March 13, 2014

February 2014 ChannelAdvisor Same Store Sales (SSS) for eBay, Amazon, Search and CSE

Note: This is a monthly feature published by ChannelAdvisor highlighting the Same Store Sales (SSS) across our wide range of thousands of retailers and billions in GMV.  Details on the SSS including background, methodology, disclaimers and the 2014 schedule can be found in this post.  

Apologies for the delay in getting this month's SSS out, we were backlogged with Catalyst US matched with the big eBay SR14.1 announcement.

Today we are releasing February 2014 SSS data for eBay, Amazon,Google Search and Google Shopping/PLA.  Overall the marketplaces we track here (eBay and Amazon) had nice bumps in February as the unusually bad winter weather snow storms cleared around most of the US and deliveries were back to standard delivery times.  With e-commerce forecasted to grow 15% (Forrester) in 2014, that is the baseline we use when comparing these results against e-commerce growth.

February 2014 SSS Results 

  • Amazon - Amazon's February came in at 23.0% compared to January’s 14.0%, a substantial m/m increase we believe due to the improvement in weather conditions 
  • eBay -  eBay's February came in at 15.0% up from January’s 12.7%. We have eBay details further down in the report that show what is going on with this marketplace.
  • CSE - Comparison Shopping Engines came in at 6.1% down from January's 12.0% (driven by softness in the non PLA engines)
  • Search - Search came in at 4.3% , an decrease from January's 10.3% y/y growth.  Later in the report we have more search details.

Reviewing these high-level results, eBay and Amazon definitely recovered well in February.  eBay's growth rate is the highest since September '13.

 

SSS Chart 

The following chart details the SSS data for February 2013 through February 2014: (click to enlarge)

02_14_sss_overall
 

This chart clearly illustrates the up-tick in marketplaces in contrast with the softness in the CPC search/CSE channels.

eBay Details

eBay's SSS for February was 15%.  To get a feel for what is driving the marketplace's performance, here are the interior data points for the month:

  • eBay auctions - Down 8.5% y/y. 
  • eBay fixed-price - Up 15.5% y/y - this was a nice showing for eBay and was the primary driver of the increase from January.  
  • eBay Motors  (parts and accessories) - P+A accelerated nicely in February coming in at  22.3% up from January's 17.6%.  Within P+A we saw broad-based increases, but tires were particularly popular in February.  Note this is the fastest P+A growth rate since July of 2013, so a strong showing and a great way for the category to start 2014.

 Here are the TTM (trailing twelve month) trends on these eBay internals.  (click to enlarge)

  02_14_sss_ebay_details

Supplemental data for Search

Here are the February Search internals: (click to enlarge)

  02_14_search_details

Note: these are all y/y comparisons (Feb 2014 vs. Feb 2013).

Search SSS increased 4.3% for February and you can see there was a mix of internals that drove that result.

First, clicks were down 9% due to consumers moving to PLA/Google Shopping.  Conversion rates ticked up 4% to 3.08% and CPCs declined to $.49 - a 7% y/y decline.  AOV increased 10% to $121.17.  We've mentioned it previously, but again this data suggests that the Google Search Engine Results Pages that includes aggressive PLA/Google shopping coverage % and placement has bifurcated the Google shopper:

  • Lower AOV items - The buyer hits the PLAs, buys and is done.  They don't need or utilize the rest of the adwords.
  • Higher AOV items - The buyer spends more time on these purchases, so while they look at the PLAs, they take the extra time to explore the adwords content on the page.

You can see this behavior pretty clearly in the conversion rates and AOVs of each program.

Supplemental data for Google Shopping

In September 2012, we introduced a new set of data around Google Shopping.  Here is the February Google Shopping/Product Listing Ad supplemental data:

  02_14_gs_details

Overall, Google Shopping came in at 48.0% y/y increase on a SSS.   While 48.0% is nothing to sneeze at, it is a clear slowdown from January's 62.8% y/y growth and the > 80% growth we consistently saw in Holiday 2013.  Looking at the data, what we are seeing is an normal aging of the program.  A digital marketing program like PLA has several key components:

  • Geographical reach - which countries is this program available in?
  • Merchant adoption (is a merchant in or out?)
  • SKU adoption (how many sku's does a merchant bid on?)
  • Search coverage - For X commercial product searches the unit shows up Y times - Y/X = search coverage.  e.g. 10 searches, 8 shows - 80% coverage.
  • UX of the 'ad unit' - Google constantly tweaks the layout, behavior and placement of PLA until the multivariant testing settles on a handful of formats that have been data-driven to be optimal.

With those attributes of the PLA lifcycle in mind, here is a quick summary of the 'Lifecycle of PLA/GS' goes as follows:

  • May 2012 - Google announces GPS is going away to be replaced by GS - US only.
  • July 2012 - GPS done, GS/PLA ramps in US with minimal UX, merchants and not many skus
  • Holiday 2012 - UX in place, lots of testing going on, low coverage, some more merchants, more SKUs.
  • Feb 2013 - GS/PLA comes to EU launched (announced in Nov 12)
  • June 2013 - GS/PLA in EU is launched
  • Holiday 2013 - Most markets are mature with strong merchant and sku adoption, search coverage is near 100%, the UX has settled on 'rail right' placement of a 8, 6, 4 box depending on selection, or an above the fold, below adwords row of 4 or row of 8.
  • Feb 2014 - Google introduces what we @ChannelAdvisor called "PLA on top" - moving the ad unit to the very top of the page for many results.

So now that the program is reaching the 18 month lifecycle, Google has picked much of the low hanging fruit and the biggest knobs left to turn are the merchant experience (to try and get more merchants and SKUs) and the UX.

One area where PLA (and Google overall) has faced headwind is on mobile (specifically smartphone). PLAs rarely show up, which is either because Google hasn't gotten to that rollout yet, or the ad unit does not perform well (most likely scenario given the form factor) in that environment.

