The IPTS is one of seven scientific institutes of the European Commission’s Joint Research Centre. It supports the EU policymaking process through science-based responses to policy challenges with both a socio-economic and a scientific-technological dimension.

The IPTS working paper provides a framework for a better understanding of what the recent economic studies tell us about cross-border e-commerce and public policy:

1.     The effect online trade has on trade costs – While new studies (including eBay’s) find that cross-border online trade significantly reduces distance-related trade costs, linguistic and cultural barriers seem to play a more prominent role online. Can policy efforts help overcome those, e.g. by improving connectivity between online payment systems and promoting efficient parcel delivery systems?

2.     The effect online trade has on consumer welfare – Preliminary estimates (including eBay’s) suggest that shifting towards more online transactions creates consumer benefits such as heightened price competition in online and offline markets, increased variety of supply and consumer choice available through online suppliers, and reductions in consumer transaction costs (time gains, transport costs). What policy measures would boost the consumer welfare impact of cross-border e-commerce, and not only the volume of such trade?

Drawing on the eBay economic research, we published last year a paper offering our views on the future of commerce and on the public policies required to further reduce trade costs and unleash consumer benefits – see the EU and US versions of our paper.

This post was originally published on the eBay Main Street blog. 

Rohan, vice president of PayPal Asia, co-chaired a session on achieving entrepreneurial success at The Wall Street Journal’s “Unleashing Innovation” conference. He emphasized that PayPal is fostering an entrepreneurial spirit at eBay Inc. as well as enabling the growth of small businesses and entrepreneurs in the region by connecting them with consumers all over the world.

“Our customers are very innovative, so we have to be very innovative to meet their needs around the region,” Rohan said.

Watch a Wall Street Journal interview with Rohan, in which he discusses why China is the fastest-growing market for online merchants:

The index reveals that large eBay sellers and PayPal merchants in Greater China have experienced revenue growth of 68 percent and 35 percent, respectively. Large eBay sellers and PayPal merchants in mainland China are growing even faster, at rates of 93 percent and 48 percent.

“Our vision to enable global commerce is paying dividends in China by empowering Chinese enterprises to sell to consumers around their world and contributing to strong growth among the local online export industry,” said John Lin, Vice President of eBay Greater China.

Click on the image below to download the report.

Watch a video from the China team (subtitled in English) that features sellers and merchants discussing the advantages of using eBay and PayPal:

Nicholas Staheyeff, Vice President CEO eBay International AG, said, “Boosting cross-border trade and helping Europe’s entrepreneurs big and small grow their business on- and offline are essential to work our way out of the current crisis. eBay is taking the lead in developing and facilitating new, technology-enabled and consumer-driven commerce, which will stimulate much needed growth. We call it Commerce 3.0 and we are already producing technology tools that enable consumers and retailers to connect, establish trust and transact globally. Such technology tools must now be matched by legislative and policy action to deliver their full potential.”

MEP Cecilia Wikström, who hosted the roadmap’s launch at the European Parliament, said, “If I buy a necklace online but have to wait days or perhaps weeks before I can wear it, e-commerce will lose its charm. Through better cross-border parcel delivery services, simplified VAT and streamlined customs procedures SMEs would be able to expand their businesses, even outside of the EU, and European consumers would enjoy real choice. The increased trade would take us out of the economic crisis faster.”

The roadmap, “Towards Commerce 3.0: Roadmap for Building Sustainable Growth into Commerce”, calls on the European Union to show global leadership by:

1. Supporting private-public partnerships for trusted, low-cost and fast cross-border, end-to-end parcel delivery services;
2. Simplifying, standardizing and ending discrimination with regard to VAT and customs duties for electronically purchased goods from both EU and non-EU sellers;
3. Designing “21^st century trade agreements” that create simplicity and transparency for consumers and small merchants;
4. Promoting “mutual recognition” of other countries’ customs programs as a key instrument to facilitate international trade flows;
5. Adopting a new policy-making mindset towards technology and information society services that embraces experimentation and innovation.

The roadmap is supported by an empirical economic study and analysis of international trade flows and exporting behaviour, comparing offline channels and eBay. The study was carried out by Sidley Austin LLP and Prof. Marcelo Olarreaga of Geneva University. Its findings highlight that trade costs matter 60% less for eBay transactions than for offline trade and that around 80% of sellers, big and small, on eBay sell to five or more foreign countries. This is a far higher number than those who only trade off-line. The study also found that an average increase in real GDP of 15.6% would be hypothetically possible if all international transactions had the same low trade costs as the eBay marketplace.

Towards Commerce 3.0 | Roadmap for Building Sustainable Growth into Commerce

Download

Economic Report: Enabling Traders to Enter and Grow on the Global Stage

Download

This post first appeared on the eBay Main Street blog. 

Q. Based on a group study this morning, 2 out of 5 of the current PowerSellers with the best store listings on eBay Pulse will not qualify for PowerSeller status based on DSR ratings, when that goes into effect. How are you going to address this issue?

