eBay Tackles $468M Unpaid Item Problem

Changes coming to U.S. site regarding Buy It Now, Best Offer.

by Auctiva.com staff writer
- Mar 19, 2013

Have you ever sold an item on eBay, but the buyer never paid? Or accepted a "best offer" only to have the person who made the offer never return to finish the transaction? You'd be far from alone. On eBay's U.S. site, unpaid items are a $468 million-a-year problem.

But good news is coming, sellers. eBay is about to make key changes in the way it handles Buy It Now and Best Offer transactions in order to reduce unpaid item claims on the marketplace. Starting in May, it will not consider items "sold" until the buyer actually pays.

This change will apply to fixed-price and Buy It Now auction transactions below $1,000 that are paid with PayPal or a merchant credit card, and where shipping cost is specified in the listing. All other transactions will continue to be processed the way they currently are.

eBay announced these changes as part of its wide-ranging 2013 Spring Seller Release, which also included changes to the fee structure. Rollout of the Buy It Now changes is expected to begin in May.

'Pay now' an industry standard

eBay is the only online marketplace where users can buy a fixed-price item without paying for it on the spot

eBay is the only online marketplace where users can buy a fixed-price item without paying for it on the spot. Sellers often wait days to receive payment for items, even though a buyer has clicked a button that says "buy it now." In fact, eBay currently advises sellers to wait four days before reporting a buyer as non-paying. (Starting in April, though, you'll be able to open an unpaid item case after two days, eBay also announced.)

In a small percentage of fixed-price listings, payment is never received. Yet, that small percentage of listings—2.6 percent, according to eBay—represented nearly a half-billion dollars worth of merchandise in 2012.

Today, eBay sellers can opt to require immediate payment on fixed-price listings and auctions with Buy It Now, but only if PayPal is the sole payment method offered. This option will remain available.

However, starting in May, eBay plans to make Buy It Now mean what it says: When buyers click the Commit to Buy button on a Buy It Now listing, the item will remain available for purchase until the buyer actually pays.

If you offer combined shipping discounts, eBay recommends updating your listings to instruct buyers to add all items they want to purchase from you to their eBay shopping cart. Otherwise, they will have to request a new invoice that reflects the shipping discount.

The change does not impact standard auction listings.

Offer not a commitment

If a seller accepts your offer, you're required to complete the transaction. Yet many buyers don't realize an offer, like a bid, is binding

Unpaid items are even more prevalent with fixed-price listings that include a Best Offer option, eBay says. Best Offer represents 8 percent of business on eBay's U.S. site, and unpaid item claims for these listings are double the site average, according to company officials.

eBay's Best Offer policy currently states that if a seller accepts your offer, you're required to complete the transaction—indeed, when a seller accepts an offer, eBay ends the listing. Yet many buyers apparently don't realize an offer, like a bid, is binding. Rather, buyers seem to approach the Best Offer option as an opportunity to haggle with no obligation to purchase the item. In the end, sellers are often left hanging.

eBay is addressing this problem by changing the way it recognizes Best Offer transactions. Starting with three categories in May, when a seller accepts an offer, the item won't be considered sold until the buyer "commits" to the transaction and pays for the item.

Sellers will be able to continue accepting offers on the same item until someone follows through and buys it.

"Now, the onus will be on the buyer to be aware that the seller has accepted their offer, and to take action," says Rebecca Miller, Auctiva.com product manager and a longtime eBay seller. "That is going to be a welcome change for sellers."

eBay says it will test the Best Offer changes in Jewelry & Watches, Computers & Tablets, and Art categories before rolling them out site wide.

Read more about eBay's plan to reduce unpaid items.

Learn how eBay's announced changes will impact Auctiva sellers on the Auctiva Blog.

Last May, eBay surveyed users about immediate payment. Scenarios presented in the survey included requiring immediate payment on fixed-price listings that state shipping costs upfront and offer an instant payment method like PayPal, and on auctions when the winning bidder has signed a one-time billing agreement to let eBay automatically collect payment.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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