Why Delay? Immediate Payment Works

Here's a look at the benefits of requiring buyers to pay on the spot.

by Dennis L. Prince
- Feb 03, 2014

Let's face it—we live in an instant-gratification world. Want to watch something? Stream it now. Want to learn something? Search for it and enrich yourself right away. And when you want to buy something, well, you can shop for almost anything from wherever you might be at this very moment.

With so much immediacy in getting what we want, why wouldn't a seller want immediate payment for their eBay listings? They would—and should—get that iron-clad commitment from buyers in any other retail setting, online or off. Yet, on eBay, Immediate Payment Required (IPR) policy modifications have the selling community divided.

Here's a look at the pros and cons of the policy but, more important, the benefits of stipulating immediate payment.

The argument against immediate payment

As much as it makes sense that you be paid at the time a buyer decides to purchase your item, many sellers are up in arms over eBay's design of the IPR feature. The argument: Buyers of multiple items expect combined packing to save on shipping costs (rather than paying individual shipping fees for each item from a seller).

It's possible an item could be purchased out from under a buyer, as if snatched out of their cart by a fast-handed shopper

With IPR, an item remains available for others to purchase until the first buyer to select it actually completes a PayPal payment. If the first buyer lags in making the payment (maybe putting several items into their shopping cart before they complete their purchase), it's possible an item could be purchased out from under them, as if snatched out of their cart by a fast-handed shopper.

Some sellers lament that this results in an unreliable and dissatisfying customer experience, a matter that the sellers themselves need to address, as eBay won't. And, although sellers can work with buyers of multiple items to re-invoice to charge a proper combined shipping cost, this simply adds to the workload and customer management effort. Good for sellers who air this lamentation; they're working to put the customer first.

The argument for immediate payment

There's an equally strong counter-argument that favors use of IPR: fending off of non-paying bidders and buyers. Sellers are at the mercy of any buyer that makes selections (Buy It Now or auction-style winnings) yet doesn't complete the transaction in a timely manner. Some wait around to pay at a time that's convenient to them, while others don't pay at all.

In the interim, a seller's goods are tied up awaiting the slow or never-to-arrive payment. This adds to the buyer management workload of the seller, and often costs them any sale at all if the item, when re-listed, fails to perform as well a second time around. In these cases, it makes sense that a buyer or winning bidder is compelled to make the immediate purchase else lose their claim to the item.

If we disagree, are there benefits for any?

Sellers are at the mercy of any buyer that makes selections (Buy It Now or auction-style winnings) yet doesn't complete the transaction in a timely manner

There's disagreement among sellers—those who claim IPR is too heavy-handed and not adaptable to the multiple-purchase shopper, and those who say it's just what was needed to weed out the riff-raff. Whatever your stance, the inescapable truth is that eBay holds the upper hand in the policy-making decisions (it's eBay's site, after all).

But this needn't be a matter that divides sellers, one camp against the other or both teamed up against eBay. The fact is that IPR can provide benefits to sellers upon the very first use. Here are the key facets of your business where you stand to gain from IPR:

  • Revenue collection: When you require immediate payment you get paid immediately. That's about as simple as it gets, and it gets your transactions done and paid for with little fuss. This serves to reduce your overhead by eliminating the need for managing "in process" sales over a period of time (even if it's only days).

  • Order fulfillment: With the revenue received, you can take immediate steps to pack and ship your buyers' purchases. Yes, you can provide combined shipping benefits to your multi-item buyers but you'll need to manage that overhead. But when sales are for single items, you can get those on their way, right away.

  • Issue resolution: With fast payment followed by quick package processing, you can manage any troubles just as quickly. Often, when buyers pay immediately, they're attentive to completing the transaction. From the moment you invoice to the point that the buyer receives notification of shipment, the two of you are attentive to the transaction at hand. If there are any concerns or questions, your shared attention over the sale will help the communication flow quickly and efficiently.

  • Even though you'll need to adapt to the policies set forth by eBay, you can still work those policies to your best benefit

  • Customer satisfaction: The goal in all sales transactions, besides revenue collection, is customer satisfaction. Be it a spontaneous purchase or a well-researched buy, once your shoppers have decided on your item, they'd like to receive it quickly. Immediate payment speeds the process, and can work to keep your customers interested in purchasing and receiving yet another item from you (and another, and another).

Declaring how you'll do business

It's true that IPR works best in an item-by-item shopping situation. Even so, when your shoppers wish to purchase multiple items and hope to save on shipping costs, you can explain that method within the body of your listings (usually involving immediate payment with a refund of shipping cost overages).

It's not a mindless process to manage the multiple purchases but it shouldn't deter you from stipulating your preference to receive immediate payment. It's your business and you should run it how you feel is best. Even though you'll need to adapt to the policies set forth by eBay, you can still work those policies to your best benefit.

If you're still not convinced, experiment with using IPR and compare the results to your non-IPR offerings. Let the outcome guide you in how you'll best serve your business and your customers' needs.

About the Author

Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay…and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

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