eBay Defaults Calculated Shipping To Pass Shipping Discounts To Buyers
eBay is moving forward with plans to force discounted calculated shipping rates to be passed on to buyers as sellers continue to pushback on fees being charged on shipping costs.
Sellers were notified via email today that as of May 15, listings with calculated shipping will be changed to reflect eBay's discounted shipping rates rather than retail retails to provide savings for buyers.
The email says:
"We're reaching out to let you know that, starting May 15, your listings that display calculated shipping will default to showing eBay Labels discounted shipping rates. The new default rates will apply to all of your active and future listings that offer calculated shipping; listings with free or flat rate shipping won't be affected.
We’re making this change to help your listings attract more buyers by offering a lower shipping cost. To get the discounted rate that will be displayed on your listings, make sure to purchase your shipping labels through eBay Labels.
If you want to opt out of this change, just let us know here by May 13 and we won't make any changes to your current shipping rates. You can also switch back to showing standard rates at any time after May 15 through your shipping discount settings."
While sellers can still opt out of this change for now, it remains to be seen how long that opt out will work, as it's not uncommon for eBay to initially make a transition like this optional only to make it mandatory at some later date.
For those who are unfamiliar, eBay has negotiated discounted rates with the carriers for shipping labels sellers purchase through the platform. Sellers have the option to use those discounted rates for shipping charged to the buyer or to have the shipping on the listing displayed at regular rates without the discount.
Unsurprisingly, many sellers opt not to pass the discount along to buyers, as the difference between the regular rate the buyer pays and the discounted rate the seller pays when purchasing the label can help make up for the fact that eBay takes their Final Value Fee percentage out of the full purchase price, including shipping and tax.
If sellers do pass the discounted shipping rate along, they are likely adding to the item price to make up the difference, just like sellers who offer free or flat rate shipping, or else they risk the fees on shipping eating into their profit margin.
eBay has been pushing sellers to pass on discounted shipping rates to buyers since late last year, cold calling sellers with high pressure sales tactics and social media campaigns - and sellers have continued to push back, telling eBay they'll pass on discounts when eBay stops charging their fees on shipping amounts.
Liz Morton
All of this comes at a time when eBay is under pressure from Wall Street to return to GMV growth by Q3 or Q4 of this year and reverse a 7 quarter long streak of having less active buyers than in 2018.
It would appear eBay believes that forcing discounted shipping rates will help drive more sales on the platform, but if that's their hope, they're likely to be very disappointed as sellers will simply have to bake those fee costs into the item price instead and the overall prices on the platform will likely not drop significantly.
This is especially true as USPS gears up for another price increase in July and other carriers are likely to make their own rate adjustments too, resulting in a defacto fee increase for eBay since fees are charged on the shipping amount.
If eBay is actually concerned about whether or not items on the site are price competitive across the larger ecommerce market, targeting shipping costs ignores the much larger Promoted Listings elephant in the room.
First party Promoted Listings ads continue to be a major source of revenue growth for eBay, responsible for $368 million of revenue in the fourth quarter and over $1.4 Billing in revenue for 2023.
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, sellers must bake that cost in somewhere, with consumers paying the price.
Liz Morton
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 while pressuring them to provide more discounts at every turn.
What do you think of eBay forcing discounted shipping rates by default for those who use calculated shipping? Let us know in the comments below!
