eBay cuts Depop parcel rates as cross-border tools expand

By James Calloway

eBay paid $1.4 billion for Depop in July and is now lowering shipping rates on the fashion marketplace by giving sellers access to discounted U.S. Postal Service, FedEx and UPS parcel rates, President and CEO Jamie Iannone said on last week’s earnings call.

The company did not disclose the size of the Depop rate reduction, parcel volume or how much business each carrier handles. Iannone said Depop’s ability to use eBay’s carrier rates has already lowered shipping and parcel costs, but he did not quantify the change.

“Access to eBay’s carrier rates has already lowered Depop’s shipping and parcel rates, making shipping investments more efficient and there’s a lot more work for us to do there,” Iannone said.

What does lower Depop parcel pricing change for sellers?

Parcel shipping costs have climbed this year amid rising fuel fees and can represent a large share of the total price for lower-cost fashion items, CFO Peggy Alford said on an August earnings call. Lower shipping charges can therefore improve a merchant’s price competitiveness without requiring a reduction in the listed product price.

Alford said reduced rates could encourage more transactions on Depop by making a wider range of price points more affordable.

“So by increasing the affordability at a broader range of price points, we’re seeing increased conversion, more customer acquisition, converting those buyers into enthusiasts,” Alford said.

That gives Depop a way to pursue more transactions and customers through shipping savings rather than product discounting. Alford, however, supplied no figures for the increase in conversion or customer acquisition, and eBay did not disclose the discounted rate merchants receive.

Which markets receive eBay’s faster delivery promises?

eBay recently deployed an improved artificial intelligence-powered delivery-date model in six major export markets, increasing the number of products it can offer with a fast-delivery promise while maintaining reliability, Iannone said.

The six markets, confirmed by an eBay spokesperson, are:

• United States
• China
• United Kingdom
• France
• Canada
• Poland

The model broadens the pool of inventory carrying a fast-delivery promise, giving cross-border buyers more products to consider on a defined delivery schedule. For sellers, the commercial benefit depends on that promise remaining reliable enough to support conversion. eBay disclosed neither the increase in eligible inventory nor any change in delivery performance.

Can AI remove manual label work?

Beyond Depop, eBay’s marketplace can now estimate a package’s size and weight, generate a prepaid label and offer tracking through its “magical listing” tool, Iannone said.

At a Goldman Sachs conference in September, he described the change from sellers buying labels and completing the process themselves to eBay using AI to determine shipping cost and handle the transaction. The effect for merchant shippers is fewer manual steps between listing a product and preparing its prepaid parcel for the carrier network.

eBay did not disclose how many sellers use the tool or what proportion of labels it generates. It also announced no changes to operating arrangements with USPS, FedEx or UPS as a result of the automation.

What changes for U.K. and German shipments?

eBay launched eBay International Shipping in the U.K. and Germany in Q3, with the marketplace handling transportation, customs, returns and post-purchase support for transactions using the service, Iannone said.

For the U.K., eBay estimates the new program can cost up to 30% less than its previous global shipping program. The estimate applies specifically to the U.K. service; eBay provided no comparable percentage for Germany.

The program gives sellers a more integrated cross-border process because eBay assumes transportation, customs, returns and support within the service rather than leaving each step as a separate seller task. The potential commercial benefit is a lower delivered cost for U.K. shipments and fewer operational handoffs for merchants.

For carriers and forwarders, the effect remains unquantified. USPS, FedEx and UPS are the only parcel carriers named in connection with Depop’s discounted rates, but eBay disclosed no parcel-volume forecast, service-level change or allocation among them. It also named no freight forwarder for the new international service, leaving the scope for third-party logistics work unclear.

What remains unmeasured?

eBay has not published a numerical target for further rate cuts, incremental parcel volume, faster delivery performance or capacity. Nor has it said how many Depop sellers receive discounted carrier rates or whether lower seller charges change procurement terms for the underlying carriers.

Going forward, eBay’s rate trajectory, the reach of its fast-delivery promises and the performance of its new international service will shape whether Depop turns lower shipping costs into more transactions; Iannone said substantial shipping work remains, and no numerical targets were disclosed.