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Tue Mar 1 2011 23:03:17

How Big a Problem Are Deadbeat Buyers?

By: Ina Steiner

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While shopping cart abandonment is a problem for online retailers, marketplace sellers have a different issue to deal with: deadbeat buyers. Unless you're selling on a marketplace that collects payments on your behalf, such as Amazon.com, you're likely dealing with the problem of non-paying buyers.

But the problem doesn't end with not getting paid. The seller must relist the item and then file a claim with the marketplace in order to get a refund for the fees it charged.

A reader wrote to me today about the problem of deadbeat bidders on eBay-alternative sites - he said on two venues, he has deadbeat buyer rates of 40 percent.

We'd like to know how bit a problem this is for you. Out of every 100 transactions, how many are deadbeat bidders?

Do you have special tips for dealing with the problem? And is there anything the marketplaces could do to minimize the problem?




Comments (42) | Permalink

Readers Comments

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

This user has validated their user name. by: Ming the Merciless

Tue Mar 1 23:37:19 2011

1. Under NO circumstances should a deadbeat buyer be allowed to leave any form of feedback.

2. NPBs should be suspended for 30 days per item if they fail to pay. Three in one year results in permanent suspension by the user's name NOT their user ID(s).

3. Venues should allow sellers to set their own threshold for bidders instead of, for example, the worthless choices ebay provides a seller. Why should we have any less protection that a B&M seller?

4. Either the seller or ebay should leave negative feedback for a NPB so that sellers can be forewarned of problem buyers.

5. All members should be ID verified.

Just as, for example, ebay profits from allowing counterfeits and knockoffs, they also profit from NPBs because sellers are very hesitant to file fearing negative feedback and low DSRs. Outrageous!

As long as ebay sees profit in non paying buyers, sellers will have to live with them.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

This user has validated their user name. by: Ming the Merciless

Tue Mar 1 23:37:40 2011

1. Under NO circumstances should a deadbeat buyer be allowed to leave any form of feedback.

2. NPBs should be suspended for 30 days per item if they fail to pay. Three in one year results in permanent suspension by the user's name NOT their user ID(s).

3. Venues should allow sellers to set their own threshold for bidders instead of, for example, the worthless choices ebay provides a seller. Why should we have any less protection that a B&M seller?

4. Either the seller or ebay should leave negative feedback for a NPB so that sellers can be forewarned of problem buyers.

5. All members should be ID verified.

Just as, for example, ebay profits from allowing counterfeits and knockoffs, they also profit from NPBs because sellers are very hesitant to file fearing negative feedback and low DSRs. Outrageous!

As long as ebay sees profit in non paying buyers, sellers will have to live with them.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Not THAT John

Tue Mar 1 23:38:03 2011

The boards are full of complaints on both sides. It is like a three ring circus over there.

I believe the style buyer you get will depend on what you sell.

Our buyers were great, never any problems in more then 10 years of online selling.

Paper payments no problem

Repeat buyers were so many time we never even held on checks to clear when they purchased.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

This user has validated their user name. by: Ina

Tue Mar 1 23:41:59 2011

Yes, deadbeats who leave feedback are another problem for sellers - I just posted a new Letter to the Editor about this:


http://bit.ly/gMQw1I

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Rich

Tue Mar 1 23:54:46 2011

I get very few deadbeat buyers; I'd say about 2%; maybe 4 or 5  deadbeat buyers out of every 200 different buyers.  I sell mostly low priced music items so the real problem is not the deadbeat buyers; my main problem is the store fee structure which punishes stores with lower priced items under $10; which is why I do less and less Ebay every year

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Theo
Web Site

Wed Mar 2 00:22:24 2011

This is actually an area that eBay handles pretty well, in my opinion. They take deadbeats more seriously than other marketplaces. iOffer is the WORST -- in January 2011, almost half of my ''buyers'' reneged. And does iOffer even care? Apparently not, because a chronic reneger with 3 reneges in the last month alone ''bought'' something from me last week and never paid.

The ''immediate payment required'' for Buy It Now on eBay is something the other marketplaces should adopt somehow if they want to be taken seriously, otherwise less patient sellers will abandon them sooner or later.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Kevin

Wed Mar 2 08:31:28 2011

There is a simple remedy to this, at least on ebay.

We all know that 90% of NPB's are new users that have feedback of <10.  Most under 5

When you sign up for ebay you have to give a credit card.  For new users with feedback of less than 5, ebay should charge the card automatically when they win an auction or purchase any item that does not require immediate payment.  Give them + feedback right away too so they can build up their feedback fast.  

