March 11, 2014

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 -  In part 2 (now available here), 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/.

February 17, 2014

No More Blackthorne: So What’s Next?

In about six weeks, eBay will end technical support for Blackthorne, a desktop software solution that helped retailers sell on the marketplace. Owned by eBay since 1999, Blackthorne found a niche among sellers uploading large quantities of listings at once.

Because of our loBlackthornengstanding relationship with eBay, we’ve been doing some work behind the scenes to make sure that Blackthorne customers can easily transition to the ChannelAdvisor platform. We know it’s hard to move away from a solution you’re comfortable using, and we realize that any new system involves a learning curve. But if you’re curious to find out what a switch to ChannelAdvisor would mean for your business, read on.

1. A secure and trusted network

Not only will you get all the features you had with Blackthorne (plus many more), but you’ll also be investing in a secure, feature-rich cloud-based platform and a knowledgeable network of staff, partners and resources. As an online retailer, your most important asset is your product data — and we’ll both keep it safe and optimize it for growth. Our bulk editing and automatic listing-revision features will save you time that you can put toward growing your business. And with your inventory information synced in our cloud, you’ll save yourself the worry of overselling — or losing your data.

2. Expansion to more online channels

You’ve been selling on eBay, and we can help you expand there. But have you ever toyed with the idea of selling on other marketplaces, like Amazon, Sears or Newegg? Because our platform runs on a single data feed, once your inventory information is in our cloud, you can easily sync it with additional e-commerce channels, including your own webstore. Even if you’re not ready to expand immediately, knowing that it’s an option down the line can inform your long-term strategy now.

3. Advanced reporting and analytics

With our eBay 360 Dashboard feature, you’ll be able to keep track of your overall GMV, top-selling products, items that need to be shipped, Detailed Seller Rating (DSR) information and customer feedback. In addition, we can help you make sense of any listing errors with efficient listing management and give you a bird’s-eye view of all your open listings. Once your items are listed, ChannelAdvisor’s Actionable Retail Insights feature will allow you to identify opportunities to optimize your listings with recommendations on item specifics, suggested eBay categories and many more. With information like this, you’ll be able to make well-informed, data-based decisions for your company.

4. Global engineering and support teams

As an eBay seller, you probably know how often eBay introduces new features and requirements. It can be hard to keep up with. But we can take that off your plate, too. Our global engineering team responds quickly to (and often pre-empts) changes that eBay and other online channels roll out. You’ll also reap the benefits of an award-winning customer support team who will answer your questions, even in the middle of the night. And, if you haven’t figured it out by now: we’re also kind of geeky about e-commerce. We’re always looking to explore the most promising new channels worldwide and share tips, news and strategies with you.

5. An eye on the details

Sure, we’ll help you with the big stuff — like making sure your product information is up to date and preventing duplicate listings. But we’ll also help you manage and automate the details, the tedious work that can take up so much of your time. Our platform makes it easy to create variations and manage custom item specifics on eBay. And the automatic item specifics feature means that you don’t need to map item specifics on your own. Best of all, if you’re selling on eBay and other channels, we’ll take care of syncing inventory and order information across all of them.

If you’re a Blackthorne user interested in learning more about ChannelAdvisor, we’re offering some incentives to make sure your transition goes smoothly. Contact a ChannelAdvisor representative to find out more.

Blog post by Jenny Hock, ChannelAdvisor product manager.

February 12, 2014

January 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.  

Welcome to our first Same Store Sales report of 2014.  Today we are releasing January's SSS data for eBay, Amazon, Google Search and Google Shopping.  Overall retail has come in below expectations due to the unusually large number and breadth of winter storms we are experiencing in the US.  In today's report we'll see if the weather is also weighing on e-commerce.  It's also important to remember that November and December were quite unusual because of the shorter holiday and the movement of CyberMonday into December.  Also, comScore has not published their 2014 e-commerce growth forecast, but Q4 came in at 11% so that's the baseline we are using until comScore publishes their forecast for 2014/Q1.

Catalyst 2014 - Amazon, Google and more!

Also, our Catalyst show (March 10-12 in Las Vegas) is filling up so I wanted to remind readers to register ASAP as we have historically hit a sold out situation.  You can learn more and register here.  Plus today we just announced Amazon's SVP of marketplaces - Sebastian Gunningham, will be back and Google will be a big presence as well - more to come on that front, you can expect a lot of surprises this year ;-)

January 2014 SSS Results 

  • Amazon - Amazon's January came in at 14% compared to December's 27.9%, a substantial m/m decrease caused by the holiday December spike. 
  • eBay -  eBay's January came in at 12.7% up a bit  from December's 11%. We have eBay details further down in the report that show what is going on with this marketplace.
  • CSE - Comparison Shopping came in at 12% down from December's 31.1% (driven largely by Google Shopping/PLA)
  • Search - Search came in at 10.3% , an decrease from December's 26.2% y/y growth.  Later in the report we have more search details.

