If you read the press releases from eBay, you would be right to think that they’re extolling the virtues of eBay Managed Payments and selling the story of how great they are.
The virtues of eBay Managed Payments
A positive spin from eBay is as you’d expect, so there are case studies of happy sellers saving money on fees, reports of $20 million being processed through eBay managed payments and that 1 in 10 transactions on Apple devices being settled with eBay Managed Payments first integration with Apple Pay.
What is worth remembering is that $20 million (or an annualised run rate of half a billion dollars) is insignificant in comparison with eBay’s overall revenues on the marketplace and PayPal don’t even see it as a rounding error on their balance sheet. eBay Managed Payments is still tiny and in effect little more than a small scale test.
The downsides of eBay Managed Payments
PayPal had plenty to say about eBay Managed Payments in their last earnings call and, apart from the ‘softness’ and low growth of the eBay business and reaffirming how closely eBay and PayPal intend to work in a world where the entire eBay marketplace migrates to eBay Managed Payments, they also say that not all sellers who were early adopters are happy:
“If you look at the seller feedback on the eBay seller forum and look at what those sellers are saying, those that have moved over to intermediated payments; you’ll see comments from them that their sales have dropped 40% to 60% and they’re clamouring to come back to PayPal. So both eBay and PayPal want to serve our mutual customers extremely well, it’s a major integration for eBay to put PayPal on, we’re committed to both of us to having PayPal on intermediated payments beginning next year but we feel really great about the growing value proposition that we have, and we feel great about the partnership that we’ll have with eBay going forward as well”.
– Dan Schulman, President and CEO, PayPal
“I would just add to that that eBay has responded to those comments saying that sellers have issues with the drop in sale, they can revert back to PayPal in the near-term and in the long-term they are working hard to make PayPal available as a payment option, and we’re working hand-in-hand with eBay to try and make sure that’s available to those customers given the strong demand from customers”
– Bill Ready, EVP & Chief Operating Officer, PayPal
There are other downsides which may outweigh the virtues of eBay Managed Payments – the lack of integration with software accounting and multichannel managements solutions and the inability to use eBay Global Shipping program are top of the list for many sellers. Not having immediate access to funds is also a problem and this is especially so for those who find themselves without funds in their PayPal account and discover that they can’t purchase eBay Postage with their eBay Managed Payments balance.
The reality of being an early eBay Managed Payments adopter
Amongst all the noise it’s hard to assess the drop out rate of buyers who, faced with having to enter their credit or debit card details rather than pay with PayPal, don’t continue to complete a transaction. We all know that sales on eBay, and indeed on any marketplace, can fluctuate enormously and realistically a three week period is not long enough to assess if sales are up or down. It would require comparisons with last month, last year and taking into account any changes that have happened to Best Match, listing quality, number of new listings launched, usage for listing enhancements, eBay sales events and eBay Promoted Listings, and even whether it’s raining or sunny.
Three weeks is way to short a time period to know if eBay are right and sellers enrolled in eBay Managed Promotions are doing fantastic or if PayPal is right and drops in sales of 40% to 60% are what’s happening. Personally, I’d guess at somewhere between the two view points but for serious business sellers, if you’re offered the opportunity to take part in early marketplace tests consider carefully before committing how it might impact your business either positively or negatively if you are reliant on your revenues.