Just like new sellers face restrictions until they get up and going, new buyers should too.  

New buyers should also have to go through some type of resolution process prior to leaving nuetral or neg feedback, but that's a story for another time.

The bottom line is that as a seller, newbie buyers account for 90% of all problems.  If I could block buyers with feedback less than 5 I'd do it in a heartbeat

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Rick1313

Wed Mar 2 09:33:43 2011

To address Theo's post...

The question as to whether eBay,inc. takes it seriously is opened to interpretation.

While it is an option that sellers can use (and I am not saying they should not be given the option), it can only be used if you have buyer paying with PayPal (which is owned by eBay,inc.).

In effect, eBay,inc. is negating the sellers' ability to offer other payment methods to their potential buyers.

On the flip side, unless the selling venue owns the payment processor (eBay,inc. owns PayPal), immediate payment cannot be offered as, how eBay has it designed, buyer is actually paying for the item(s) before eBay's system recognizes the buyer as the purchaser of the item(s).

In effect, eBay,inc. is making sure that the money is available in buyer's PayPal account, whether via a balance or buyer allows PayPal to extract the funds from their credit card on file (remember, the CC company has PayPal and not the seller as the merchant on record).

If the funds are not available, eBay's system rejects the buyer's purchase request and the item will remain active for seller on the eBay selling site.

eBay,inc. (outside of PayPal) and other selling venues (who are the fourth party in the transaction payment process) cannot go into the third party's (payment processor) system to see if the funds are available before recording purchase. Hence, purchase must be made first and the whole deadbeat buyer scenario is back in place.

Whether selling venues and payment processors can work things out to give the selling venue authorization to verify funds are available before purchase is made, is something for those parties to explore, if there are no blocks in place by regulatory bodies that prohibit the action.

So for eBay sales, if seller's top priority is that they do not want to wait for when buyer will pay for the purchase(s), and that they have no problem in only offering PayPal as a payment option to satisfy this buyer requirement, then the option is a good one for that seller.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Peter

Wed Mar 2 09:39:34 2011

The problem of deadbeats and late payers (both becoming more significant of late, since we are in the Second Depression economy) is easily solved by making 'immediate payment' mandatory. Amazon has this, so why not Ebay?
Of course Ebay would have to offer a more reliable payment system than just Ebay, since I now often get reports back from buyers that there are problems with using Paypal. Never hade that with Amazon Payments though.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: L

Wed Mar 2 10:08:57 2011

My NPB on ebay rose at least 300% after ebay stopped sellers from leaving negative fb to buyers.

I recently changed about 5 of my listings to ''immediate payment required''. . . and, since I did that (a month ago), sales of those ''immediate payment'' items dropped almost 50%.  From 90 sales per month, to about 47, for those particular items.

In the category I refer to, there are typically always about 250 to 300 items for sale ... I was, and still am, a TRS, with 99.9%/5.0,4.9,5.0,5.0 ... ''Best Match'' had (and still has) my items on the first search results page, often within the top 10 items ....

Conclusion:
Some buyers either get ticked off with ''immediate payment required'' and/or, I'm losing some sales through situations where Paypal is not working when they try to pay.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Quicksilver Messenger This user has validated their user name.
Web Site

Wed Mar 2 10:19:46 2011

I have an eBay store and have immediate payment required on some types of items. On items that buyers usually buy more than one, such as magazines, I don't. I had a buyer that signed up yesterday with zero FB that still hasn't paid. I will give them the benefit of the doubt for a couple of days. They might not fully understand how eBay works, they may have had buyer's remorse and found it cheaper elsewhere. It's not a high dollar item. Either way, if they don't pay, I will just follow my usual protocol of of filing the NPB after the (7) days I give them to pay up.

I have noticed a significant increase in NPB activity on eBay over the past year or so. I have never had a problem with this on any of the other venues I sell on.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: luxe

Wed Mar 2 10:43:19 2011

Deadbeat buyers are becoming more and more of a problem for me - maybe 10-20 in a 100.

And yes, you can file an UPI case and get a refund of the final value fee, but in my most recent case I lost $3 - a $1 listing fee and $2 reserve fee - completely non-refundable.  

It's completely unfair and an unacceptable cost, especially to small sellers like myself.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Theo
Web Site

Wed Mar 2 11:01:32 2011

Rick,

All good points. My reference to eBay was relative to other marketplaces, at least eBay has a system in place (like it or not) that deals with deadbeats to some extent. iOffer has nothing of the sort that I can see.

