Gift Giving & Returns: eBay vs Amazon

Posted on April 7, 2009. Filed under: Amazon, eBay | Tags: , , , , , |

Rule No 1: Know Thy Customer

For each product that we sell online, our first priority is to understand our customers.  We want to know why they want to buy the product we have to offer, why they would want to buy it online and where (ie Amazon, eBay, our own website), and then specifically why they would want to buy that particular product online from us.

We analyze recorded data, of course, but we also talk to our customers.  It is surprising to us just how many of our competitors never take the time to get to know their customers (as a group, not necessarily each customer individually) but instead these sellers  just lower their price when sales aren’t at the level they want or need.  Selling cheap is one strategy.  In our office we always say “it is easy to sell cheap but it is more challenging and thus more rewarding to offer value”.  The real trick is to know what value the customer desires and is willing to pay for.  And that takes hard work and creativity.

One obvious fact is that there are many reasons why people buy online and they are willing to pay different prices for items based on the reason they are buying.  For example, a person buying an ipod for themselves might consider getting a refurbished one to be more thrifty or waiting until the ipod goes on sale or until there is a free shipping offer, for example, but most people I know would buy only a brand new ipod for a gift and they would be willing to pay a reasonable price even if it is not the lowest price.  People are generally willing to spend more money on a gift for someone else than on the same item for themselves.

Customers purchase items online and have them shipped directly to themselves for 3 main reason: (1) direct consumption, (2) resale, or (3) gift giving.  For example, some buyers on eBay can purchase items at such a bargain that they can resale the items on eBay at a higher price if they have patience or they can sell the items in another more profitable venue such as Amazon.  Also, some buyers purchase items and have them delivered directly to them but they intend on giving the item as a gift to someone else.

But many customers purchase items online strictly for gift giving and they have the item shipped directly to the recipient without ever having touched the item themselves.  Sellers who do so obviously have the utmost trust in the site where they are purchasing.

Having said all of that, for the items we sell we have data that shows Amazon is by far the number one place customers shop when they want to send a gift (for birthday, graduation, Christmas, etc) to someone.  So, naturally, Amazon’s sales during the Christmas holiday season are going to surpass all other venues since online buyers have the most trust in the Amazon platform.

Why specifically is Amazon the number one platform for buyers who are buying gifts?

1. Consistent  product quality and good service on Amazon

Buyers on Amazon have an expectation that the product they buy will be of good quality and the seller (either Amazon or a third party seller) will provide good customer service.  Until recently, eBay has had absolutly no minimum standards for sellers and even still has no approval process for new sellers.  Therefore, the product quality and customer service on eBay is “hit or miss” and most people buying a gift don’t want inconsistency; they want a sure thing.

2. Convenience (gift giving options are automated on Amazon)

Buyers on Amazon can choose to have a (free) gift message to the recipient included on the packing slip and/or to have the item gift wrapped if the seller offers these services.  It is easy for the buyer to choose these options with a click of the mouse and I have been pleasantly surprised at the number of gift message requests I have received for my Amazon sales.  On eBay, a buyer would have to email a seller to ask if they would include a message or gift wrap and what the extra charge would be for gift-wrapping.  And when buyers are purchasing gifts, they often times are not in the mood to wait and to communicate back and forth.   It is a hassle for a buyer to purchase a gift on eBay and takes too long.

3. Seller support for shipping to gift addresses (nonexistent on eBay until 2008) on Amazon

Until last year, eBay required sellers to accept 100% of the risk associated with shipping a gift to a buyer’s recipient when the buyer paid with PayPal.  While eBay Express required sellers to accept payments from buyers who had an unconfirmed address (the billing address is different than the shipping address), they did not support sellers by offer PayPal seller protection for shipments to unconfirmed addresses.  When eBay Express was in operation, I had several $200 – $500 sales on eBay Express that I refunded because I was not covered with PayPal seller protection so even if I had delivered the item to the buyer and gotten their signature at the time of delivery, PayPal would have refunded the buyer’s payment if they simply stated they did not receive the item.  I often had to tell eBay buyers that I could not ship an item to their gift recipient and I can guarantee you that buyers quickly learned that eBay was not a friendly place to buy gifts.  In contrast, Amazon gives me an address where they want me to ship the item and I am covered as long as I deliver the item to the address specified whether it is the confirmed billing address or not.