Note that our deep dataset on PLA indicates that contrary to some reports Amazon does not participate directly in PLA.  Several Amazon subsidiaries do such as Zappos and Diapers.com.  eBay dabbled in the program since inception, but for Holiday 2013 went very deep and wide in the program, frequently to the extent that all 8 results would be from eBay.

The point of bringing the history and lifcycle of the PLA/GS program is to illustrate that any new program like this is going to have it's 'go-go' phase and then eventually settle down into it's organic growth rate as it matures across several variables.  It will be interesting in 2014 to watch where this trend goes and what Google does to continue to improve the program.

 

Conclusions 

We hope you are able to use the data provided here to benchmark how your e-commerce channels performed to your peers.  

Our next SSS post will be in April when we look at the March 2014 data to see how the first quarter ends for the top e-commerce channels.

This blog post was written by Scot Wingo, CEO, ChannelAdvisor.

March 12, 2014

Live Blogging from 2014 Catalyst Americas: eBay Fireside Chat (Part II)

Welcome to the live blog of ChannelAdvisor's Catalyst 2014. We'll be live blogging the general sessions to make sure Catalyst attendees don't miss anything. Also, make sure you're following hashtag #Catalyst2014 and @ChannelAdvisor on Twitter for all the latest.

Speakers: David Spitz, President of ChannelAdvisor  and Christopher Payne, Senior VP for eBay Marketplaces, North America

Part 1: http://ebaystrategies.blogs.com/ebay_strategies/2014/03/live-blogging-from-2014-catalyst-ebay-fireside-chat-part-i.html

Payne: We work with merchants of all sizes. Why should you care about this? Because it drives more engagement into the platform. Getting young people active is important as well. In-store pickup is an innovation that they are responding to.

In the U.K., they don’t like having stuff delivered like we do here. Especially London. We’re trying an in-store pickup that is working really well. And I think it’ll work in the U.S. as well.

Shutl is a company we recently bought in the UK that is doing really cool stuff. You can get one hour delivery, two hour, next day, etc. They arrange it. We are beginning to test that in the U.S. and are really excited about it. "Local" could become the next paradigm shift. Just like mobile is right now. Local could be next and we’re at the forefront of it.

Spitz: We’ve heard you’ve invested in anti-drone technology.

(laughter)

Payne: Absolutely. 

Spitz: You heard it here first, folks.

The rapid growth of cross-border trade has been a big theme here at Catalyst. Talk about what it means for eBay.

Payne: We view global as a birthright at eBay. Anyone should be able to sell to anyone. Global has been a part of our vision since day one. There’s a lot of room for improvement in that area though. We want to break down the barriers of trade.

One of the key alliances we have is with PayPal. When PayPal enters a market like Russia, we can come in behind them. The methods a country uses to pay for products are really important. 

40% of our sellers do not export. And of those 60% who do, they don’t go to many countries. We want that to change.

The idea with our work in cross-border trade is to make the process easier on the consumer and the seller. We think we’re uniquely positioned to do that.

Spitz: Russia is a fast growing area for you guys? What do retailers need to do to get there?

Payne: It’s fairly simple. We’ve built a Russian language site. We do support in Russian as well. Customs, duties.. it’s all handled by the program.

Spitz: eBay has done quite a lot of evolve and become a major force in e-commerce. When we all leave here, what is the most important thing to take away from this conference?

Payne: First, to everyone, thank you for your business. It’s an exciting time and we hope you give eBay a chance to earn your business.

Spitz: We’ve been partners with eBay since 2001. It’s our longest-standing partnership, and we’re very grateful for it. Thank you for being here.

Payne: It’s been my pleasure.

 

Reminder for the Catalyst America’s social presence:
• Follow @ChannelAdvisor on Twitter as we’ll be tweeting out updates, reminders about sessions, networking events and more.
• Tag your social posts, Instagram pics with our show hashtag: #Catalyst2014 tabs on discussions, networking opportunities and more on the Catalyst app.
• Keep an eye on the ChannelAdvisor blogs where we’ll be live blogging the keynotes and main sessions at Catalyst.

Live Blogging from 2014 Catalyst Americas: eBay Fireside Chat (Part I)

Welcome to the live blog of ChannelAdvisor's Catalyst 2014. We'll be live blogging the general sessions to make sure Catalyst attendees don't miss anything. Also, make sure you're following hashtag #Catalyst2014 and @ChannelAdvisor on Twitter for all the latest.

Speakers: David Spitz, President of ChannelAdvisor  and Christopher Payne, Senior VP for eBay Marketplaces, North America

Spitz: Welcome. I’d like to say a quick thank you to the staff for putting on a great Catalyst.

Now, how many of you sell on eBay? A lot. That why I'd like to welcome Christopher Payne.

Payne: Thanks for having me. I've been at eBay over five years. Love my job and thrilled to be here. Lots of waves of innovation happening right now and thrilled to be talking about them.

Spitz: Can you tell us how eBay thinks of its evolution? 

Payne: Lots of innovation at eBay. First, the work we’ve done driving trust in eBay. Second, simplifying the buying process. Third is innovation. Changes we’ve made to create a better environment for both they buyer and seller.

In 2009, we launched the reward program.

Core to the "new eBay" is the work we’ve done to drive more trust in the marketplace.

eBay looked a lot different five years ago. It was slow, it was purple. Search wasn’t great. We’ve made big strides in those areas. Conversions have increased as a result.

Mobile, local and cross-border trade are the three things that are accelerated things for eBay now. We’ve tried to wrap who we are now around a new logo.

Spitz: EBay feels more social now. What is driving that? Browse versus search?

Payne: One of our core tenets is to connect buyers to their needs. In Q4 of last year, we launched a thing called “Collections.” It allows sellers of all sizes to build collections. Pharrell is one of our celebrities who has collections. Goes all the way down to small jewelry sellers.