Regardless of PayPal's ownership by eBay, I'm sure it's technically feasible for non-eBay marketplaces to require immediate payment if not through PayPal, then direct CC or Google Checkout.

Deadbeats are a big reason why the smaller marketplaces can't competing effectively with Amazon and eBay.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Rick1313

Wed Mar 2 11:41:51 2011

Now, to address AB's blog...

I'm assuming that the reader who wrote AB did not specify what two selling venues he/she is talking about or AB thought best not to mention the sites if they could not authenticate the reader's claims (which I am not saying hasn't happen as described).

I'm actually surprised that AB uses the term ''Deadbeat buyers'' and not ''Non-paying buyers'' in the title. At the start of their commentary, AB says ''non-paying buyers'' but then slips to ''deadbeat buyers'' for the 100 transaction question.

Hopefully this is not a terminology that will be associated with all ALL buyers who do not pay for their purchases. Things can happen without warning or on a moments notice that immediately changes buyer's priorities.

However, the blog is an excellent issue/topic, especially as AB is asking for readers to offer their opinions on how to address the problem of non-paying buyers.

--------------------

That being said, for me, the ratio is extremely low. I have to imagine some categories are more open to non-paying buyers than other ones.

In the case of a selling venue that has auctions (a bidding process), the ratio probably increases for the seller who offers some or all of their product line in that type of selling format.

A buyer, seeing multiple auctions of the same item, can bid on those that are of interest and only pick one to pay if bidder wins more than one. Also, after winning, if another same type item comes into the auction house, they can delay paying to see if they will win the new auction at a lower price.

As selling venues will not show buyer's payment record to seller, any implied sanctions that the venue says will be levied against buyer is moot.

The can and do remove unpaid strikes as their best interest is to keep buyers buying and sellers have to take ''one for the team'' to accommodate the selling venue's business model.

Tips for dealing with the problem is dependent on if you have a communicative buyer.

If they do not communicate, a seller can do little than to file a non-paying buyer case to the selling venue.

If they do communicate, what is said by buyer will determine which way a seller sees the transaction should complete or terminate to both parties satisfaction (or at least as satisfied as one party can make the other party be).

The problem with a selling venue like eBay,inc. is that, besides the feedback/DSR issue (which I am commenting on AB's other thread on non-paying buyers), they give seller only one shot at trying to get back their final value fees (FVF).

They are multiple scenarios, through no fault of the seller, that eBay allows themselves to keep the FVF that they are liable in a court of law for damages if they refuse to credit the fee(s).

The fact that the scenarios even exist helps any plaintiff wanting to show the bad faith business model that currently runs eBay,inc.

But I digress.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Sam

Wed Mar 2 11:50:57 2011

I agree with several other people. Just make it so the item has not been "won" until the item is paid for. If I sell magazines, and I want a buyer to be able to purchase several, no problem. Select as many items as you want. Even come back tomorrow or next week and add some more. But until the items are actually paid for, the items are not really bought yet. If the buyer comes back in a few days, and say one of the magazines that he selected was purchased (and paid for) by someone else, tough luck, they lost it. It's so incredibly simple.

An analogy would be for say someone to go into Walmart, pick out all the items they want and stuff them in a box and put it in the back room and not pay for them until they feel like it. Insanity. You haven't bought it until you've bought it.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

This user has validated their user name. by: Ric

Wed Mar 2 11:56:15 2011

eBay needs to improve service to their sellers in the form addressing  slow payments and non payment issues..

Slow payments and non paying bidders have definitely become a larger issue on eBay since the company eliminated seller's ability to leave negative feedback. As there is little in the way of visible repercussions, buyers do not have any sense of urgency about completing purchases in a timely manner.

eBay could easily correct this situation to benefit the seller community if it decides to become proactive in cleaning up the unintended consequences of the no negative feedback for buyers policy..

If they do not want to allow sellers to leave negative feedback for Non paying bidders, then eBay needs to make NPB strikes a visible part of a buyers record. NPB strikes should be issued by eBay and become a publicly viewable part of a buyers feedback, sort of a buyers dashboard.

Additionally, sellers should have access to set stronger filters that eliminate a buyers ability to bid or purchase items based on NPB strikes, and allow sellers to block buyers / bidders with as few as one NPB strike in the last 30 days.

The process of blocking NPB's would serve two purposes.

First, it would lower the customer service contacts required to process NPB complaints and the resulting fee credits.

