eBay announces the end of third-party checkout (3PXO)- June 2011

August 24, 2010

ChannelAdvisor ChannelAdvisor By ChannelAdvisor

Today, eBay’s Todd Lutwak (looking quite tan, I might add!), announced today that in about nine months eBay will sunset eBay’s third party checkout system.   ChannelAdvisor (and our customers) are the largest user of the Third party checkout (we use 3PXO as shorthand so I’ll use that going forward to save time) system so I wanted to share a bit of background on the system as well as our plans in a world without 3PXO  and what it means for buyers and sellers.

Background on 3PXO  (or “Greetings loved ones, let’s take a journey” – Snoop Dogg )

Prior to October, 2001, there was no checkout at all on eBay.  You would click buy now or win an auction and it was up to the buyer and seller to work out how to complete the transaction.  To fill that gap, innovative third party applications built checkouts that the seller could just email to the buyer and BAM the transaction was done.

In October, 2001, to much initial fanfare followed by massive outcrying of sellers, eBay rolled out a checkout system.  Sellers that were using third party systems were very upset about the system and eBay shortly thereafter allowed sellers to turn off the eBay system and instead plug in one of the third party checkouts- thus 3PXO was born.

Sidebar – this is funny, in searching around, I found that eBay still has the help files up from the initial launch of checkout live here – it’s like a trip in a time machine.  

ChannelAdvisor and 3PXO, today and in the future

The initial reason that 3PXO was born and exists to this day is that eBay’s checkout has significant gaps that in some cases can negatively impact the buyer and seller experience.  The biggest items:

  • Tax/VAT calculation – many larger retailers need enterprise-level tax calculations as part of their business.
  • Promotions – Sellers frequently want to offer specials such as ‘buy two get one free’, or free shipping on orders over $X, etc.
  • Shipping and Handling – eBay has very limited Shipping and Handling options.  Also, eBay has a UPS exclusive that makes it impossible to use FedEx as a shipping carrier.
  • Up-sells/recommendations – The eBay checkout does not have up-sells or recommendations or after-purchase bundle building/configuration.
  • Payment option flexibility – By doing away with paper payment options, eBay has essentially gone Paypal exclusive – many sellers also have found that buyers like having the option to just pay with a credit card or for large B2B transactions, by invoice/PO.

We’ve been working with eBay to help them understand these feature gaps and they are committed to filling them before turning off the 3PXO functionality.  You can read more details about their plans here.

Today we announced our plans around this phase-out of 3PXO.  Today, sellers have two choices:

  1. Stay with the ChannelAdvisor checkout through the holiday period
  2. Move to eBay checkout with immediate payment today (if immediate payment is a huge issue for you, this is the best path if you don’t have tax/fedex/promo/payment/other considerations)

In early 2011 as eBay rolls out their solutions to the gaps that exist, we’ll be adding support for those and have more information on when we feel like they are solid and able to meet our customer’s needs.

ChannelAdvisor will continue to provide advanced functionality around inventory management, channel optimization, etc. for customers.

Seller impact of the end of 3PXO 

If eBay is able to bridge all of the gaps in functionality, there shouldn’t be much of an impact to sellers.  However, if, for example, eBay forces all sellers onto their UPS rate card, or does not implement improved shipping and handling features, or does not implement VAT/taxation features, the negatives for sellers could be:

  • Maybe forced to leave the marketplace due to some showstopper (e.g. VAT tax capture and calc)
  • Maybe forced to raise S+H fees if flexibility around promotions, FedEx/shipper, S+H rates, etc. are not allowed.
  • Sellers already are not allowed to offer up-sells so that functionality is already gone

Buyer impact of the end of 3PXO 

These changes will be largely positive for buyers as they will have one unified checkout experience by mid-2011 and then when the eBay Cart/Basket is ready (reviewed yesterday here), everything will be one happy common buyer experience.

There is a small probability that if eBay can’t execute on the long list of checkout features they need to add, that there could be some buyer impact (e.g. the higher fees for S+H mentioned above), but we’ll have to wait to see how that plays out.

Conclusion – More Search (and cowbell!!!!), less cart/checkout

There’s a long time between now and June of 2011 and we’ll keep you posted as eBay rolls out the various fixes to their checkout.  Ultimately a common buying experience is the right path and we are very supportive of that path.  My only concern is that all of the effort going into checkout and cart right now is taking away from search, which is where I continue to believe eBay is falling further and further behind.  If you had to nail one of the two (search or checkout/cart), personally I’d pick search. Right now it looks like eBay is betting on and making the most movement on checkout/cart at the detriment of search.

More bluntly stated – Does it really move the needle if eBay has a perfect cart/checkout if buyers can’t find the items they are looking for?

SeekingAlpha disclosure – I am long Google and Amazon. eBay is a strategic investor in ChannelAdvisor.