Reviewing these high-level results, it does seem that as is being reported in the broader retail world, the weather is impacting the e-commerce world as well.  We'll be keeping a close eye on how this develops through the rest of the quarter in Feb/March.

SSS Chart 

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

Sss_jan_14_macro

This chart clearly illustrates the unusual spikey-ness between Nov/Dec/Jan that we experienced.


eBay Details

eBay's SSS for January was 12.7%.  To get a feel for what is driving the marketplace's performance, here are the interior data points for the month:

  • eBay auctions - Down 10.9% y/y. 
  • eBay fixed-price - Up 14.6% y/y - this was a nice showing for eBay and was the primary driver of the increase from December.  Perhaps eBay enjoyed some re-gifting this year and also continues to benefit from the mobile device upgrade cycle.
  • eBay Motors  (parts and accessories) - P+A decelerated a bit in January decreasing to 17.6% from December's 21%. P+A has historically been impacted by weather - it is hard to work on your car when you are in two feet of snow.  At the same time, consumers are going to need wipers, snow tires/chains, etc. so it will be interesting to see if the category starts to climb back into 2014.

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

Sss_jan_14_ebay_details

Supplemental data for Search

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

Sss_jan_14_search

Search SSS increased 10.3% for January and you can see there was a mix of internals that drove that result.

First, clicks are down due to consumers moving to PLA/Google Shopping.  The key driver for the increase with search was a nice increase in the AOV.  This indicates to us that consumers are using PLAs for lower AOV items (as supported by the supplemental data in the next section) and for the more expensive items they are using the Adwords side of the equation to figure things out.

Supplemental data for Google Shopping

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

Sss_jan_14_google_shopping

 

Overall, Google Shopping came in at 62.8% y/y increase on a SSS.   The Google Shopping/PLA program continues to see strong growth driven by Google showing the ad-unit more frequently as well as increased advertiser adoption and SKU adoption.  We saw a little dip in AOV (driven by retailers loading up their lower ASP items into PLA as they expand their adoption of the program) but you can see conversion rates (CR) improved very nicely - a function of the previously mentioned items plus Google's algorithm(s) improving the consumer experience and showing the 'right product at the right time' which is resulting in a 13.6% increase in the conversion rate.

 

Conclusions 

We hope you are able to use the data provided here to benchmark how your e-commerce channels performed to your peers.  While normally cold weather helps e-commerce, this year we are seeing an unusual amount of snow events which are causing well published shipping delays.  Also, consumers don't start their seasonal Spring shopping (which drives the Sporting goods, P+A and apparel/accessories categories) when they are toughing it through the snow.

Our next SSS post will be in March when we look at the February 2014 data to see if the weather clouds have lifted.

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

 

January 24, 2014

5 Ways to Grow Your Marketplaces Presence in 2014

1. New Marketplaces

If you’re selling only on Amazon, or only on eBay, you should really consider adding the other. These two marketplaces continue to dominate the space. If you've already tackled these, it may be time to look to Sears, Newegg or Rakuten.com Shopping as a potential new revenue stream. Retailers who sell electronics and tools especially tend to find success on Newegg, while sellers in the home and garden category typically yield good results on Sears. (Stay tuned for more details on this differentiation in a future blog post.)

2. Insights

Take it to the next level. Make sure to review and act on your Amazon and eBay Insights. These can be found under the Optimization area of the eBay and Amazon sections in the ChannelAdvisor platform. Insights will provide you with SKU-level information on how competitive your pricing is, how many sellers are using Fulfillment by Amazon (FBA) on an item and what eBay item specifics are missing. You’ll also receive tailored recommendations on potential new products you can source to grow your business.

 

 

3. Cross-Border Trade

EBay's Global Shipping Program (GSP) is an easy way to test out cross-border trade while only having to ship domestically. Shipping and customs charges are automatically included in the buyer’s checkout purchase total and the program is free for sellers. GSP can help increase sales within months, and facilitate orders from more than 30 countries. In fact, eBay is hosting a webinar on GSP next Thursday, January 30th if you’re interested in finding out more. Sign up here.  

 

Amazon too has a similar program called Amazon FBA Global Export.  In the US, for eligible products using FBA Global Export, orders can be placed from international locations if the buyer is in a supported country. Check out this blog for further information.