This allows us to create connections between people and ideas. It allows you the opportunity to show what makes you different or special as a retailer. We like what we see so far.

Spitz: eBay recently went all in on mobile it seems. We see a number of brands that are net new to eBay seemingly because of mobile. Tell us about your mobile strategy and where it’s heading.

Payne: In the wave of innovations that we’re talking about, mobile is the “big dog.” It’s changing the landscape. In ‘08 or ‘09, we took steps to capitalize on that platform, which helped us become a leader.

Also, eBay just seems to work well on mobile. We made an investment and it just worked. We went from $0 in 2008 to $20 billion last year on mobile.

Mobile is tough though. There’s different kinds of phones, tablets, etc. One thing that we think we bring to the table is that we’re making investments in it. So we think it’s to your advantage to partner with us, because you also benefit from our investments there.

Spitz: You guys are setting the bar high in that regard. New images requirements, etc. How do you balance new requirements with making it easy on the seller?

Payne: We know expectations are rising, and we try to rise with them. But we try to work with the customer to make it as easy as possible.

Better quality (better images, better shipping times, etc.) leads to a better experience and ultimately better sales. 

Spitz: You guys had a pretty significant release this week It’s the biggest one in years. How should people react and adapt to the release.

Payne: This release is an important change for us. It’s designed to meet the rising demands from the customer. Some key points of it:

1. Putting more of the things that matter at the forefront. We want to decrease churn.

2. Holiday returns. There is little seasonality to our business. One key reason is that we don’t offer holiday returns. We think you’ll get disproportionate sales when you do that.

3. Our philosophy is to move to as many objective standards as possible. Stay away from any standards that can be deemed subjective. 

4. Philosophy of transparency. Anonymous behavior affects sales. People don’t like it. We want to give sellers additional line item info. We think this will be super important. Will create trust on the platform.

 

Reminder for the Catalyst America’s social presence:
• Follow @ChannelAdvisor on Twitter as we’ll be tweeting out updates, reminders about sessions, networking events and more.
• Tag your social posts, Instagram pics with our show hashtag: #Catalyst2014 tabs on discussions, networking opportunities and more on the Catalyst app.
• Keep an eye on the ChannelAdvisor blogs where we’ll be live blogging the keynotes and main sessions at Catalyst.

March 11, 2014

Live Blogging from 2014 Catalyst Americas: Scot Wingo Keynote (Part III)

Welcome to the live blog of ChannelAdvisor's Catalyst 2014. We'll be live blogging the general sessions to make sure Catalyst attendees don't miss anything. Also, make sure you're following hashtag #Catalyst2014 and @ChannelAdvisor on Twitter for all the latest.

Part 1: http://ebaystrategies.blogs.com/ebay_strategies/2014/03/live-blogging-from-2014-catalyst-americas-scot-wingo-keynote-part-i.html

Part 2: http://ebaystrategies.blogs.com/ebay_strategies/2014/03/live-blogging-from-2014-catalyst-americas-scot-wingo-keynote-part-ii.html

ChannelAdvisor Update

Digital Marketing is two-thirds of what's going on in the e-commerce space. But it's complex: paid search, comparison shopping, social media, different devices, different promotions. And you spend money in each of these places and need to measure your success on each channel. And quickly.

What if you could calm that chaos? 

Today we're announcing our Digital Marketing program.

We've integrated our Paid Search and Comparison Shopping solutions into one single platform. It turns chaos into conversions and allows you to more easily manage all your advertising channels from one place.

What is ChannelAdvisor thinking about data?

You've asked for more channels, and we've delivered. Now, we want to help you understand what's happening across the entire ChannelAdvisor data set, comparing your performance with other retailers.

What if you could better price your products and predict what would sell well? What if you could better match your products with fulfilllment centers?

2013 was a big year for ChannelAdvisor. We went public in May under the symbol ECOM. We expanded our team by 47%, and we have 10 global locations. When we talk about cross-border trade, we can actually deliver. We're there. We have over 2,400 customers. We processed over $4.4 billion in GMV. If we were a retailer, we'd be #5 on the IR list.

But we can't do this without our sponosors, partners -- and most importantly, our customers. Thank you for coming to Catalyst, and enjoy the show!

 

Reminder for the Catalyst America’s social presence:
• Follow @ChannelAdvisor on Twitter as we’ll be tweeting out updates, reminders about sessions, networking events and more.
• Tag your social posts, Instagram pics with our show hashtag: #Catalyst2014 tabs on discussions, networking opportunities and more on the Catalyst app.
• Keep an eye on the ChannelAdvisor blogs where we’ll be live blogging the keynotes and main sessions at Catalyst.

Live Blogging from 2014 Catalyst Americas: Scot Wingo Keynote (Part II)

Welcome to the live blog of ChannelAdvisor's Catalyst 2014. We'll be live blogging the general sessions to make sure Catalyst attendees don't miss anything. Also, make sure you're following hashtag #Catalyst2014 and @ChannelAdvisor on Twitter for all the latest.

Part 1: http://ebaystrategies.blogs.com/ebay_strategies/2014/03/live-blogging-from-2014-catalyst-americas-scot-wingo-keynote-part-i.html

---

Marketplaces account for a third of online sales in the US, but in China marketplaces account for 90% of online sales. Tmall is the largest marketplace in China, with about 50% of the market share. China celebrates Singles Day, with 4X the sales of Cyber Monday. Let's invite Ralph Zhao from Tmall Global to talk about this now. Today, ChannelAdvisor announced that we're supporting Tmall Global.

Ralph Zhao: In China, e-commerce started around 2003, and in these ten years, Chinese consumers have been buying from marketplaces; it's all they can see. They can find anything -- even a military tank! That's what we call selection. If you have good products, you can sell very well.

Marketplaces are a trend that will surely continue. More and more players are entering the market. Mobile is a big trend in China. Mobile purchases in China grew 3X in 2013 from 2012. In the second half of the year, we all focus our attention on Singles Day -- this year, I'd expect 100% growth from last year.

