eBay Admits to Competing With Sellers

Through the years, eBay has positioned itself as a platform that doesn’t compete with its sellers, setting itself apart from its primary competitor, Amazon.

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Nevertheless, there have been past rumors that eBay provided favorable conditions to prominent brands, and eBay’s Chinese marketplace is really about cross-border ecommerce with tools that help sellers export goods to the United States and other Western countries.

But except for the eBay branded boxes and shipping supplies it offers to sellers, eBay has never been directly involved in selling products to the general public.

And that is why this quote from Chad Stewart, Director, U.S. Exports at eBay, caught my attention discussing the mechanics of the new eBay International Shipping (eIS) program.

“Those [returned] items come back to our hub in Chicago, at which point we are then preparing those items to be sold again on the site. So those items will not be destroyed unless obviously they’re somehow come back to us destroyed. But the vast majority of these items end up just finding another home with a buyer within the United States as we try to list those items on the site as well.”

To my knowledge, this is the first time an executive at eBay has admitted to a plan that had the marketplace selling items on the platform, competing with sellers.

Stewart did not elaborate on the specifics of how this process will work, but it’s probable that eBay will engage a liquidator to handle the sale of these items on their behalf on the platform.

The objective of this approach is to recover as much of the program’s ‘no return hassles feature’ expense as possible, given that the company is essentially providing eIS at no charge to U.S.-based sellers.

Stephen Priest, CFO at eBay confirmed in the company’s last earnings call, eIS “also gives us the ability to dial up our charges depending on what the costs we incur for the International Shipping.” And he further explained that the company expected eIS to become a profit center by the end of the year.

It’s evident that eBay is aiming to generate positive revenue through this program, and the sale of returned items will likely be a critical component of the overall process.

And with this program just starting out in the U.S., other large marketplaces such as the UK, Australia, and Germany may not be far behind. This could add more returned inventory on the platform through eIS.

eBay – Slippery Slope

This is a bit of a slippery slope. eBay sees international shipping as a means to generate more GMV, especially from sellers less accustomed to sending items overseas.

Stewart also raised the possibility of enabling sellers to request the item to be returned for a fee sometime in the future. However, this is still being evaluated, as the shipping fee and product value fee would both need to be considered.

Remember, with eIS, sellers keep the sale once the shipment arrives safely at the U.S. distribution center. eBay takes the risk of the sale thereafter, including managing returns. If there are too many returns, the program would be bust, and that is not in anyone’s interest.

But I am still slightly concerned about eBay getting into the “selling business.” It could open the door to trying a similar strategy with other programs. And for the first time, they are openly admitting to such a strategy to offset costs, even if they are using a liquidator.

Jamie Iannone and Co. may have to dial down the motto of eBay not competing with their buyers, as that is by their own admittance no longer the case.