4. Dropshippers

Have you tried out Dropshippers? This blog post talks about the benefits of using a dropshipper for fulfillment, such as expanding your catalog and improving fulfillment time. If you are already using a Dropshipper, take time to review your your drop-shipping agreements and setups to ensure that they aren’t hurting your seller status. The late purchasing surge during the recent holiday season caused some delivery delays, which may have affected your seller metrics.

5. Automation

Do you find yourself spending hours manually managing inventory across channels? ChannelAdvisor software helps to reduce that time-consuming work and allows you to focus on other areas of your business. Make sure to take time to set things up properly from the beginning so that when you upload a new file it automatically sends the information everywhere you want it to be and makes updates accordingly.

BONUS TIP!  6.  Outsource

Why not leave the management to someone else--free yourself up to concentrate on strategy? Our Managed Services team of experts lives and breathes marketplaces and can help set up the automation you need and provide guidance on strategies that will lead you to success on online marketplaces. (http://www.channeladvisor.com/platform/excel-with-services)

 

Blog post by Luke Evans, Manager, ChannelAdvisor Marketplaces Services


Should You Go It AloneUnderstand the value of marketplaces? Before you jump, make sure you also fully understand the financial benefits of working with a software partner. Download our FREE white paper for more info: Should You Go It Alone or Through a Provider?

 

 

 

 

January 23, 2014

eBay Q4 2013 Results (from a seller's perspective)

Yesterday, January 22, 2014, eBay announced their 2013 Q4 results.   In this post, we'll look at the results from a seller's perspective.  This blog focuses on the performance and any nuances around the eBay marketplace; we do not dig into PayPal, eBay Enterprise or other elements of the overall eBay business.

ComScore just released their holiday growth report for e-commerce (desktop only) showing 14% y/y growth in October and 10% growth for Nov/Dec, for desktop which we'll call Q4 10%-12% until they release the combined Q4 number. Note: comScore's data does not include tablet/smartphone.

Overview of eBay's Q4 marketplace results

Q4 Highlights:

  • Active users (on the marketplace) for the Q came in at 128.1m, representing 14  % y/y growth - keeping the pace from Q2 and Q3 (also 14%). eBay added 15.8m active buyers y/y and 4.5m sequentially.
  • On the call Donahoe said that 40% of their new users were coming from mobile. (He also said 14m mobile customers were added, which would be more than 40%, so I believe that number was for eBay and Amazon).
  • US GMV came in at up 14% y/y ($8.5b in GMV) - ahead of comScore's Q4 growth rate.
  • Fixed price grew 19% y/y (well ahead of overall e-commerce) - FP hit a new high-water mark of 73% of transaction
  • >55% of transactions featured free shipping
  • International was 61% vs. 39% for US (A new high for international gmv)
  • International grew 10% y/y ($13.1b)
  • Top-Rated Sellers (TRS) same-store-sales (SSS) were up 18% (greater than e-commerce) and TRS sales now represent 47% of sales (new high mark)
  • eBay launched 89 retailers/brands on the platform in 2013
  • Cassini is now live globally

Q4 Lowlights:

  • International GMV grew a sluggish 10% y/y.
  • Auctions declined 5% y/y and hit a low-water mark of 22% of GMV
  • eBay announced that activist Carl Icahn has been buying up eBay stock and is advocating for the company to split PayPal and the marketplace.  eBay strongly disagreed with this suggestion on the call.

Updated Q4 dashboard:

Here are the key metrics from the quarter: (click to enlarge)


Ebay_q4_13_dashboard

eBay's quarter was mixed and came in at the low end of their expectations from a revenue perspective.  We were pleased to see the US GMV come in at 14% y/y growth as we did see weakness toward the end of December.

 

 eBay Category Details

Unlike Amazon who is very closed with their category data, eBay releases detailed category metrics every quarter that we analyze for you.  Here is a chart that lists each category from largest to smallest indexed by their Q4 2013 GMV.

Ebay_q413_cats_size

Home and garden is the first category to ever get to over $3b in a Q and CSA isn't too far away coming in at $2.7b for the Q and leapfrogging P+A for the first time.

The next chart looks at each category by their y/y growth rate (more relevant in our world than sequential Q->Q growth).  The green indicates the category grew faster than e-commerce, the yellow is in-line and the red is substantially lower than e-commerce.

Ebay_q413_cats_growth


Outperforming categories

  • It's no surprise that video games were the fastest growing category - thanks to the PS4 and XBoxOne.
  • P+A had a great Q growing at a strong 22%
  • B+I grew an impressive 16% - we are seeing a lot of interest in eBay from industrial supply type companies and that's reflected in this 

In-line categories

  • Given the usual gifting popularity of CE and toys it was a little surprising to see these categories come in at 9% and 7% respectively.