What is Tmall Global and how does it help US retailers sell into China?

Chinese consumers have always been sensitive to price. That's changing. Chinese people are buying high level products. In recent years, many Chinese people are looking to buy US products. And many US retailers want to sell into China, but there are many barriers, including rules and regulations. Not to mention customs and translation.

Clothes, baby products, cosmetics and housewares are popular categories sold by US retailers into China. Now with ChannelAdvisor, retailers can easily launch their products into Tmall, which is a great thing. There are 100 million buyers per day coming to Taobao, and there are more than 400 million active users.

Is China leading or lagging?

China skipped over big box era and moved right to online marketplaces. We think the US will follow in China's steps. Why?

By the end of 2014, there will be as many mobile users as there are people in the world. This is benefiting marketplaces. Maybe only 10-20 apps stick around in your daily usage: You want one or two apps you go to that have your information.

Will marketplaces eat the e-commerce world?

Historically, eBay and Amazon have been the biggest players in this space. Now, there's an explosion of new marketplaces. We believe in the future there will be social networks that will add marketplaces, and sites like Google. 

Recent Cross-Border Trade Trends

The US has the most overseas buyers. Everyone's excited, but it's hard to figure out strategy. ChannelAdvisor has developed the Agile Cross-Border Trade Framework. Agile CBT subverts the tradtional new-market approach by testing, learning and iterating, which reduces the risk of starting all at once. example, during your test cycle you might discover you have demand for your products in Australia -- then you can focus your attention there. 

Take advantage by first selling on marketplaces (global, then local) when expanding overseas. There are some great international selling programs, such as eBay's and Amazon's.

Here to talk about Brazil marketplaces is Sean Summers, VP of Marketplaces, MercadoLibre.

MercadoLibre is leading e-commerce ecosystem in Latin America. Last year, 20 million consumers bought 83 million in products on MercadoLibre. We found that our sellers were interested in cross-border trade, but encountered many challenges. Almost 50% of e-commerce in Latin in America is non-credit card, for example.

Brazil makes up 50% of MercadoLibre's market of 13 countries, and is the fastest-growing country in the region for e-commerce sales. MercadoLibre has its own form of payment system, and is also used by thousands of retailers in the region. Many payments are made in multiple installments as well.

Mobile accounts for 15% percent of MercadoLibre's sales, and we think this is a trend that will accelerate. MercadoLibre has its own app as well. 

Reminder for the Catalyst America’s social presence:
• Follow @ChannelAdvisor on Twitter as we’ll be tweeting out updates, reminders about sessions, networking events and more.
• Tag your social posts, Instagram pics with our show hashtag: #Catalyst2014 tabs on discussions, networking opportunities and more on the Catalyst app.
• Keep an eye on the ChannelAdvisor blogs where we’ll be live blogging the keynotes and main sessions at Catalyst.

Live Blogging from 2014 Catalyst Americas: Scot Wingo Keynote (Part I)

Welcome to the live blog of ChannelAdvisor's Catalyst 2014. We'll be live blogging the general sessions to make sure Catalyst attendees don't miss anything. Also, make sure you're following hashtag #Catalyst2014 and @ChannelAdvisor on Twitter for all the latest.

Speaker: Scot Wingo, ChannelAdvisor CEO

Keynote Title: E-Commerce. Accelerated.

Part 2: http://ebaystrategies.blogs.com/ebay_strategies/2014/03/live-blogging-from-2014-catalyst-americas-scot-wingo-keynote-part-ii.html

Part 3: http://ebaystrategies.blogs.com/ebay_strategies/2014/03/live-blogging-from-2014-catalyst-americas-scot-wingo-keynote-part-iii.html

Welcome to the eighth annual Catalyst! Let's look back at 2013:

E-commerce is growing at 11%, three times the rate of brick and mortar. And consumers are increasingly doing their shopping online -- total retail foot traffic for November and December 2013 was down to 18 billion, or half of what it was in 2010.

Have you seen any malls built recently? We haven't, either. Not one indoor mall has been built in the US since 2006. 

Let's look at the #1 online retailer, Amazon. There's 237 million users and $74 billion in sales. These numbers will grow, to 266 million and $84 billion in 2014. How does Amazon do this?

In 2006, they had a partnership with Toys R Us. Deployed a third-party book marketplace for toys. And then they introduced Super Saver Shipping. Now, they've introduced Prime. Their growth has been faster on e-commerce. Amazon's 3 Flywheels:

1. Third Party Marketplaces
Amazon is 2X as big as everyone thinks it is, when you consider its third-party marketplace. 

2. Amazon Prime
Helps connect all these flywheels by giving consumers 2-day shipping. 10% of Amazon's users are Prime subscribers, and they spend 4X as much as the regular Amazon shopper.

3. Fulfillment Network
Amazon has over 100 fulfillment centers; Amazon's shipping costs are going down, because their fulfillment centers are close to large population centers. So the cost to ship products is decreasing. There's more shipping innovations made each day -- drones are just a recent example.

Marc Andreessen wrote a 2011 essay, with a premise that software is eating the world. In 2014, this makes a lot of sense. Zipcar, Netflix have become popular; snail mail is eaten by email. These disruptions happen quickly. Everything is driven by software: Even at Starbucks, you can pay online. Uber is disrupting the tax industry. 

How does this affect e-commerce?

We at ChannelAdvisor believe that marketplaces are eating the e-commerce world. The key benefits of marketplaces are selection, value, convenience and confidence.

eBay has introduced the Defect Rate -- a whole new system for measuring the top-rated seller rating. About two-thirds of people won't be affected, but many will. If you're here at Catalyst, we can walk you though what this means for you.

Why marketplaces now?

Marketplaces are aligned with consumer demand and expectations. Consumers want limited buying options, best price, fast/free shipping, purchase protection.