Lorrie Norrington, President of Marketplace Operations: It’s true that some sellers won’t make the grade with DSRs. When we put out the DSR requirements, we said you would need to have a 4.5 or above to qualify for PowerSeller status. We also gave sellers until July 1 to bring up their DSRs. Based on what we presented earlier, it’s obvious that a high percentage of PowerSellers are not only making the grade with DSRs but they’re qualifying for discounts. Sellers need to reach out to us and their TSAMs because clearly there are some best practices out there to ensure folks get the highest DSR possible; whether it’s over communicating or immediate feedback, for example.

Todd Lutwak, Sr. Director of Seller Development and Programs: The sellers have done an excellent job raising their DSRs. I think that sample that you took locally is definitely different from the metrics we’re seeing. Over 80% of PowerSellers have 4.5 DSR or above. We’re continuing to monitor as we progress to that July date.

Lorrie: I’d like to add that we really appreciate the work that PeSA is doing here. The educational work is going to be really important for sellers that want to get their high DSRs. To Todd’s point, 80% are doing it now and we want to have more.

Q. You said that there were some retaliatory remarks that prompted the change to Feedback? Can you elaborate on that?

Lorrie: I was referring to the fact that sellers were 8 times more likely to leave a retaliatory negative remark and that is why we changed the Feedback system.

Q. What was happening there? Can you talk more about this?

Matt Halprin, VP of Trust and Safety: The Feedback system was set up to make sure that both parties were accountable to each other. What has happened over time is that sellers have increasingly held off on leaving feedback until the buyer leaves feedback to make sure they don’t get a negative rating without being able to counter that. Sellers used to do this twice as much as buyers; now it is eight times as much. So basically buyers were no longer willing to hold sellers accountable for their performance; which is why 90% of sellers have positive feedback scores of 99% and above. As a result, buyers don’t trust the feedback system because they can’t discriminate between great sellers, average sellers or poor sellers. We needed to fix that because eBay is based on trust. If buyers don’t have trust they won’t send money or bid as much on an item (we’ve all talked about the notion of ASPs not being quite as high as they used to be). It is up to us to help your economics by making sure that buyers are more confident when they bid. Which is why we changed the system and with this more honest of a system we’ll be able to do things like elevate items in search and reward sellers for top performance with bigger discounts. All of which will create more of a race to the top than we’ve had before.

Lorrie: We announced this change back in January and it goes into effect in May. My advice is as soon as your buyers pay you, give them positive feedback.

Q. I was at the Catalyst Conference and I’m really excited to hear about some of things you’re introducing and to see you guys out here in force. You said it today, and it came up back at the Catalyst Conference about the .02 points discrepancy for non-domestic DSRs. There are some areas of this world that just don’t have the same postal service as we do here in the US. There is a distinct drag in Italy for example, really slow. Another is Slovakia. I shouldn’t have to tell the Canadian customer that his mail system is stinky – he already knows it – but it won’t stop him from dinging me on shipping. I know you look at it from the 50,000 foot level but it would be great if you could address it more granularly so maybe I could qualify for the 15% discount next time. [Applause]

Matt: Although this is the first time I’ve heard about Slovakia, it’s not the first time I’ve heard about Italy or Canada. We’re aware of it and there are a variety of ways we’re looking at addressing it. I don’t think right now that we have a tool that allows you to lock out a country like Italy for example (if you simply choose not to ship there) but that is one end of the spectrum. Just to share one bit of information, and I admit it is 50,000 foot information, but it is very telling for us. We thought that all Cross Border Trade DSRs were going to be a little bit lower than domestic DSRs because of shipping. Actually, around 50% of sellers have cross border trade DSRs that are equal to or higher than their domestic ones. So obviously there are some best practices in place that are helping address that possible situation. Now, I want to make sure I affirm what you said – we are looking directly at Italy and Canada to address that specific issue.

Q. Talking about shipping. Shipping & Handling cost seems to be the lowest DSR for most eBay sellers, I think we can all agree there. Shoppers love free-shipping. Can you talk about how eBay looks at free-shipping relative to DSR scores as well as free-shipping economic models that work for sellers in the eBay landscape?

Matt: Shipping and handling is the lowest DSR of the four but I do want to point out that 72% of all DSRs left for S&H are 5s. Frankly, I think that means the DSRs are working because we all know that S&H charges on eBay are higher than the Internet on the whole. So we have an online shopping environment that has set buyer expectations and we all need to find ways to address that together.

Dinesh Lathi, VP of Seller Experience: The fact of the matter is that free shipping is the standard for eCommerce now. Sellers who want to meet buyer expectations need to aspire to that. It is our job, the people here on stage, to help you do that. So, there are definite things in the works at eBay that will help you accomplish that. Look for that soon.

Lorrie: And, in the end, I think it’s pretty straightforward that you need to be very specific when you identify shipping costs and set that expectation and again, to Matt’s point, there are a lot of people out there getting 5s for S&H.

