A Beginner Seller’s Guide to Defects on eBay

Defects, what defects? If you’re a new seller on eBay and have overheard other sellers talking about percentages of transactions, defects, evaluation periods and performance standards, this article is for you. It’s a little complicated at first, but I’ll try and break it down from the very beginning.

eBay’s Seller Performance Standards

eBay has certain expectations for sellers. One of these is the key principle of sellers to provide a service that provides a high level of satisfaction to buyers. After all, it takes two to complete a transaction and eBay is nothing without people willing to use their marketplace to shop and buy items. eBay, therefore, expects sellers to:

  • Ship items efficiently as per seller’s own specified handling time
  • Manage inventory carefully
  • Describe items appropriately and make sure they are delivered to customer in the same condition
  • Provide a returns service according to seller’s stated return policy
  • Specify and charge ‘reasonable’ shipping and handling costs in listing
  • Provide professional customer service, including prompt response to questions and when resolving issues

To maintain these high standards of service, eBay has a few different ways of monitoring and penalizing sellers. One of these is a defect system.

What is a defect on eBay?

Put simply, a defect is a bit like a ‘black mark,’ or indication of failure. eBay sellers will receive a defect on a transaction when:

  • an eBay Money Back Guarantee and PayPal Purchase Protection case is closed without seller resolution
  • the seller initiates a transaction cancellation (e.g. when an item is out of stock)

The latter is quite self-explanatory but let’s unravel exactly what the former means.

eBay’s Money Back Guarantee (MBG) allows buyers to request a return (even if a seller does not allow returns) because the item does not match the listing or they report that the item was not received. If the seller cannot (or will not) resolve the return with the buyer when an MBG return is requested, either of the parties can ask eBay to step in and help. This is called opening a case. If the seller is found to be at fault, it is at this point that the seller would receive a defect because eBay considers that the case has been closed without seller resolution.

PayPal offers a similar guarantee to eBay buyers with their Purchase Protection. If an item is not received or the buyer believes the item is not as described and the seller does not resolve the issue, PayPal can be asked to intervene. As with the MBG, if PayPal sides with the buyer, the seller will receive a defect on the transaction.

Helpful to know

Buyers do not have any access to a seller’s defect rate. The defect rate is purely for eBay to keep tabs on sellers.

Detailed Seller Ratings (DSRs) and buyer feedback do not contribute to the defect rate.

Return requests and item not received requests that are successfully resolved with buyers also do not count towards the defect rate.

If a PayPal or MBG case is resolved in the sellers’ favour (or found to be no fault of the buyer or seller), it will not count against the seller’s performance rating.

eBay’s defect rate

The defect rate shows how many defects a seller has received in comparison to total sales transactions. It is demonstrated as a percentage. The number of defects is divided by the total transaction amount to create the transaction defect rate. Note that eBay does not differentiate between sales transactions that were positive or negative in the total transaction count.

Example – In the last 12 months, John has made exactly 1235 sales (so averaging around 100/month). In that time, he has had 23 defects. 23 divided by 1235 is 0.0186. To create a percentage, this amount (0.0186) is multiplied by 100. The resulting percentage is 1.86%.

To see your own defect rate, check the Seller Dashboard under the My Account tab.

Defect rate requirements on eBay

eBay sellers are only allowed to receive a certain number of defects on transactions or risk being penalized. The defect rate (as calculated above) is used to evaluate the seller according to eBay’s performance standards. The minimum performance standards (on eBay.com at the time of writing) are:

  • up to 2% of transactions with one or more defects over the most recent evaluation period
  • a maximum of 0.3% of eBay Money Back Guarantee or PayPal Purchase Protection closed cases without seller resolution over the most recent evaluation period
  • Top Rated Sellers must not have more than 0.5% of transactions with one or more defects over the most recent evaluation period.

Evaluation periods are based on the number of sales. Sellers with 400 or more transactions over the past 3 months are evaluated based on the past 3 months, while sellers with fewer than 400 transactions are evaluated on the past 12 months.

If sellers do not meet the defect rate minimum standards, they risk eBay imposing:

  • Search placement lowering
  • Limits on selling
  • Downgrading of store level
  • Higher final value fees
  • Suspension

How to avoid receiving defects on eBay

Look out for a future Auction Nudge guide concentrating on best practices to avoid receiving defects when selling on eBay.

Gemma
Gemma
Gemma is our all things eBay expert. Originally from the UK, she now lives in Canada and travels extensively. You can read about her travels at her blog Off Track Travel.