Underperfoming categories

  • BMV and vehicles are all categories that have historically been structurally challenged, so no surprises there. 

 

eBay's Category mix

Frequently sellers ask about the mix of categories on eBay.  This pie chart takes the non-vehicle categories and shows their relative share of eBay's Q4 GMV in a pie chart:

Ebay_q413_pie

 

Conclusions

On the call, eBay management talked about the competitive nature of the quarter and that offline retailers were moving to digital slower than they expected.  Reading through the lines, it feels like they were talking about Amazon.  Amazon announces their results on January 30th and we'll be covering that at sister site AmazonStrategies .

Scot Wingo wrote this blog post. I am CEO of ChannelAdvisor.

January 22, 2014

eBay Q4 2013 results preview (seller oriented metrics)

This week on Wednesday 1/22, eBay announces Q4 results after the market closes (~4:30pm ET).   In this post we preview the Q4 report and provide an overview of what we will be watching for from a seller's perspective.

ComScore just released their Holiday growth report for e-commerce (desktop only) showing 14% y/y growth in October and 10% growth for Nov/Dec, for desktop which we'll call Q4 10%-12% until they release the combined Q4 number. Note: comScore's data does not include tablet/smartphone.

Our average Q4 SSS increase for eBay's GMV was 11.6% which is in-line with the desktop comScore number.

eBay Q4 Dashboard

As usual, before the results, we are publishing our dashboard so sellers/retailers can track the relevant pieces of the results:

Ebay_q4_preview_dashboard


Shortly after eBay announces, we will update the dashboard with the actuals to see how they did vs. their guidance, Wall St. expectations and Q3 2013

What else are we looking for?

In addition to the "usual suspects", we'll be watching for these trends:

  • eBay continues to focus on CBT with their Global Shipping Program.  We'll be watching to see if eBay has any new data points here.
  • Mobile mobile mobile - eBay likes to reveal some interesting mobile stats which we watch with interest. 
  • Any insights into user growth are always of interest
  • Growth rate of top-rated sellers vs. above-standard sellers.
  • Any information about eBay's performance during the holiday.
Scot Wingo wrote this blog. He is CEO of ChannelAdvisor.  

January 09, 2014

December 2013 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 schedule can be found in this post.  

Happy New Year everyone!

Today we are releasing December 2013 data for Marketplaces (eBay/Amazon), Search and Comparison Shopping Engines (CSE) along with supplemental data.  December was the last month in Q4 2013 and gives us the final view into how the holiday performed.

As we've been mentioning in our regular holiday updates and we highlighted in the monthly November update, this year was quite unusual with a late Thanksgiving causing Cyber Monday to shift to early December and shortening the holiday selling period by six days compared to 2012. 

Before diving into the December results, we wanted to provide one last overview of holiday 13:

Holiday 13 Wrap (ha!)

Heading into Holiday 2013, Forrester forecasted 15% y/y growth and comScore forecasted 17%.  Based on our SSS data, we believe the holidays came in above these forecasts.  Google Shopping/PLA along with Amazon drove a lot of that success.  Old-school search (AdWords) was surprisingly robust (see thoughts below in search details).  The biggest puzzle for the holiday was eBay.  eBay started strong (up ~30% Thanksgiving-Cyber Monday), but then in the middle of December lagged enough to come in at ~11% y/y growth overall for the holiday and November/December which is below the growth-rate of e-commerce.  In the December results below we peel the onion on all these trends from holiday 2013.

December 2013 SSS Results 

  • Amazon - Amazon's December came in at 27.9% compared to November's 12.3%, a substantial m/m increased caused by the holiday shift.
  • eBay -  eBay's December came in at 11% flat from November's 10.9%. We have eBay details further down in the report.
  • CSE - Comparison Shopping came in at 31.1% up from November's 5.0% (driven largely by Google Shopping/PLA)
  • Search - Search came in at 26.2% , an increase from November's 9.2% y/y growth.  Later in the report we have more search details.