4. Returns are acceptable and easy on Amazon

On Amazon, customers have the right to return items for any reason.  Often times, buyers who are purchasing gifts are not as familiar with the product as the recipient and as a result sometimes the buyer purchases the wrong item.  On Amazon, the gift recipient can work with the seller to send the item back for an exchange or a refund and it is quite acceptable to do so.  On eBay, it is not unusual for a buyer to actually damage an item themselves and then claim an item has been damaged in shipment just so they can get their money back.  Returns haven’t been the norm on eBay since most sellers have stated in their auctions that are sales are final.  So an uninformed eBay buyer who purchases the wrong item often times has no recourse other than to damage the item themselves and claim it was damaged in transit.  eBay sellers are often times reluctant to accept returns because eBay and PayPal do not support sellers charging a restocking fee whereas Amazon does support sellers who charge a reasonable restocking fee.

So, what does all of this mean for ecommerce sellers? 

Sellers who offer items that are great for gift giving will find that Amazon offers enormous potential for sales and not just greater sales in terms of units sold but also greater sales in that higher per unit prices can be obtained when selling on Amazon versus eBay.  However, with the increased sales will likely come increased product returns.  So, developing a clear and yet fair return policy on Amazon is essential.  In addition, it is important to develop internal policies and procedures for handling returns efficiently. 

On eBay, buyers are most often more knowledgeable about the product they are buying and are less likely to return items.  However, having an “all sales final” return policy on eBay could result in more claims of items damaged in transit. 

And eBay sellers need to be aware that there may be some changes coming in the future which will  make it less likely than an “all sales final” policy will be allowed on eBay.  About a week and a half ago, eBay conducted a survey about returns.  One of the questions asked was “Under which of the following situations would you pay for return shipping for items you have sold on eBay?”

ebayreturnshippingb

eBay also wanted to know if sellers would be willing to share the dimensions and weight of the package so that they buyer can easily pay for returns.

ebayreturnshipping3b

The very first question eBay asked in the survey was “Do you feel eBay should offer a process on its site to facilitate returns between eBay buyers and sellers?” so I can see where eBay is headed in the future.  I am concerned that in the future eBay is going to require sellers to input the weight and dimensions of all packages shipped so that buyers have the ability to easily return items. 

Of course, the easy eBay return policy will allow buyers to pay for the return shipping with PayPal with a click of a button.  This, of course, increases PayPal’s revenue which is eBay Inc’s number one goal.  Never mind that the eBay sellers’ workload will increase exponentially for no good reason.  My returns on eBay are practically nonexistent for many reasons, one of which is that I take the time to carefully and clearly describe my items.  But yet I will be punished by having to input weight and dimensions for thousands of packages just so PayPal can see a slight increase in their revenue for buyers using PayPal to return items to eBay sellers.

Amazon is the number one destination for gift shopping for all the reasons I stated above.  But the underlying reason that Amazon was successful this past holiday season is because they understand rule number one.  They know their customer.  And Amazon defines “customer”, in both words and actions, as including both the buyer and the third party seller.  On the other hand, eBay creates policies and implements programs that are only beneficial to eBay while forgetting one of the most important stakeholders – their sellers. 

When eBay created eBay Express they “forgot” to consider how sellers would react to being forced to accept PayPal payments for unconfirmed addresses while receiving no seller protection for those shipments.  And sellers did react in a very predictable way – by refunding payments and cancelling orders, often times leaving negative feedback for buyers who requested shipment to an unconfirmed address because they ignored seller’s terms stating that they only shipped to a confirmed address.  There are such obvious and predictable consequences to many of eBay’s new policies.  Sometimes I am not sure if eBay can’t or simply won’t see the damage they are inflicting upon their own marketplace.

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One Response to “Gift Giving & Returns: eBay vs Amazon”

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The time involved in selling on eBay in itself makes the venue cost prohibitive.

How many hours can someone spend making revisions?

Constantly on the watch for glitches that screw up inventory

Having to constantly take inventory to be certain you didn’t forget to make the adjustment in quantity for the NPB, the unsuccessful auction or fixed listing.

The necessity to manual create invoices because the site seems entirely incapable of consistent invoice calculation- pathetic

The unusually high frequency of high maintenance buyers- rather potential buyers wanting a seemingly endless amount of pre-sale service

Having to deal with people trying to bargain on the price and or shipping when this is not an option and is clearly stated

the list goes on and on as you well know

It would shock me if eBay via PayPal tacked on an extra fee for the return and charge the paypal fee for the return shipping to the seller.

Yep they just keep grabbing more and more and they don’t provide a damn thing for what they already take.

Again, I sigh in relief that I am done with their BS


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