Let's invite Soren Mills, CMO of Newegg, up to the stage now. Newegg is leading seller of consumer electronics and IT products online. Newegg customers are passionate about commerce experience and wanted to see an expansion of categories. We found that as we did this, we brought in new customers in new product categories. Before that marketplace, we were 90% male. As we opened up the marketplace, we're now at 70/30.

We keep our specialty retailer core and audience base as we expand. It's been a surprise to us how many consumers who come in for new categories also shop in IT categories. We invested early in mobile and are always adding new content and features on our mobile site.

Newegg's marketplace sales are growing at triple rate. We see our marketplace is a key part of the future for Newegg. Ship by Newegg is our new program with 2-day shipping. We handle shipping and fulfillment. 

Reminder for the Catalyst America’s social presence:
• Follow @ChannelAdvisor on Twitter as we’ll be tweeting out updates, reminders about sessions, networking events and more.
• Tag your social posts, Instagram pics with our show hashtag: #Catalyst2014 tabs on discussions, networking opportunities and more on the Catalyst app.
• Keep an eye on the ChannelAdvisor blogs where we’ll be live blogging the keynotes and main sessions at Catalyst.

Introducing the eBay Defect Rate - eBay tweaks the feedback system again in Seller Release 14.1 this Spring

Today, March 11, 2014 eBay announced their first seller release of 2014 (we shorten this to SR14.1 to save time).  The changes are substantial and we think warrant a pretty in-depth look so we have provided this two part blog post:

  • Part I - (you are here) in the first part we will introduce the changes coming in SR14.1 (written by Scot Wingo)
  • Part II - (coming soon) In part 2, we will recommend strategies for both getting the most out of SR14.1 and avoiding any bad consequences.  We do believe that most sellers will want to take some action(s) and the changes go into effect pretty quickly. (written by Jenny Hock) 

In this post we focus on the US details, but it's important to note that SR14.1 applies to the UK, DE and global standards programs as well.

Introducing SR14.1 - Why is eBay making these changes?

eBay has done a great job providing tons of details about SR14.1 including:

  • Detailed micro-site about the changes is here 
  • Customer care support is available
  • Webinars and videos are coming soon
  • town hall (detailed in this post)
  • in-person meetups  

Also, if you are a ChannelAdvisor customer, your account manager has been briefed on all of these changes for quite a while and is prepared to talk about them generally and with you in detail.  In addition we’ll be hosting our own Webinar - keep an eye on our twitter feed and webinar page for details.

Therefore in this blog post we are going to quickly go through the highlights of the changes and then dig into analysis of what this means to you.  Then in post II we’ll go through remediation strategies.

Why?

Since the eBay Donahoe era (March ’08 - happy 6yr anniversary JD!), eBay has increasingly been focused on collecting information from buyers and using that data to improve the buyer experience on eBay.  Donahoe is a big fan of the Net Promotor Score (NPS) system and eBay surveys most transactions in this way.  While customer satisfaction is a noble and smart pursuit (most eBay bonuses are determined by NPS scores for example).  It’s important to realize that eBay doesn’t operate in a vacuum.  E-commerce is increasingly competitive with Amazon setting the Bar.  In fact Amazon is the gold standard (ranked number 1 for 9yrs in a row by the ForeSee experience index) but all of the brick-and-mortar players are waking up to the importance of the buyer experience as are other ‘pure plays’.  In a world where the same product is available in a click or a finger-swipe on a mobile device, a great customer experience is even more important.

The good news is with $76.5b in GMV last year with say a $75 ASP, that’s 1b transactions where eBay has detailed data from NPS, money-back claims, PayPal claims, DSRs and feedback.  In fact, I imagine the data created from this is quite massive and complex to analyze because of some of the subjective datapoints (opinions that are hard to measure) and find the objective (measurable and reliable) datapoints.

Well, it seems like eBay has been doing just that - mining their buyer data because 100% of the changes in SR14.1 are oriented toward improving the buyer experience, which translates to a higher set of standards for eBay sellers.  Long-time eBay sellers are familiar with the constant bar raising, but before we get into the details, we wanted to go through a brief history of eBay and ‘sellers standards’.

Note: if this is a topic that is of interest to you, we strongly recommend downloading the December 2013 Foresee online experience report

A Brief History of Feedback/Seller Standards

If we don't learn from the past, we are doomed to repeat things in the future, so before digging into the new changes, we wanted to remind everyone of the five major periods of time for the eBay feedback/seller standard system:

  • 1996 - 2007 - Feedback is born - Pierre recently told Inc magazine about the birth of the eBay feedback system and why he chose ‘pos/neg/neutral’. It was added to the site 6 months after launch in February of 1996 so this system has been around for 18 years now.  The problem with feedback is it doesn’t give eBay enough data, why did the person leave a negative?  Was the neutral a bad experience, or was the buyer having a bad day?  Also, by the mid-2000's, most sellers had 99% positive feedback ratings, so it was hard to separate the wheat from the chaff.  Finally, unfortunately bad actors came up with numerous ways to game/manipulate the feedback system. 
  • 2007 - The age of DSRs - In 2007, eBay rocked the seller community by introducing a major overhaul in the feedback system.  What they added were four additional criteria called Detailed Seller Ratings (DSRs) that ask the buyer to rank a seller from 1 to 5 ‘stars’ on communication, item description, shipping speed and shipping cost.  eBay lore has it that the ruckus created by the community over this change led to eBay forever canceling the eBay Live tradeshow they used to have.  
  • 2009 - Top Rated Seller Era - In July of 2009, eBay introduced the Top Rated Seller (TRS) program.  The changes from the DSR program were largely viewed as ‘sticks without carrots’ - all a seller received for having great DSRs was to stay in the eBay ecosystem and the punishments (sticks) ranged from search disadvantaging and suspension.  After reviewing the buyer implications from the DSRs, eBay decided to add a carrot called the TRS program.  If a seller maintained stellar DSRs, they were rewarded with a TRS badge, discounts on fees and (most importantly) search elevation.
  • 2010-2013 - Seller Standards bar raising Period - Every year since DSRs and TRS were introduced, eBay has tweaked the programs.  For example in 2010, they used the DSRs to drive free shipping by promising a 5 star on shipping costs.
  • 2010-2014 - BBE and NPS the time of a ‘shadow feedback system’ - As early as 2010, sellers started to be contacted about something called a BBE - Bad Buyer Experience.  Usually your account would be suspended or limited due to this metric being too high.  The challenge for sellers is 1) there’s no way to know what your BBE is on a regular basis (e.g. in myeBay) 2) There was widely different information on what a BBE is and 3) it was confusing to have feedback, DSRs and BBEs.  Also, while eBay started using NPS to understand how customers view feedback as early as 2009, in the 2012 timeframe many sellers were warned, limited and suspended because of poor NPS scores.  Even if you had great feedback, DSRs and BBEs, you were at risk.  Many sellers called BBE and NPS ‘shadow feedback systems’ because they were out there, but not provided to the seller so the seller could improve their business.

