When you reflect on eBay news and updates from the past year, its separation from PayPal probably sticks out in your mind. That was big news, no doubt. But for longtime eBay sellers, the company’s Defect Rate changes are top of mind and raised many questions.
EBay’s consumer-first approach is a growing trend among major marketplaces, such as Amazon — and now eBay with its Defect Rate (released in two major phases throughout 2014).
If you sell on eBay, it’s likely next to impossible that you haven’t come into contact with this new Defect Rate (eDR) by now. But if you need some refreshing — or if you’re new to selling on eBay (welcome!) — we’ll break down both eBay’s 2014 seller releases to serve as a handy reference as you plan your 2015 strategies.
Let’s start with the first release of 2014, which we call SR 14.1.
In a Nutshell, What’s SR 14.1?
SR 14.1 was born in March 2014 — for a deeper dive into the release, ChannelAdvisor CEO Scot Wingo dissected it here. But the eDR was the main component of the release:
The eDR is calculated over a 90-day period for most large sellers. The eDR is what’s known as a “meta metric,” meaning that it’s derived from several other metrics, including pervious detailed seller ratings (DSRs). In a way, this makes it easier to understand because eBay sellers are likely already familiar with the concepts the eDR is based on, such as DSRs for ship time, description, ease of returns and feedback.
Avoiding a high eDR boils down to focusing your efforts on four areas: Describing your item accurately, providing a positive buyer experience, managing oversells and shipping quickly.
What Counts As a Defect?
The new eDR replaces the four former individual DSRs. The eDR is based on negative transactions that have one or more of the following defects (in eBay’s words):
- Seller ratings of 1, 2 or 3 for item as described
- Detailed seller rating of 1 for shipping time
- Negative or neutral feedback
- Return initiated for reasons that indicate the item was not as described
- EBay Money Back guarantee or PayPal purchase protection case opened for item not received or item not as described
- Seller-cancelled transactions
Why Did EBay Make Such a Significant Change?
For many years, Amazon has set the marketplace standard for a smooth buyer experience. EBay attempted to put its many years of customer data to good use and revamp the way sellers are rated on the marketplace. The initial changes in SR 14.1 were oriented toward improving the buyer experience, which translated to this higher set of standards for eBay sellers, aggregated as the eDR.
What Are the Implications of the eDR on Your Seller Status?
Your eDR determines the classification that you’ll be assigned by eBay:
- Top Rated Seller (TRS): You must have an eDR that’s less than 2%. Or, to make it easier to understand, that’s fewer than 2 (defects) per 100 (transactions): 2 per 100, 20 per 1,000 or 200 per 10,000.
- Above Standard Seller: If you have an eDR between 2% and 5%, you’re still a good seller, but you lose TRS benefits. Being in this bucket brings no real punishments other than showing up lower in eBay search results.
- Below Standard Seller: If you have an eDR higher than 5%, then you’re a below-standard seller, and you’ll face increasingly severe consequences — from account limits to all-out account suspension. Again, that’s 5 per 100, 50 per 1,000 or 500 per 10,000.
As mentioned, the better your eDR, the better position you’ll have in search results. For example, if two Top Rated Sellers sell the same item, and one has a 1% eDR and the other 2%, the 1% eDR seller will show up higher in search results.
What Does This Mean for Retailers?
EBay has tried to better balance its seller ratings, and as a result, you as a seller will need to stay on top of customer feedback across the board. This means identifying and responding to seller issues in a timely fashion and ensuring your product descriptions are on point.
When you receive a negative review, you should aim to get further feedback from buyers and, if need be, react by making changes (such as to your product descriptions). This will help boost future ratings. Likewise, it’s important to flag any ratings you think are unwarranted.
Ratings for sellers that sell 400 or fewer units per month are backtracked by 12 months, and ratings for retailers with over 400 units are based on feedback from the last three months.
How Can ChannelAdvisor Help?
To adapt to this new rating system, take a few precautions to make sure you’re being a better seller.
EBay’s defect calculation currently considers refunds for shipped items as “seller-cancelled” due to being out of stock if eBay isn’t otherwise notified of the refund. Therefore, to protect your seller status, it’s important to notify eBay, via a dispute, that a refund is coming. Because of the importance of this simple (but manual) task, the ChannelAdvisor platform automatically creates eBay disputes for certain refunds submitted to ChannelAdvisor for eBay transactions. The transactions must meet the following criteria:
- The order has been marked as shipped by the seller
- The refund is at least 100% of the item value
- No previous disputes have been submitted for the transaction
We’ve automated the manual process on your behalf and will initiate a dispute before you get into a situation that can hurt your reputation on eBay.
For the second and final part of this series, we discuss eBay’s second seller release of 2014 — SR 14.2
Blog post by Jordan Nowlin, social media and blog manager, ChannelAdvisor