FVF on S&H Charges

[hockey_card_corner]

Just got off the phone with an ebay cs rep & was told they no longer change FVF's on S&H . Checked my latest invoice & FVF's for S&H we're still being charged, called back & spoke with another rep & he said it's something they're talking about, but nothing has been implemented yet! OK

We all know why ebay charges the FVF on S&H was due to the amount of sellers selling $100 items for 99 cents and charging $99 for S&H which was perfect for the seller because they could circumvent eBay fees and make larger profits for themselves.. What does eBay do to counter this activity? At first they allowed ebay users the option to report sellers with excessive S&H & circumvention of eBay fees, I guess they got so many reports it was cheaper to say we can't investigate all these reports, so to curtail the circumvention we'll just charge a FVF on S&H  & the sold item.. Sure we'll hurt the honest seller, but we'll get our money from the circumventing sellers & a little extra to boot! Shareholders must be loving it...

So if they're truly considering dropping the FVF on S&H, what is up their sleeve to recoup the lost revenue? Maybe increase FVF's on sold items, but offer lower FVF's if you opt to buy into the ebay Store option??

Regardless of what they choose, charging a FVF on S&H is like the Gov charging taxes on taxes, down right dirty!! 

What are your thoughts??

[pierrelebel]

"eBay will never drop the fvf fee on shipping."

Correct.

Over two years ago when eBay announced they would charge FVF on the value of the transaction, the move was made primarily to match its largest competitor, Amazon, who has been charging fees on the value of the transaction (including shipping) for years.

And yes, most sellers do get a small break in fees when selling on a "free shipping" (shipping included in the price) basis.

Let's take the example of a $50 item sold with $10 shipping charge.

A TRS would pay FVF (for example)

9% x $50 less 20% rebate ($3.60) + 9% x $10 ($0.90) for a total of $4.50 (7.5%)

If the same seller sells the item for $60 with "free shipping" (shipping included in the price)

9% x $60 less 20% rebate for total FVF of $4.32 (7.20%)

It may not seem like much on one transaction but on sales of $100,000 a year, a TRS would save $300 in fees.

In addition, the seller would automatically receive DSR of 5 for "shipping charge" while the seller  charging $10 for shipping is subject to a few unhappy buyers who may feel $10 does not deserve a "5".

[inuk_the_polar_bear]

All exactly my thoughts. The one thing I would slightly disagree with is the timing of free shipping coming in. While it was officially announced, two years ago, I knew about it at least two years before that. Anyone who did not know was refusing to listen.

So, the free shipping saga is 4-5 years old.

I think the reasoning that there were fee avoiders is a red herring. eBay and Paypal were processing huge amounts of shipping money and wanted a share of it.

[pierrelebel]

"Paypal were processing huge amounts of shipping money and wanted a share of it."

Actually PayPal was already getting it.  PayPal has always charged fees on the total amount of the transaction, including shipping and tax(es), same as all credit card merchant account processors.

[drucecat]

Sooooo - I think hockey_card_corner may have established that the eBay executives may be talking about removing the FVF from S&H.

Given that this would amount to many tens of millions of dollars, maybe hundreds  of millions in revenue to eBay/PayPal, this would indeed be big news at the water cooler, as femmefan suggests. Even preliminary talks about this should have everyone at the office talking about it.

There are two points that are a certainty, if this is true:

Firstly, eBay will have to find this revenue somewhere else. And that is one very scary unknown!

Secondly, I would be absolutely shocked if the executive were not talking about removing the FVF fees from S&H. Given the state of finances of USPS, I think that even a casual observer would assume that some draconian domestic rate increases are surely coming. Couple that with the fact that the eBay community probably represents the largest customer base for USPS, then I think we can assume that eBay has some inside information as to what to expect. For those of you who went to any of the eBay Live conventions, I'm sure you'll remember just how much USPS embraced the membership at their booth. It was a warm and inviting place to be. So, let's just say that eBay probably has some USPS assistants who work  with them well in advance if significant changes are about to come.

So, for the sake of my argument, assume that the rate increases are a definite and they will be substantial. So let's say they are as much as 40% (given the recent USPS international first-class rate increase, I'm being conservative). How could eBay expect their membership to react to giving them a 40% increase in FVF on S&H revenue? Outrage - absolutely! The membership will be outraged enough at the rate increases. Many sellers will close down and many new products will not be competitive with the brick and motor stores.

So, have pause to think about what a substantial USPS domestic rate increase might mean for eBay.  I think that you can see that everything, even FVF on S&H,  could be subject to scrutiny.  

For eBay, removing the FVF on S&H prior to or simultaneously with the USPS rate increases, is a brilliant strategy, as it mitigates their culpability.

[inuk_the_polar_bear]

Two things.

Pierre,and I knew you would do that, I said eBay and Paypal.

the eBay community probably represents the largest customer base for USPS

I doubt that very much. Even if it was, it is not a cohesive group. It is millions of individuals doing  millions of individual things. Too much diversity to establish common policies. You are also assuming eBay and USPS complicity. Not a good plan.

You are assuming the various Post Offices have no forward plans. I doubt that. They have been watching mail volumes decline for the last six years. Letters are done. That leaves parcels. That is an entirely different manner of processing and distribution.

Couriers can't and won't do it. Smaller communities they hand off to the postal services.

The FVF on S&H will never go away. It should have always been there.

[pierrelebel]

"I think hockey_card_corner may have established that the eBay executives may be talking about removing the FVF from S&H."

No such thing. Period.

[drucecat]

"I think hockey_card_corner may have established that the eBay executives may be talking about removing the FVF from S&H."

No such thing. Period.

I chose my words very carefully;

    .... may have established that the eBay executives may be talking ...

The point is, I'm not privy to what the eBay executive is talking about. So, I find it impossible to deal in certainties.

For the reasons that I have outlined, I sincerely hope that they are talking about removing the FVF from S&H.

I'll try to twist this just a little differently.

I find it distasteful for a company (eBay) to receive an increase in income based solely upon the actions of another company (USPS or CPC). By this I mean that for every rate increase made by USPS or CPC, eBay receives extra compensation equaling the percentage of the increase.

An example:

If postage increases 20%, then eBay's/PayPal's FVF on S&H also increase 20%. They have done nothing to warrant the increase in revenue. They receive it only because they have associated a fee, based upon the value of another companies service. 

[brandeentertainment]

Shipping is the sellers concern, not the buyers.

I find this statement to be completely wrong ,... Sure i have to find away to make profits well charging crazy shipping rates but if the above statement was actually true you would not see 1000's of buyers and sellers complaining about it ..

I think Shipping is both a Sellers and buyers problem just in different ways..