Bank Failure: What Ebay Hasn't Learned From the 2008 Fiscal Crisis.

[tahoe-sports]

I'm not sure where if this is the right place to post this, but Ebay's return policy is baking in a bank/market failure scenario. 

If you don't rememberthe 2008 banking crisis, we were facing a collapse of the banking and financial system because banks provide other banks with liquidity and are interconnected within the financial system.  If there is a run on one bank, it spreads to the entire financial system. This occurs because banks don't keep sufficient reserves to cover their losses and are the source of liquidity for other banks. 

Ebay has baked in the same contagian risk by requiring returns without requiring reserves.  I got hit with this today.  I got returns on my biggest orders over the last few days, which I strongly suspect are fund raising efforts by sellers desperate to pay off their own returns and in turn, return reserves used up. I had to make returns to raise cash to cover my returns.  None of this would occur if sellers were not required to offer easy returns (liquidity).  In essence, I was required to provide liquidity to another seller, and another seller was required to provide liquidity to me through the return system.  I was their bank and someone else was mine. 

This is a bad and very dangerous buisness policy. I'm hoping someone on their staff looks at this posting and knows a canary in the coal mine when they see it.  Ebay needs to require reserves or allow sellers to opt out of the return policy to prevent sellers from becoming unregulated financial institutions and all the risks that comes with that.  The threat of cascading returns rippling through the entire system is real and it needs a real solution.

[tahoe-sports]

Title is off.  Should read financial crisis not fiscal crisis.  Apologies.

[tahoe-sports]

The holidays just exasperate the problem.

Say a seller gets some big dollar returns and they are more than they have in their paypal account.  It's Friday.  They try to move money from their bank to paypal, but it's going to take several business days to process.  The seller requests the money transfer on Friday and the buyer return ships priority mail the same day.  Saturday and Sunday the bank is closed.  Monday the 31st the bank may be open or open part of the day and parcel is received.  The bank is closed on the 1st.  By the second, the buyer is expecting a payout on their return, and you still don't have funds in paypal because it may have been only one or two business days.  

So, are you going to bet on a bank transfer (if you have funds to transfer) or are you going to make a return to cover the value of your returns or both?  You're likely going to do both because there's just not enough business days to ensure you get funded from your bank.  So you pass the problem on to the next guy and the ripples of returns flow through the system.

[grayirongolf]

Robbing Peter to pay Paul is what this is called & yes, it causes a domino affect in the long run.  

[gracieallen01]

But .... but .... but .... that is a seller problem - that isn't ebay's problem.  ebay doesn't have any responsibility in how sellers conduct their business.  ebay is just a venue, and only, maybe, sometimes a managed marketplace.  ebay still gets their fees and still keeps buyers happy and sellers working, right?  Sure, they do, just ask them.  This isn't an ebay problem, just check the UA, or call CS and ask them.

(Darn, wonder if they are going to return the sarcasm font for the New Year?  hrmpf! doubt it)

[sharingtheland]

The holidays just exasperate the problem.

That should be exacerbate, not exasperate.  Apologies.

[luckythewinner]

Bank Failure: What Ebay Hasn't Learned From the 2008 Financial Crisis.

You missed the key difference between the two. 

During the financial crisis, as the contagions spread and banks failed it was not feasible for other banks to spring up immediately and take the place of the failing banks because the barriers to entry in the banking industry are huge. 

But with returns on eBay, it is the individual sellers who are failing . And unlike the relatively small number of banks during the financial crisis, there are millions and millions of potential eBay sellers. The barriers to entry on eBay are negligible, and new sellers can - and do - pop up at the drop of a hat to take the place of departing sellers. 

And throughout all this, eBay doesn't miss a beat. 

Not only that, but the barriers to departure are redically different, too. Even if a bank sees a run on its reserve coming, they are legally required to stay in business and server those customers. They cannot simply close up shop until the outlook improves because they have depositors, investors, shareholders, and regulators to satisfy.

But on eBay, if a seller begins to see a run of returns, the seller can limit the impact by simply ending all his listings and waiting it out. Unlike a bank, he can manage his exposure. 

[castlemagicmemories]

---

@sharingtheland wrote:

The holidays just exasperate the problem.

That should be exacerbate, not exasperate.  Apologies.

---

But you are exasperated at the exacerbation.  

(Sorry, Sherry, just had to do it!)

[castlemagicmemories]

I understand your points, OP, but not all sellers will be returning their items to cover their own returns, so the effect may not be as widespread as to cause significant stress.

[castlemagicmemories]

This is a bad and very dangerous buisness policy. I'm hoping someone on their staff looks at this posting and knows a canary in the coal mine when they see it.  Ebay needs to require reserves or allow sellers to opt out of the return policy to prevent sellers from becoming unregulated financial institutions and all the risks that comes with that.  The threat of cascading returns rippling through the entire system is real and it needs a real solution.

It's up to the individual sellers to decide how best to handle potential returns.  Many build a small amount into their item cost to accomodate this.  They may set aside funds in what they call their cookie jar insurance.  And for new sellers, Ebay does require a 21 day hold on funds.  

I don't really see it as the canary in the mine, with all due respect, I don't believe that most sellers rely on returning items to fund their returns.

[whatmorefabric]

I get more returns on the River than I do here.

I have nastier customers on the other E site than I do here.

Returns are a part of YOUR doing business,  not Ebay.   They are common in e commerce.   

You need the reserve,  not Ebay and You need to roll the cost of returns into your pricing.

[amysaint_0]

So you returned things to cover the cost of things returned to you, rather than being financially responsible and keeping a reserve in your account to cover any possible returns.

You can't blame anyone but yourself.

[goodluckselling]

You want eBay to place controls on sellers paypal reserves to meet anticipated returns?   eBay does not have any control over how much money you leave in your paypal account?  That is your responsibility.

You are making a claim that eBay is requiring you to make easy returns?  eBay allows sellers to have a no return policy, so explain to me how eBay is requiring you to do this.

Good Luck Selling!

[amysaint_0]

@tahoe-sports

You were not REQUIRED to abuse another seller. You CHOSE to do so. Honestly, your attitude is shocking. You seem to think what you did was perfectly ok. It's not. It's blatant abuse of returns. Your utter lack of respect for other sellers is disgusting. Your utter lack of financial responsibility is disturbing.

[castlemagicmemories]

If OP chose a buyer's remorse reason, he would still be out money because he would be paying for the return shipping.

Unless he chose another reason for returning?