Has E-Bay really considered the value prop for managed payment requirements?

[wills_thrill]

I don't think any of the brass at E-Bay have really thought this managed payment requirement through.

Let's say you have a seller, selling $40k annually and paying $600 per year in store fees.  Let's also say that is many smaller transactions, so E-Bay makes 10% selling fee on average for the $40k.  Let's say that is 400 $100 transaction.

That is $4600 per year in revenue for E-Bay.

Let's say that customer goes voluntarily into managed payments.  E-Bay gets $.25 per order and 2.75% fee?  That is $1100 in revenue from the 2.75% and $100 from the per order fees.  So $1200, but this isn't all revenue for E-Bay, as they will have to split it in some fashion with the actual payment processor.  So let's just say less than $1200 in additional revenue.

Then they get the additional interest for holding your money for several extra days, but for a $100 transaction, the most they could hope to get from that is about $.01 per day, so say $.05 per order X 400.  This is a $20 in additional annual revenue.

So forcing a seller of this size into managed payments will net E-Bay less than $1200 per year in additional revenue.

However, if that seller decides to leave E-Bay, E-Bay will lose $4600 in revenue.  So E-Bay is essentially betting $4600 to win under $1200 (probably closer to $600 at best).  That is a horrible value proposition, that I don't think any sane person would wager.  And for each one seller of this size that does leave, it wipes out the gains made from 4 other sellers, at least (and probably more like 8 of them).

I guess as long as fewer than 1 in 8 leave, there may be some gain, depending on the makeup of who leaves (I guess larger revenue sellers are less likely to leave, which favors E-Bay).  But is it really worth all this angst.

Wouldn't it have been better for E-Bay, and better for it's customers, if E-Bay just raised store fees to $80 per month in this case, and seller could choose to keep Paypal.  But offer a discount down to $50 per month if also enrolled in managed payments (bundle discount)?

With this strategy, E-Bay sees an increase in revenue for the seller adamant not to go into managed payments, or who want to prolong it to some future date (maybe 2021).  But they can also get the benefit for those who go into managed payments?

Then instead of a win-lose value prop, it is only a win-win value prop for E-Bay.  They retain all sellers and get additional revenue from all sellers.  Maybe they make managed payments the requirement for free selling accounts, which would also be fair.

Who is running E-Bay?

[corvettestainless]

Ebay makes money off buyers. Buyers will find that X thing from anyone, so the sale still occurs and the fee still occurs. 

Ebay and PP are not together anymore, ebay needed to find another processor. I believe ebay was given $70M to allow Ayden to be that player. I'm sure it's a limited contract, so either someone else or Ayden ponies up again. 

Plus, for every 1 seller that leaves. 1.2 replaces them. 

There's only 450000 women's size 7 black shoes listed. If there were only 400000, would it matter? 

[lacemaker3]

eBay will probably not lose any revenue at all as a result of Managed Payments.

If some sellers leave eBay, that probably won't change the value of sales at all. Buyers will still buy the same amount of items, just from other sellers. Some from sellers who adapted to the change, and some from new sellers. eBay doesn't stand to lose anything.

[donsdetour]

Back in the day when open air markets were used, it was simple: only so much money was coming in those gates (Purchasers money). The idea was to get your part.

Ebay is the same way, as long as it is were the purchasers are there will be sellers.

[ky-thrill]

E-Bay doesn't have to find a new payment processor.  They weren't paying Paypal to accept E-Bay business.  It would have cost E-Bay nothing to keep Paypal.

This was strictly a play to boost E-Bay revenue by getting a piece of transaction fees.  E-Bay revenue growth was in negative territory from Q4 2018 till Q1 2020.  COVID saved their bacon in Q2.

They think like cavemen.  Ugh, we force everyone into managed payment, get all Paypal fees.  Hope stop negative growth.

But instead of maximizing the money they could make by coming up with consumer friendly policies, they choose to isolate some.  The only reason most of their schemes are accepted is because sellers are too afraid to stand against E-Bay.  I bet if 25% of E-Bayers stopped selling on E-Bay when forced into managed payments, E-Bay would sing an entirely different tune.  It would probably just take one quarter.

Sellers, out of either greed or necessity, will chew their own arms off and give them to E-Bay, instead of taking a stand against them.

[ky-thrill]

That's silly, of course they will lose revenue.  If they can add 10 people and lose one, they still lost revenue, because they could have had 11.

It's called opportunity cost, and it is a real loss of revenue.

[lacemaker3]

No, because those 11 sellers just divide up the available money from buyers between them. It doesn't make any difference to eBay if it is split between 1 seller, or 10 or 11 sellers.

The money that the buyers spend is still the same, because they don't care how many sellers there are, as long as what they want is offered by at least one of them.

[3eyedfishcatcher]

Right now they are taking about the same or just a little less than the sellers were already having to give to PayPal. While you did not see it daily or monthly the amount you get from PayPal is less than the buyer pays. For most it is the incipience of not being able to use the money till it is transferred to your bank. While you can buy a shipping label from pending funds you cant pay a invoice or make a purchase. There is also concern that later on after all sellers are in yearly the rats will go higher than PayPal. This is a real concern as yearly eBay raises rates. For now sellers are not seeing a real increase in fee's but a shift to where those fee's go with less of a service that was created as a industry standard by PayPal and their past parent company. 

Also for MP sellers it is .30 cents for processing the order not .25 cents.