This is probably old news to some of you but since the first notice I saw of this was on an item I was listing last night, the wound is still fresh for me.

I heard the rumors that eBay was going to introduce their own insurance option. When I saw those insurance option is going away notes, I figured that was all they referenced.

Here is the message I saw on a listing last night:

Dear Seller!

Starting the week of September 22, 2009, optional or required buyer-selected shipping insurance will no longer be allowed on eBay.

What you can do:
*You will still be able to insure you items.
*You can fold the cost of insurance into your item price or handling fee.
*You can indicate, ‘The item is insured” or “Handling fee includes insurance.”

What you cannot do:
*You cannot charge the buyer a separate fee for insurance, either in a listing or after the buyer has committed to purchase the item
*You cannot indicate insurance is only offered upon buyer’s request
*You cannot indicate you are not responsible for the item once it has been shipped.

For more information on the changes to optional insurance, please visit:

http://pages.ebay.com/sell/July2009Update/faq/index.html#1-10

Well it is time for the first rage filled post of the new blog design.

WTF, eBay?

The spin machine is spinning merrily along on this change but, in the end, this whole thing is all about this sentence from their FAQ:

By removing optional or required shipping insurance, we are adjusting to help meet buyer expectations for ecommerce and aligning with industry standard practices. In most circumstances, buyers do not expect to pay for the cost of shipping insurance.

“Buyers want insurance but don’t want to pay for it,” eBay says. “Just like our magic eBay logic reasons that buyers don’t like to pay for shipping so we should force sellers to offer shipping for free, we are going to now force them to offer insurance for free as well as buyers don’t want to pay for that. When buyers get something for free, no one has to pay for it at all, right? We believe it is some kind of process involving elves.”

“Buyers would also prefer to get all of their items for free. We are still trying to work out how to force the sellers to foot that bill as well.”

Let’s sum up this change, shall we?

  • You cannot offer buyers the option to get insurance but you have to insure your items so insurance is now, essentially, mandatory but totally on your dollar.
  • “You can fold the cost of insurance into your item price or handling fee.” Oh, goody, CAN I? Oh, rapture!! Now that we have moved to a low or free shipping based feedback system, I was really hoping you were going to force me to raise my shipping costs. Folding is the new buzz word, is it? I would like to fold you into a pillow and press down until the kicking stops, whoever came up with this.

This leaves sellers will only a few options, all of which are terrible:

  • Raise item prices to cover insurance fee (only works with fixed price)
  • Raise handling fee to cover insurance fee (really your only option with auctions, especially if you start at $.99 like we do)
  • Insure every single thing you mail out (which will get really expensive really fast)
  • Not insure anything and just hope that any packages lost or damaged in transit are worth the money you saved in not buying insurance
  • Insure or not willy nilly and hope it all evens out

Now one thing to note is that the FAQ says sellers do not need to update their existing listings. However, two of the “cannots” above are “indicate insurance is only offered upon buyer’s request” and “indicate you are not responsible for the item once it has been shipped” which are sentences that appear in many seller’s listings.

Will sellers who fail to remove this message be penalized despite what the FAQ says? Remains to be seen.

If you do opt to just insure everything and eat the costs, you can actually still automate that process with the free Auctiva account. Just set it up once and then you will automatically pay the reduced insurance rate on every package you ship out. That is the least painful way to handle that situation in my opinion.

What am I going to do?

I am going to take a willy nilly approach. I am going to raise my  handling fee to cover the minimum insurance on fragile or very highly priced items but leave the handling fee the same on the rest. Lost packages happen very infrequently for us so I am just going to have to trust in my shipping carrier. I will be using UPS more often than USPS, however, where I can help it since they offer free insurance and Auctiva’s discounted insurance for everything else.

For auctions, if the price goes much higher than expected, I am just going to eat the insurance price and insure it anyway. This is nothing new. We always added insurance on even if the buyer didn’t go for it on unexpectedly high ending auctions so this will be business as usual.

In the end, it isn’t the end of the world. It just means that the cost of running my business has gotten a little higher.

Do I understand why buyers want free insurance? Yes. Am I pissed as hell that I am being forced into it? Yes. I can understand something and still really really hate it.

In the end, this boils down to the fact that the carriers are the ones that are unreliable. I personally don’t lose packages but now my business has to pay extra to cover the fact that USPS or UPS sometimes loses packages or breaks things. The fact that the sellers are being hit in the pocket books for something so very far out of our control really irks me but what can you do?

You know what would be a service I would totally buy into right now if such a thing were available? Monthly insurance. If I could pay a set fee per month that automatically covered every single thing I shipped out within that month, that would be completely worth it to just not have to worry about it. They could either charge a flat fee per month or, where they’d likely make more money, they could do it based on total value of items shipped. If I shipped $1,000 worth of items in a month, bill me proportionally to that total amount.

In the end, it would still save me money since I am not getting nickel and dimed with lots of tiny insurance fees and the company offering it would be making money since only a very small percentage of packages actually get lost so they rarely have to refund. Under this new insurance structure, this is the only sort of thing that makes sense.

Seriously, someone get on that.