 With that background in the history of all things feedback and how sellers have reacted to different programs, SR14.1 brings a new era in feedback.There’s a new sheriff (metric)  in town - the eBay Defect Rate (we’ll call it eDR for short) to avoid confusion with Amazon’s existing ODR - Order Defect Rate).

 

What are the big news items in SR1?

Last year’s SR13.1 contained a bunch of protections for sellers and large fee changes as you see here, so it was a very mixed release - fees, standards, some free stuff, etc.

This year’s SR14.1 is more focused and  has these major new components:

  • The introduction of eDR - one measure to rule them all. 
  • TRS changes - TRS is being changed to now be based on the eDR.
  • Return policy changes - To qualify for the Top Rated Seller Plus seal and the 20% final value fee discount between November 1 and December 31, TRS sellers must offer extended holiday returns, with returns accepted until January 31st.
  • Returns policy - There will be improved messaging about hassle-free returns to consumers.
  • Category changes - There are some minor category changes coming April 7, 2014.

 Analyzing the SR14.1 release, we believe the introduction of eDR and the ties to TRS are the most impactful part of the release and focus on them going forward.  We encourage you to read the eBay details on the holiday returns and improved return processing pieces.

 

How is eDR calculated? What is the eDR? What’s in and what’s out? Where do I need to be?

We STRONGLY recommend sellers take time to understand this one because it will have serious ramifications for your business for the foreseeable future. 

Now that we have your attention, eDR is a percentage that looks like this formula:

Number of defective transactions / number of transactions * 100 (to get a percentage)

So for example, if you have 5000 transactions a month on eBay,  if 10 of them had an eDR 'defect' you would have: 10/5000*100 = .2% eDR.

This calculation is done over a 90 day period for most large sellers.  The eDR is a meta-metric, meaning it is derived from several other metrics.  In a way this makes it easier to understand because it is based of concepts like feedback and DSRs that everyone is familiar with.  It’s also very interesting to see what eBay has included and NOT included.

The new eDR includes (drumroll please):

  • Item as described DSR - If you get a 1,2 or 3, that transaction will hit your eDR
  • Ship time DSR - if you get a 1, that transaction will hit your eDR
  • Feedback - negative or neutral - If you are left a non-positive feedback, that transaction will hit your eDR.
  • Returns - If an item is returned and the reason is ‘not as described’ (SNAD in eBay-speak - significantly not as described), that transaction hits your eDR.
  • eBay Money back guarantee / Paypal purchase protection cases opened for INR (Item not received) or SNAD.
  • Seller-cancelled transactions - e.g. if you say you have 10 of something, sell them and then cancel 5 unique transactions, that is 5 eDR ‘hits’.

 Some caveats - 

  • Only sales with a US buyer count towards eDR - so if you have 1000 sales to the UK, they are excluded from the eDR calculation.
  • You have to have at least 8 unique buyers for this to kick in (doesn’t matter for larger sellers) for TRS sellers (5 for Above Standard Sellers)
  • Global Shipping Program (GSP) - For US sellers these transactions are not included (see first bullet).  FYI we are getting a lot of mixed messages from sellers about GSP suggesting that it is negatively impacting their TRS, hopefully this will clear that up.  
  • Fast and Free - When buyers choose fast free shipping as calculated and offered by eBay, the seller is still automatically given 5 stars for both the ship cost DSR and shipping time.  Since shipping time is in eDR, FnF can help your eDSR.  However, remember that you still have the item as described DSR and other components that aren't 'helped' by FnF.
  • Only one of these can ding you per transaction - for example if a buyer leaves you all 1 DSRS, leaves a neutral, hits you with a SNAD return and a money back guarantee, that’s only 1 strike against your eDR. 

Analyzing what eBay has included here it is clear they are really focusing in on SNAD, INR and canceled orders.

 What’s NOT in eDR:

  • Shipping cost DSR
  • Communication DSR
  • BBE (seems to be replaced by eDR)
  • NPS (also replaced by eDR)

 The logical question from these items missing is - “why would I ever charge free shipping again or answer customer’s questions.”  That’s a good question and one I’m sure these metrics will still matter in some way, especially if they get egregious, but for now eBay wants you to focus on eDR which does not include those items, so they must be less important now to the buyer experience.

Implications of your eDR

As you can imagine, your eDR determines which of three ‘buckets’ of seller you are:

  1. Top Rated Seller - You must have an eDR that is < 2% or 2 / 100 or 20/1000 or 200/1,000 transactions to be TRS.
  2. Above Standard Seller - If you have > 2% and < 5%, you are still a good seller, but you lose TRS benefits.  For this bucket there are no ‘consequences’ other than being disadvantaged in search.
  3. Below Standard Seller - If you have > 5% eDR, then you are a below standard seller and will face increasingly severe consequences from limits to all-out account suspension.  That’s 5/100, 50,1000, 500,10,000 

To have your DR applied there is a minimum of 5 unique buyers ( for below standard) and 8 for top rated.  Also, unique buyers are applied at these tiers, but they are filtered out over the 90 day period.  For example, maybe you have a persistent bad actor that buys 90 items from you over a 90 day period and files a negative each time (of course you would block them before this but bear with me).  Those 90 DRs would be calculated as 90, but tallied as 1 over that period.  You will see the total number in your dashboards, but not the unique-buyer number.