Q. I understand the retaliatory feedback concept. I don’t agree with it but I understand it. What I don’t understand is why DSRs are anonymous. If we have customers leaving valid DSRs we want to know who they are so we can make things right. If we can’t do anything to counter their feedback, we should be able to see what they’re leaving us. [Applause]

Matt: This is a tough issue and it’s one that we haven’t settled on inside eBay yet. I’ll explain why they are the way they are now but also talk about the fact that they may be changing. First of all, why wouldn’t we make it completely transparent? The answer is that we have seen sellers who send emails after receiving a negative, (for example, they have received a 3 or 4 from a buyer) and the seller begins to harass the buyer. I get examples of this sent to me from buyers all the time. The harassment is what we’re really trying to get away from. eBay really is the only place where a merchant can kick the buyer on their way out the door. This is the reason why we might keep it anonymous. The argument for making it completely transparent is very obvious. It will help sellers learn about what they’re doing right and what they’re doing wrong. So what I think you’ll see at a minimum is us moving to a place where we provide the information in different ways – whether it’s by geography or by category – or go all the way and provide complete transparency. We’re not sure yet, we want to monitor how the new feedback system works before making our final decision.

Lorrie: It is an important point though. I think it’s obvious that our intent is to put more trust back into the system. We think this new Feedback system does that. Like Matt said, we haven’t even rolled it out yet so we’re just going to have to see how it goes. I think it’s a great point of learning for us. I think this is a good time to emphasize what we’re trying to get across to sellers. First of all, we want an incredibly open dialogue with you and to listen to you and there will be places where we continue to roll out new initiatives or experiments that we’ll want your input on. There will also be places where we won’t change because we think it’s best for the marketplace. But the open and honest dialogue with each other can only help. So, in the case of the new feedback system, we haven’t rolled it out yet, and as we do roll it out we’ll learn from it.

Q. We have a shipping calculator on our system so that anyone that comes and makes a bid can calculate the shipping cost before they make a decision to buy and yet we still only have a 4.6 for shipping. We would like to be able to respond to them to find out why they’re not leaving a 5 even though they knew the cost was coming.

Matt: With the new system I think everyone in this room will get more specific information on a transaction that has not gone perfectly well. Buyers will now have 80 characters to provide feedback and detail all without the fear of a negative retaliatory feedback.

Lorrie: And I think this is exactly the kind of input we’re hoping to get here. Our intent is to make your experience better so it’s this kind of feedback that helps get us there.

At this point, the keynote Q&A was ended to allow for the first sessions to commence. Immediately following this initial Q&A session, all eBay representatives moved into the panel room for an hour of further questions and discussion. That one is coming next time.

Cheers,
RBH

I received a number of questions regarding cross-border trade practices in the first few days of the blog and, over the weekend, Scot Wingo proposed in eBay Strategies that “Confusion abounds over eBay’s new International Visibility Offering” so I decided to go off on my first recon mission. One of the initial questions raised on Ink about this was by Davey regarding setting up an internal cross-border trade team. You will be interested to know that there already is a team in place devoted to evolving and enhancing Cross-Border Trade (CBT) practices on eBay. The team was expanded and has been in place and focusing on CBT since early last Fall, and it seems the fruits of their efforts are now starting to see the light of day. I was lucky enough to sit down with a couple of members of the team over the past two days to see if I could sort some of these questions and concerns out.

Firstly, I wanted to find out more about the International Visibility Feature discussed by Scot and the questions he raised around non-US buyers rating US sellers at .2-.5 lower stars. It is the CBT team’s contention that although a ding of any kind is not optimal, they’ve seen no evidence of this going beyond a .1 rating. In fact, I got the impression that some sellers have even higher International scores than domestic.

Further, it was agreed that the current DSR set-up is not the best for international transactions and they are currently focused on addressing an improved rating system.

Thirdly, I wanted to get their opinion on the current “work-around” strategy of listing across two different seller IDs and although it was agreed that this was a solution of sorts, it could be argued that the seller is simply creating more work for themselves by having two IDs to manage and, by directing buyers to another ID could only add to the confusion.

Which leads to a theme that I’ve seen come up with regard to current CBT practices. Quite frankly, it seems that not enough education regarding CBT is out there. For one thing, buyer’s expectations need to be set with regard to shipping cost and time. Essentially, this is what the team has been brought together to do: educate and enhance the international experience. As it stands now, the buyer is confused with the current set up (yes, I agree with Scot’s assessment) and in order to counter that confusion, we need to have better messaging and education that can set the expectations on both sides of the transaction.

I took a look at the current Best Practices on international selling. It definitely has served its purpose up until this point, but its time has passed. In meeting with the CBT team today I was given a sneak peak at the soon-to-be-launched Global Trading Page that will house detailed support, information and new best practices for both buyers and sellers (I was told weeks – not months). Unfortunately, I don’t have much more info on this right now but they were nice enough to provide me with an extremely teasing screen shot of the page (see above). As soon as I get a URL for this, I’ll be sure to share with the group.

I realize there are a lot more questions regarding CBT but I’m pleased to report that there is a team devoted to answering those questions and enhancing that experience. I’ll be interested to get folks’ feedback on the landing page once it goes live.

Cheers,
RBH