INRs on cheap untracked items is not a problem. With that said, sellers perceive it as a bigger issue than it is. If eBay in conjunction with Canada Post solve that problem with either some form of cheap insurance coverage, or some sort of cheap lettermail type service, there is a lot of money to be made.
If eBay had a service where good standing sellers could pay $1 to be covered for INRs on items below say $30, most sellers would pay that. It would be illogical to pay it, but most sellers still would. People might exploit it and scam eBay, but that already happens with buyer protection. eBay requires man power and loses fees when a buyer makes a false claim, INR or otherwise.
Expedited Lite is a step in the right direction, but it seems to be more for customers than for sellers. eBay seems to be positioning themselves as a safe platform for people to buy collectibles without having to worry about scams or authenticity issues. This seems like the type of thing where a seller can offer it as a tier in addition to lettermail, where buyers who feel unsafe buying things untracked now have a more reasonable option to select than Regular Parcel. Not every buyer understands that they are covered if an untracked item doesn't arrive, so tracking is important to some buyers.
Of course, this is useful for the rare scenario where a seller has an item above their threshold of comfort for an untracked shipment. Or, if the buyer has significant feedback pointing to INR fraud. Like others have pointed out, it's still too expensive to use on every single order.
Maybe there could be a slower and cheaper tracked service where it is direct to post office, or requires the use of a Canada Post Flex address.
eBay could also fold any of these services into their store subscriptions, which if they can find a way to offer additional cheaper tracked services for sellers would encourage sellers to subscribe or upgrade their store account.
Ultimately, as someone who sells a lot of untracked items in the 50 or less dollar range, I don't think lettermail for low cost items is a problem. I think a majority of sellers perceive it to be a problem, and I think tracking is something that can add value for buyers. So while Expedited Lite is a useful tool for a certain tier of items, I could see there being room for eBay to come up with an additional service for cheaper items that aren't worth paying an additional 5-6 dollars to send tracked.
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