We created this handy graphic to help you remember where you want to be on the eDR scale and where you start to get into trouble:

Ebay-dr

One other thing that is very interesting about eDR, is the better your eDR, the more you will be ‘search advantaged’  for example, if you have exactly the same item sold by two TRS, and one is a 1% eDR and the other 2%, the 1% eDR seller will show up higher in search results.  It will be interesting to see how sellers go through the calculus of the costs of this type of eDR vs. other levers such as lowering the product price, or offering free shipping. More on that in post II.  Before eDR, it was more of a ‘you are advantaged’ or ‘you are not advantaged’ type system (binary vs. linear).

 

eDR vs. Amazon ODR

As mentioned in the ‘Why?’ section, we highlighted that Amazon is the top online customer service brand.  Therefore we thought it would be interesting compare these two metrics:

Note Amazon looks at three metrics that determine your seller health:

  1. ODR < 1%
  2. cancellation rate < 2.5%
  3. Late shipment rate < 4%

  

For this comparison we’ll look just at ODR:

Ebay_dr_amzn_odr

 

Looking at this table, you see there’s a key difference in how eBay and Amazon handle these things:

First, Amazon focuses on objective, measurable metrics for the bulk of their ‘inputs’.  Second, Amazon acknowledges that returns are part of the online shopping experience and does not hold them over a seller’s head.  This would create a misalignment and sellers would stop offering generous return policies.  In categories like shoes you have return rates as high as 30% and you would essentially cut all the supply out of this category if you focused on return rates (even if it is just SNAD/INR).  In fact A-Z claims are there as a safety net to help the buyer in the case where the seller has tried all the normal courses of action.

Sellers we’ve talked to find the Amazon requirements more logical and aligned with online selling whereas the eBay metrics (historically) are subjective and buyers learn quickly to manipulate the items to cause the maximum pain - a common design flaw in an objective system.  Conversely when one of these metrics is at risk, sellers can quickly and summarily be dismissed from the platform with zero human interaction, whereas to their credit, eBay does do a lot via customer service reps and what-not to educate sellers and keep them from driving off the cliff.

The conclusion is both eBay and Amazon have very different requirements and if you sell on both, you need to be very aware of them or face permanent suspension.

Sr14.1 Timing and impact

The new eDR goes into effect on the August 20 monthly seller evaluation, but that is a 90 day look back from the first of the month so it effectively goes into effect May 1st, so as of today you have ~50 days to get ready for the eDR.

We’ve heard from eBay that 2/3 of the current TRS folks are in good shape, while 1/3 have some work to do.  With some proactive work, I’m sure all of those folks can get back in the TRS saddle and we may have some new additions as people look at this program and decide it is more valuable/less expensive than the four-DSR based TRS system.

Note that there are some seller grace periods detailed in the eBay announcement that give TRS folks time to get changes implemented and counteract the new eDR if needed.

Also, eBay plans to send out letters with details of what your eDR would look like TODAY along with a comprehensive dashboard in mid-April.

Conclusion and What should I do?

Reviewing the SR14.1 release, it looks like eBay is taking a big step to address what they believe drives customer satisfaction (and thus increased activity/buyer).

By now, you may be starting to break a bit of a sweat and have started worrying about what this means for your business - that’s good.  We have detailed recommendations coming soon in post II, stay tuned.  

We look forward to hearing your opinions (in comments or through other ChannelAdvisor channels) and helping you navigate the ever changing world of selling on eBay.

This blog post was written by Scot Wingo, CEO, ChannelAdvisor Corp.

March 06, 2014

Top 7 Takeaways from Insite Melbourne 2014

Simon Bruce Box 13 Insite AU
Simon Bruce, Box 13

With attendees from Google, eBay, Kathmandu, Jeanswest and Shopbot, last week’s Insite Melbourne 2014 conference drew in industry leaders and retailers to discuss the state of Australian e-commerce now — plus trends for the year ahead.

According to the NAB Online Retail Sales Index, Australians spent $14.9 billion on online shopping last year, up 11.3% from the year before.1 In light of this continued rise, it’s essential to find new ways to stay competitive in a cross-border trading, multichannel, multi-screen climate. To help retailers keep up and stay ahead, experts from ChannelAdvisor, Columbus, eBay and Google outlined practices and strategies on curated commerce, delivery and infrastructure, connected devices and cross-border trade.

The Insite environment was one of open discussion, with a wealth of ideas exchanged among retailers and industry experts. Popular sessions included an engaging conversation with Box13 

Thad Tremaine Insite
Thad Tremaine, ChannelAdvisor

Business Development and Merchandising Director Simon Bruce, and a perception-transforming presentation from eBay Australia's Senior Director, B2C Marketplaces, Hamish Moline, which offered a window into utilising marketplaces and entering the global retail sphere.

Retailers also benefited from hearing ChannelAdvisor Vice President of Global Services Thad Tremaine speak about the services offered at ChannelAdvisor, giving new and existing customers alike a greater understanding of the breadth of options.


Did you miss Insite this year? We’ve gathered some of the key trends and lessons from the conference here:

  1. Curated commerce: Knowing your customers — and tailoring products and services to them — is a good way to increase conversion rates and brand loyalty. What’s more, providing unique offerings and experiences will allow you to carve out your own space in the growing market.

