EBay to get more involved in transaction disputes

The company will in some cases issue refunds to buyers at its own expense

EBay is moving away from its traditional laissez-faire approach regarding buyer and seller interactions on its marketplace, and instead will get more involved in transaction disputes.

Starting around mid-June, eBay will in some cases issue refunds at its own expense to buyers who claim they either didn't receive the item they bought, or received a different product. EBay will do this even if it determines the seller wasn't at fault.

In addition, eBay will begin steering buyers to take their complaints to eBay for resolution, as opposed to reporting them to its PayPal online payment unit, the company said Tuesday.

"The goals of the new process are to keep buyers on eBay by giving them a more familiar e-commerce resolution experience, and to reduce the time buyers and sellers spend resolving issues," reads eBay's announcement.

EBay hopes to have fully transitioned the dispute process from PayPal to eBay before this year's holiday shopping season. At that point, eBay will be "the primary entry point" for buyers who contest a transaction.

What will not change is eBay's continued encouragement for buyers and sellers to communicate and try their best to resolve their differences.

Other changes coming in mid-June include a newly designed layout for product pages, which has been in testing for the past year. The new layout will include larger, higher quality pictures with a zoom-in capability, as well as a "real-time countdown timer" for auction listings.

EBay will also debut a service called Smart FAQ, which automatically creates a "frequently asked questions" section to a product listing by pulling information from the listing's text. In testing, using Smart FAQ cut in half the time merchants' spend answering buyer questions, eBay said.

Last month, eBay CEO John Donahoe said the company must adapt to new e-commerce market dynamics, like being more hands-on in managing its online marketplace to increase buyers' confidence and trust.

"The [eBay] marketplace hasn't kept up with competition, nor customer needs," he said at eBay's meeting with financial analysts at its San Jose, California, headquarters.

EBay has been a victim of its success, which has made it hard to implement changes needed to take advantage of future opportunities. "We were trying to protect our past," he said.

With rivals like Amazon.com turning up the heat, eBay's e-commerce prowess has waned, as both buyers and merchants seek new alternatives in online shopping.

In 2008's fourth quarter, the Marketplaces unit saw its revenue decline 16 percent, compared with the same quarter in 2007, while gross merchandise volume declined 12 percent. Unique monthly users also dropped year-on-year.

EBay began strictly as an online auction site but has since become more diversified, allowing the sale of fixed-price items and letting merchants open "stores."

It also got into the online payments business with its acquisition of PayPal, which generates about one-third of the company's revenue, and into Internet telephony with Skype.

Along the way, Amazon.com has expanded its focus into eBay territory by allowing merchants to sell their products from its Web site and providing e-commerce services, like fulfillment.

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