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Ebay is eyeing new seller responsibility policies that could take effect in September.     An announcement is expected in the last week of July.   They are being marketed as a way to make sellers abide by “best practices” and to make eBay a more mainstream marketplace that is safer for users.     I immediately see problems with this and believe it will have a negative effect on those in the Scouting collectibles market.

Several of the proposed changes deal with shipping and handling charges.     Sellers would be required to charge only the actual costs of shipping and packaging supplies.     It would also become the seller’s responsibility to assure the item arrives at the buyer’s location as described.     The seller will no longer be able to offer insurance on an optional basis.     The seller could still charge the actual cost for insurance, but it would have to be incorporated into the actual item price or the shipping charges:   the cost, wherever placed, would be mandatory.

Having sold on eBay this raises more questions for me.

USPS insurance is expensive coverage.     I even dislike calling it insurance.     Those who have tried to file claims with the USPS can report various nightmares and difficulties in getting their claims processed and paid.     If the USPS were a private insurance company, their “claims handling policies” would land them in legal hot water with state insurance departments.

Sending packages by the US Postal Service using their insurance is a time consuming process.   One must stand in lines at local post office counters, fill out a form for each parcel, and have a clerk weigh and calculate postage.       One can only ship when the post office is open, and incovenient situation for those who work at jobs not related to the eBay selling activities.     If the USPS insurance is not used, the item can be packaged postage calculated and affixed without ever having to stand in line at a post office.     Smaller parcels can be dropped into a local mailbox or left for the local mail carrier to pick up.     If one doesn’t have proper postage,   without USPS “insurance” one may use the automated postage machines at many post offices that can weigh parcels and dispense proper postage.     It may be possible to purchase insurance at these machines, but my experience has been that this is not possible.

Some sellers use a private carrier to insure parcels shipped by their business.     This is usually part of the insurance coverage on their business operations.       At least one company offers such coverage to sellers of collectibles.     This charge for this coverage is not on a per parcel basis.     Under the proposed eBay policy, how could a seller charge for this insurance?

There are other carriers for parcels.     UPS and FedEx are two such examples.     However, for small and light items their charges would be significantly higher than the USPS.     What would be the reaction from buyers if told that it costs $4 to ship that $5 patch they just bought because the seller uses UPS to ship parcels insured, and that such insurance is mandatory per eBay policy?   I used to work for a seller of collectibles and remember well the reactions from some over their $4 minimum shipping charge.

I used to work as an actuary and still think like one some times.     What if a seller wanted to include a risk load on his parcels similar to how the USPS calculates insurance charges.     I believe the charge could be much less than the cost of the USPS insurance.     If the seller was detail oriented he would establish and maintain a seperate fund — at least on an accounting ledge basis — of the risk load charges collected.   A larger operation would maintain a reserve of funds on their books in a manner not too dissimilar to the claims reserves maintained by insurers.

Then in the event that a parcel is lost, the seller just writes the check and deducts that amount from his risk load fund.     Refunds could be given much quicker than the several months it takes to get a refund from the USPS, and with significantly less hassle and cost to both buyer and seller.       A quick payment or replacement for a lost item would result in better customer service and increase goodwill.   Should the fund prove insufficient to cover losses he could raise the risk load charge, just like insurers seek to raise their rates.     However, what would be eBay’s reaction to this practice?       Would it be allowed?     Would it be disallowed even if it was less than the cost of USPS insurance or the costs of other shipping carriers?   How would seller react to this practice of “self-insurance”?

There are a couple of other things to notice here.     If the insurance charge was incorporated into the price, presumably through the minimum bid for auction listings, eBay would see an increase in fees.     They tell the sellers they cannot profit from shipping/handling charges while they seek to do just that themselves!     One commenter to the article referenced at the top of this post notes that if the insurance charge was added the shipping, this could result in lower ratings for the seller and adversely affect his search placement, or in an extreme case result inhis suspension from eBay.

In all, it sounds like the ultimate goal of these charges is three fold:   increase revenue to eBay,   create the illusion they are improving buyer service and security,   and drive away small time sellers.

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