Second, it would act as a deterrent to buyers who would find their ability to bid or buy restricted by sellers, thus motivating buyers to complete all purchases.

Shopping cart abandonment needs to be anticipated now that eBay appears to be ready to implement a cart.

eBay should address the growing NPB issue more directly before implementing a shopping cart. Perhaps the shopping cart should be built so that it automatically cancels items if payments are not completed in a timely manner.


How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: lydia

Wed Mar 2 12:03:47 2011

They are more of a problem than in the past even with BINs. We don't do many auctions because new buyers tend to not expect to win a high percentage of auctions.

Amazon does not permit feedback before an item is received positive or negative, that is good common sense.

For us, we hate them like everyone else but think that "yelling" at them just exacerbates the situation. What we do is try to be as professional as possible and think of it as a necessary evil. We block them, file the NPB. Would rather have a NPB than a return since we lose money on those (we ship for free, don't charge restock fees generally, depends upon the hassle factor and buyer attitude). At least you don't have to package and get threats with NPB...returns have increased but nothing like in a retail store environment. If you have ever had a retail store or worked retail, these problems will seem miniscule (shoplifting, face to face contact with crazies, people who buy and return for the thrill of buying). Of course, they can put on hold and then that would be the equivalent of the NPB.

My advise is not to go nuts on these buyers, that is when they try to manipulate the system to get revenge. Of course, there may be a few crazies, but most buyers are not. I notice that the less expensive the item, the more crazies we get.

Just our experience...

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Rick1313

Wed Mar 2 12:40:07 2011

Sigh!...Posted from Preview instead of Back To Form. To continue...

Unless selling venues reveal the non-paying strikes that a buyer has accumulated, the situation will grow worse and not better as more selling venues (or expansions thereof) pretty much means depletion of other selling venues buyer base (at least that what the a selling venue is hoping for) and so will make selling venues more lenient with non-paying buyer.

Example: If a buyer made $3,000 in purchases over a course of a year but did not pay for $500 worth, the selling venue will be more forgiving of buyer than one who made $800 in purchases and did not pay for $500 worth.

It's all in the numbers.

------------------

To Theo's post...

I fully understood your post. The bulk of my post was to address, as I see it, why there is a lack of ''immediate payment' options on selling venues (except eBay,inc.).

I didn't phrase it as such but I believe it is privacy issues that prevents ''immediate payment'' as designed on eBay,inc., and not technical problems.

As an example...

Seller lists on Etsy and uses PayPal as a payment method. Buyer wants to purchase the item but seller wants ''Immediate Payment''.

Etsy prevents the purchase (as eBay does) until they verify with PayPal that buyer has funds available (from whatever source PayPal will access) to pay for the purchase.

Since a purchase has yet to be made and Etsy is not the one who is selling the item (and is not connected with PayPal), PayPal will say that is confidential information and will not provide the information (remember, this is a four party transaction and not three party).

This would happen with any payment processor that Etsy would use.

Since that is the case and the sale will never come to be, Etsy will not have an ''immediate payment'' option unless the payment processor allows them, as a fourth party in the transaction, to have a verification process of buyer's capabilities of paying for a purchase (and this is key) before the purchase has been made and UA's have been amended to reflect buyers acceptance of the sharing of private information.

That is, if regulatory bodies would allow the selling venue and payment processor to share the privacy of situation.

Whew! Got it out.

Time for lunch.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: Independent seller
Web Site

Wed Mar 2 13:31:34 2011

I have not used eBay for a very long time, as I stopped in 2006, but I sell online direct, and my whole selling platform is prepaid. Even my order form states clearly that the buyer understands that if the payment does not clear, the buyer will not get the order filled. I have no deadbeat buyers. People harp on eBay needlessly, when they should know that selling direct from their own sites is the only way to go. eBay exists because there are so many people who don't want to go through the trouble of setting up a market of their own, or have only one or two items to sell. If you want to be a real dealer, then set up your own shop on your own site. Otherwise, you get what you pay for.

How Big a Problem Are Deadbeat Buyers?   How Big a Problem Are Deadbeat Buyers?

by: DonC
Web Site

Wed Mar 2 13:44:24 2011

About 1-2% of my transactions result in non-payment. Most are on low value items. I automatically file a NPB and have my fees refunded.

I made the mistake of listing a motorcycle last year. A zero feedback buyer won the auction,didn't pay and the deal cost me $100. Lesson learned. I'll never list another vehicle.

A partial solution on the part of eBay? Verify buyers before they can bid.

Good luck with your sales,

Don

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