  2. Optimisation techniques: Every minute, 204 million emails are sent, 47,000 applications are downloaded, and more than 2 million search queries are made on Google.2 Given this information haze, it’s more important than ever to find and target the right customer.  Through effective creative and remarketing technology — such as Google's Dynamic Remarketing segmentation and real-time optimal bidding determination — retailers can magnify initial marketing investments by tailoring ads to past site visitors and thereby increase conversions.

  3. Delivery and infrastructure: According to Forrester Research, 73% of Australians want same-day or next-day shipping. Without paying exorbitant rates, such speedy delivery isn't available on international purchases; Australian retailers can therefore capitalise on the demand by providing a service not otherwise available to Australian consumers. New Zealand’s proximity to Australia also makes it a prime market for Australian retailers. The shipping costs are low, and without physical access to stores in Australia, New Zealand residents are eager to shop. During the conference, Simon Bruce of Box13 reported that exports to New Zealand through the Trade Me marketplace now make up at least a third of Box13's business. And retailers can look forward to new delivery opportunities from eBay, which will increase next-day services and launch click and collect later this year, as well as scheduled same-day delivery and eBay NOW in 2015.

  4. Multi-screen trade and the importance of mobile: Because consumers are now shopping anytime, anywhere and from multiple devices, it’s important for retailers to streamline the path to purchasing. We learned from the eBay presentation at the conference, Australians are way ahead in mobile usage, with 47% of site traffic originating from mobile devices. But many retailers remain woefully behind the trend. And with 30% of shoppers who say they will abandon a site if it’s not optimised for mobile,3 retailers should consider listing on marketplaces that are already mobile-friendly. 

  5. Cross-border trade: In 2012, cross-border e-commerce sales reached $300 billion, and global online trade is expected to soar to $1.4 trillion by 2015.4 Additionally, macroeconomic recovery from the EU and US and a slowdown in Asian manufacturing will see both markets escalate their cross-border trade initiatives. Moreover, with the sliding Australian dollar, local retailers should look to take advantage of this global opportunity and target international markets. Selling on eBay and Trade Me, for example, can be a gateway to offshore markets while managing risk for retailers. 

  6. Social: revenue versus awareness: As Simon Bruce discussed in his session, while utilising social media might not necessarily directly drive conversions or site traffic, it will serve as a worthwhile tool for building brand recognition.

  7. SEO: Graham Wilkinson, client performance director at Columbus, shared valuable advice on the necessity of implementing Google Product Listing Ads in addition to standard search marketing through AdWords. This idea was reinforced by Google's Customer Solutions and Innovations Performance Expert Pablo Arana in a much-anticipated session, where he spoke of the decline in the effectiveness of SEO natural search for driving results. 

These seven takeaways provide just a taste of the information shared at Insite Melbourne 2014. For even more know-how, don't miss out on other valuable e-commerce events this year.

And make sure to check out our photographs from Insite Melbourne 2014!

March 02, 2014

Countdown to Catalyst Americas: eBay Takes the Stage

EBay Christopher Payne
Christopher Payne, eBay


The Vegas weather is heating up, and so too is the stage at Catalyst Americas with eBay’s Christopher Payne, Senior Vice President of eBay Marketplaces in North America.  Payne will join ChannelAdvisor President David Spitz on Wednesday, March 12th at 12:30 pm PT for a fireside chat discussing eBay’s latest initiatives.

Payne oversees all aspects of eBay’s largest marketplace including the company’s efforts in fashion, motors, electronics and other verticals. He also heads up advertising, business development, local commerce and marketing.

To whet your appetite, check out the live blog from last year's fireside chat with eBay at Catalyst.  

In addition to the eBay keynote, the 2014 Catalyst Americas agenda includes sessions such as:

  • Marketplaces Madness: Your Next Steps for Amazon, eBay & Emerging Marketplaces
  • Branding Basics: How to Manage Your Online Identity
  • Inside the Mind of the Consumer
  • 20/20 Hindsight: Sharing Lessons Learned the Hard Way

Catalyst Americas is almost sold out, but there’s still time to sign up.  Check out the 10 Reasons Not to Miss Catalyst, and see the full agenda and register for Catalyst Americas 2014 today.

February 19, 2014

The Best in E-Commerce Insight at ChannelAdvisor Insite Melbourne 2014

Insite MelbourneActionable strategies and educational opportunities abound at ChannelAdvisor Insite Melbourne 2014. The half-day conference will offer presentations by visionaries and industry leaders, coupled with a networking reception where you can mingle with colleagues in the industry and speak with leaders from e-commerce comapnies such as eBay, Google and Columbus. 

This year, speakers include Simon Bruce, business development and merchandising director at Box13; Hamish Moline, senior director, B2C marketplaces at eBay Australia; and Graham Wilkinson, client performance director at Columbus. They’ll offer tips on merchant acquisition, multiple digital marketing disciplines, and achieving the best outcomes for sellers. 

Retailers can also look forward to a Google presentation on shopping campaign and dynamic marketing, given by Pablo Arana, customer solutions and innovations performance expert at Google. This will be a rare opportunity to receive the latest information on the new Google Shopping features being launched this month. 

In the span of a few short hours, you’ll be immersed in informative and innovative content from experts in the e-commerce space, opening doors to new markets and strategies. You’ll also get the chance to learn more about ChannelAdvisor's solutions, which provide retailers and manufacturers with a central location to manage all information and inventory data across multiple channels — enabling you to sell more efficiently online.

Insite offers a cornucopia of information, engagement and solutions. With online shopping in Australia predicted to account for nearly 10% of total retail sales by 2017, this event is a must for retailers looking for unparalleled access, networking and insight. Rather than attempting to reinvent the wheel, get advice from those in-the-know and start implementing strategies for your business the moment you walk out of the conference.

Insite Melbourne 2014 will be held at the Burke Room in the Hotel Windsor (111 Spring Street, Melbourne) on Tuesday, February 25, 2014 from noon until 5:45 p.m.

For more information on Insite Melbourne 2014, and to register, please visit channeladvisor.com.au/insite/.