SSS Chart 

The following chart details the SSS data for December 2012 through December 2013: (click to enlarge)

  

13_dec_sss_overall_v2
 

This chart clearly illustrates that the 'great holiday shift of 13' created an unusual dip in November and a spike in December.  Talking to retailers, this created what for them was one of the most stressful holiday sales periods in recent memory because we essentially had 21 days to know how the entire year played out.


eBay Details

eBay's SSS for December was 11%.  To get a feel for what is driving the marketplaces' performance, here are the interior data points for the month:

  • eBay auctions - Down 10% y/y. 
  • eBay fixed-price - Up 10.7% y/y
  • eBay Motors  (parts and accessories) - P+A accelerated a bit in December increasing to 21.0% from November's 19.6%.  P+A is not a holiday driven category, so is less impacted by the Thanksgiving shift.  Plus it's very hard to wrap mufflers and tires ;-)

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

   13_dec_sss_ebay_details

The obvious question looking at eBay compared to the other channels is: Why was eBay flat from November to December?  (And why did holiday come in at 11%?)  If you recall when we date-aligned the holiday dates (blog post here) eBay's holiday started at 29.7% and then drifted down to 9.6%.  Unlike last year where we saw a U shape to the holiday for all channels, eBay's holiday started strong and then  slowed as we got past Cyber Monday.  In particular the 7-8 days in the middle of the month 12/8-12/15 were particularly sluggish (sub 10% y/y SSS growth) - this had the impact of erasing many of the gains eBay enjoyed in the first week of December (as well as a good showing the last week of November).

Looking back at 2012 we noticed a couple of macro differences between holiday 12 and 13 that could be contributing factors:

  • In 2012, eBay invested heavily in TV promotions that ran primarily during sporting events (football games) - there was no national US TV promotional activity that we saw.
  • In 2013, eBay did a great job lining up their promotional calendar with Thanksgiving, Black Friday, Cyber Monday, etc.
  • This year we saw early inventory stock-outs in Brick and Mortar which helped eBay in the start of the holiday, but we did not see that continue to play a role after the Cyber Five.
  • Also in 2013, eBay appeared to invest heavily in Google Shopping/PLAs (perhaps in replacement of a TV campaign?).

We're waiting to hear more from eBay on their Q4 conference call which is scheduled for January 22nd.

One highlight is the performance of eBay Motors Parts and Accessories which was up 21% (highest growth since July), which is unusually strong given the winter weather experienced in December across the US.

Supplemental data for Search

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

   13_dec_sss_search

After lagging e-commerce growth for most of  2013, Search  had a strong December. Some of that is due to Cyber Monday being in December, but also looking at the internals I direct your attention to the nice move up on Orders - driven by a material bump in conversion rate (CR). AOV was also up nicely (probably driven by improved economic backdrop primarily).

Looking at the data here combined with what we are seeing in Google Shopping, I think Google's approach of having the two offerings (PLA+AdWords) is improving the results of both programs - indicating it is definitely a better buyer experience.  Think of it from this perspective:

As consumers work through their purchase decision and can broadly be put into two buckets or modes:

  1. Research mode - "What kind of camera, toy for a my niece who is 8, tablet, HDTV, boots should I buy?"  These consumers are going to be drawn to the AdWords part of the page.  By effectively moving the transactional types of ads (economically at least) out to PLA the quality of the AdWords improves for these consumers.  Instead of "Uggs for $199!" I get "find the right boots for you" in AdWords and the Uggs are over in PLA.
  2. Buy mode - "I know I want the Playstation 4, where can I a) find it and b) get the best price/shipping/service/etc." Conversely if you are ready to buy, you don't want to slog through 30 AdWords results looking for it - you want to find it faster and know the price, availability, merchant, etc. PLA/GS is perfect for this.  Yes, I want those Uggs and $199 is the perfect price -boom.

Certainly the conversion rate moved up due to macro-economic factors and seasonal factors, but this is one of the largest conversion rate improvements for AdWords we have ever seen and we believe it speaks to some structural improvements driven by the 1-2 punch of PLA+AdWords.

Supplemental data for Google Shopping

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

  13_dec_sss_gs_details

GS/PLA SSS were up 90% y/y, which is substantially faster than e-commerce.  A large part of this growth is the fact that last year most retailers were just experimenting with GS/PLA as was Google - now we have Google sending massive traffic to GS and retailers advertising all of the SKUs that make sense.  During the Holiday both Google and retailers really poured on the PLA spend, product and search coverage.

Google Shopping AOV increased 2.6% y/y largely driven by category mix changes. Conversion rates showed a decrease due to the fact we have more ads showing up for many, many more searches.   You can't argue with 90% y/y growth so this is quite minor compared to the broader opportunity.  In fact, we continue to believe that retailers are under-investing in this important channel.

Conclusions 

We hope you are able to use the data provided here and our holiday coverage to understand how your sales on all e-commerce channels compared with those of your peers.  The 'Thanksgiving shift' / six missing days forced retailers of all sizes to bring their "A Game" in terms of operations and logistics, and given the nature of y/y metrics, these comps  will follow us into 2014.  

Our next SSS post will be in February when we look at the January 2014 data to get a feel for how the new year is kicking off.

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