eBay is waiving seller fees and providing other initiatives to help shuttered retailers move online, as the COVID-19 pandemic threatens to wipe out Main Street.
The e-commerce giant on Thursday announced the launch of its Up & Running accelerator program, designed specifically to help the 70 percent of small businesses that lack any online presence to make the transition to e-commerce.
eBay is pledging up to US$100 million in support of the program. In the coming weeks, the company plans to highlight small business sellers on its site. It also promised new ways for shoppers to support their favorite local businesses while staying at home.
The Up & Running program supplements eBay’s Retail Revival initiative established in 2018 to help stores in cities reach a broader audience. eBay founded the revival program on the principles of empowering people and creating economic opportunity.
As a result of social distancing directives to mitigate the coronavirus spread, brick-and-mortar retailers have been forced to close their physical doors. Economic data shows that only half have enough cash to survive for 27 days without new money coming in.
“For the last 25 years, eBay has helped launch and grow hundreds of thousands of small businesses, and now we’ve created Up & Running to accelerate the start-up time frame for retailers opening online stores during these unprecedented times,” said Jordan Sweetnam, senior vice president of eBay North America.
The company was built on the simple premise that connecting buyers and sellers around the world creates economic opportunity, he added, which is exactly what is needed now.
eBay’s online sales platform connects a business to the marketplace’s more than 180 million shoppers around the world.
A Work in Progress
eBay’s Up & Running follows last week’s actions to help small and medium businesses that already selling on eBay. eBay announced those changes directly to the seller community:
- deferred fee payments;
- added seller protections; and
- 100,000 incremental free listings.
Those actions reflect eBay North America’s commitment of more than $200 million in support programs for existing sellers, the company said.
The fees eBay is waiving typically amount to $21.95 per month with an annual subscription. That subscription includes additional perks for sellers, like lower fees, discounted shipping supplies and more.
Potential Main Street Boom
Coronavirus prevention efforts, like social distancing, are increasing the pressures small businesses have been under for years from centralized behemoths such as Amazon. If the program works as eBay proposes, it could help local businesses find and develop alternative sales channels and income sources, said Charles King, principal analyst at Pund-IT.
“The practical points of the program are likely to be welcomed by many small businesses looking for customers and sales, especially those with little or no experience in doing business online,” he told the E-commerce Times.
On the plus side, the program is aimed at businesses that are both hurting and potentially endangered due to the depth and length of the COVID-19 crisis — but eBay’s Up & Running program has a negative side as well.
“It is hard to know what — if any — benefits a business will see in just 90 days. In worst case scenarios, working with eBay might distract businesses from local efforts that could do them more good,” King cautioned.
How Up & Running Works
eBay will give new businesses a free basic eBay store for three months. With the new online storefront, the company will waive selling fees and allow the new online merchants to sell up to 500 items for free.
New eBay sellers also will receive guidance and resources, including a suite of exclusive marketing and merchandising tools, customization features and discounted shipping supplies.
As part of the new Up & Running program, eBay will provide educational webinars, individual support, and access to experienced sellers willing to mentor those who are new to e-commerce.
New eBay sellers also will receive resources they need to run their business, including a suite of exclusive marketing and merchandising tools, customization features to build a brand, discounted shipping supplies and more.
eBay’s offer is available to new sellers who register as a business account between April 1 and June 30, 2020. These newly registered business accounts must pass eBay’s validation requirements.
This offer is not available to existing sellers with business or consumer accounts created prior to April 1st, 2020.
Follow these simple steps to get started, with support available along the way:
- Create a business account on the sign up page.
- Register your business by following the instructions in the email that will follow.
- Follow the steps on the how to get started page to activate the no-sales-fee offer.
This is a welcome initiative from eBay, noted Arle Lommel, senior analyst at CSA Research. Its significant brand recognition will help boost visibility for struggling businesses and broaden exposure for brick-and-mortar retailers that hitherto have served only local audiences.
“It’s a smart move for those companies that can make the jump to online,” Lommel told the E-Commerce Times.
Hurdles to Clear
The current economic crisis is driven by the near-total collapse of demand many companies face. Those that sell perishables or that cater to individuals with limited Internet access will not gain from this program, Lommel said.
Those that can move to online face a pump-priming problem right now. With unemployment near 30 percent, consumers will not spend much in the short run. That lack of spending will keep these businesses from paying their employees, which in turn will exacerbate the lack of demand.
“Even if Up & Running could remove all barriers, a significant section of the economy is simply stalled pending something to get it moving,” Lommel cautioned. “Whether the U.S. stimulus checks can do that remains to be seen.”
Up & Running seems best suited to helping small businesses. Many are facing severe supply chain constraints, challenges from stay-at-home orders for workers, or compromised logistics. So even if they can sell on eBay, can they produce and deliver?
“For businesses with significant stock on hand, this could be a good way to clear inventory,” Lommel said. “I think the bigger impact from Up & Running will come after COVID-19-related restrictions ease and employment starts to bounce back. At that point many companies are going to be operating on a knife’s edge, and this could make the difference for them.”
The Plan’s Good Points
eBay essentially is providing a fast-track for businesses that have no online presence. Waiving many of the start-up fees for the first three months can be a solid incentive.
“For a business that might be clutching at straws at the moment to get sales, this is a good way to get your products in front of a much larger customer base (i.e., the Internet) than whoever was walking by your doors before,” said Flynn Zaiger, CEO of Online Optimism.
For small merchants who never ran an eBay store but have consumables people will need in quarantine, this is the perfect three-month opportunity to give it a shot, he told the E-Commerce Times. “You really don’t have much to lose. At this point, it can only help.”
The short-term interval may not produce a profit on sales. When the first three free months end, the fees will kick in, and that could hurt, suggested Dustin Vann, CEO of Trusy Social.
ebay’s platform also might constrain the new online merchants. Customization is limited, so individual stores will not stand out.
“This leaves your product to do all the hard work,” Vann told the E-Commerce Times.
Another potential problem for inexperienced online merchants could be lack of support, according to Vann. “You’re in a queue and not a VIP, as you would be if you paid for your own platform.”
Convenient Cost Savings
eBay’s initiative to lure new first-time merchants online is a cost savings for small business owners of $75 over three months. That’s not insubstantial when operational cash is tight during a crisis like the one we’re facing, said Kris Hughes, senior content creator at Gembah. It also waives selling fees, enabling merchants to sell up to 500 products for free on the platform.
“This is saving businesses up to 10 percent of the profit margin they would lose by having to pay the selling fees under normal conditions,” Hughes told the E-Commerce Times.
In terms of impact on Main Street, Up & Running should reduce some of the losses. It might help some Main Street retailers succeed that otherwise would have failed due to COVID-19, said CSA Research’s Lommel.
At the same time, those that find they can succeed as etailers may not return to shopfronts in small towns with limited audiences, he added. However, to the extent that this helps them, their employees will be spending in their local economies.