have free shipping and those that are not?
Sellers are asked:
As a seller, do you use eBay's postage promotion tools, such as promotional shipping discounts and coupons?
As a seller, do you use free shipping as a strategy to offset shipping costs, or do you include it in the price of your items?
As a seller, do you see an increase in sales when you offer free shipping on eBay?
What impact has your use of postage promotions had on your eBay business?
- Increased Sales
- Increased customer loyalty
- More items were purchased
- As a seller, what factors influence your decision to offer free shipping on items?
- Item Price
- Competitor Pricing
- Shipping Costs
- Customer Demand
- Seasonal Trends
- Would you recommend using postage promotions, specifically free shipping, to other eBay sellers? Why or why not?
This survey is just one more sign that eBay is becoming increasingly concerned about items on the platform not being price competitive across the broader ecommerce market, and that they may be targeting shipping costs in particular as a point of friction for buyers.
eBay has been on a long downward slide when it comes to buyer retention, with Q3 2023 marking the 6th consecutive quarter that Active Buyers were lower than in Q1 2018, and consumers seeing higher overall prices on eBay versus competing marketplaces could certainly be one factor in that decline.
US sellers recently reported receiving marketing calls from eBay with high pressure tactics "encouraging" them to pass on discounted shipping rates to buyers.
Many sellers rightly pointed out the fact that eBay charges their final value fees on the full amount of the order, including shipping, which means sellers have to bake in extra margin to cover those fees.
Perhaps eBay should consider lowering or removing fees on shipping as a potential solution to their perceived high shipping cost problem before asking sellers to take the financial hit?
If eBay thinks nudging (or outright forcing) sellers to pass discounted shipping rates along to buyers is going to have a significant positive impact on price competitiveness across the platform, they may be in for major disappointment.
First, as these sellers mentioned, the carriers continue to increase their rates multiple times a year (giving eBay a defacto fee increase every time they do) and the costs paid to both the carrier and to eBay have to come from somewhere.
Passing on discounted shipping rates could also prove disastrous to sellers when eBay sneaks in shipping increases with no notice, which can result in situations where the shipping amount charged to the buyer is less than what the seller ends up paying when they go to purchase to label.
If price competitiveness is the real concern here, rather than tinkering around the edges targeting shipping costs, eBay needs to confront the giant Promoted Listings elephant in the room.
First party Promoted Listings ads continue to be a major source of revenue growth for eBay, with over 2.3 million sellers adopting a single ad product in Q3 2023.
Q3 also marked another strong quarter for our advertising business. Total advertising revenue grew 24% to $366 million. First-party ads grew 36% to $345 million or 36 points faster than FX-neutral GMV growth.
Over 2.3 million sellers adopted a single ad product during Q3, and we currently have over 850 million live promoted listings. Promoted Listing Standard, our cost per acquisition ad unit, was once again the largest contributor to growth in Q3, driven by continued optimization of placements, ad rate improvements, and the recurring benefit of the halo attribution change we discussed last quarter.
With more placements for Promoted Advanced Cost Per Click and Promoted Display ads, expanded Offsite Cost Per Click ads for Google placement, and "halo" attribution that allows eBay to charge Promoted Listings Standard ad fees for even more transactions, sellers increasingly face a "pay to play" scenario just to keep their businesses running on the platform.
Promoted Listings Standard ad fees are also charged on the total amount of sale, including tax and shipping, and as ad rates continue to rise at an unsustainable pace, once again sellers must bake that cost in somewhere, with consumers paying the price.
If eBay is serious about wanting to win over buyers with better prices than the competition, they're going to have to reckon with their own role in driving prices up across the platform and come up with real strategies to increase sales rather than simply milking existing sellers for more revenue via ads and other fees.