Online marketplaces benefit from having easy to order interfaces and lenient return policies. Although these make it easy for the buyer, millions of freelancers around the world waste time and effort on projects where the buyer and platform take no responsibility for their part in the waste that results in a growing percentage of orders that are cancelled. To encourage repeat purchases and attract new customers, many freelancing websites allow buyers to refuse the delivery of an order for any reason. If the seller doesn’t accept a “mutually agreed upon cancellation,” their feedback and rating will take a significant hit.
On top of cancellations that are “mutually agreed upon,” there are a flurry of spam purchases and loopholes scammers have found to receive services without ever having to pay, leaving the seller as the primary victim. The marketplace, in this article Fiverr, does not take responsibility for these types of scams performed within their site.
Fiverr is a global online marketplace that offers tasks and services, beginning at only $5 per task performed. The price attracts buyers of all types, but the popularity of the site and value of the work performed for the low cost has even attracted the business of multiple Fortune 500 companies.
My Freelancing Experience
In 2010, I became a buyer and seller on Fiverr to get hands-on experience, find out what people were willing to buy, and how to work with any business and business owner. The experience is very valuable for a young entrepreneur, especially those who intend to start a service-based business. I still freelance today on a limited basis, and I do feel that even with the low return on an individual project, thebenefits outweigh the costs. Since starting to offer creative services, I have accumulated nearly 600 sales with a feedback rating of over 99%.
The unseen side of being a freelancer on Fiverr is the wasted time and energy on purchased orders that are not accepted for one reason or another. For example, I offer naming services where the buyer will receive three name options that are all screened for domain availability and trademark availability. When delivered, I always provide in excess of ten options with other bonuses. Due to the work and time involved, the cost of this service is not offered at $5. Although clearly marked in the description in large bold letters, the majority of buyers do not read before purchasing.
Most of the cancellations I experience occur because the buyer expects an unlimited amount of revisions until they have a perfect, pronounceable 5-letter .com domain name that has not been available for over 10 years, or because of the overall subjective nature of business names. Although none of this is promised and an initial conversation before purchase is a requirement of my offering, most buyers purchase without doing so. Websites like Fiverr are breeding grounds for cancellations because of customer expectations that all services provided, no matter how simple or complex, are indeed only $5. The truth is that $5 is a starting point; just the floor, not the standard. Average payment per gig on Fiverr is well north of $10 due to purchased extras and additional offerings by sellers.
Visitors, buyers, and others aren’t allowed to see the number of cancellations a seller has had. Cancellation information is only available to the individual seller, and platform-wide data is not available, but I did a little homework to shed some light on this problem. First, I’d like to share my cancellation rate.
As shown in the graphic above, I have had a whopping 100 cancellations compared to 491 successfully completed projects. While my profile shows a 99% five-star rating, the behind the scenes picture is much cloudier and frustrating. These cancellations account for nearly 17% of my total sales, meaning roughly one out of every five orders I receive will end without any compensation for my time or work.
While it’s hard to find firm statistics on cancellation rates, the topic comes up again and again on message boards and forums. I was able to collect a total of 31 data points from four forum and blog posts where sellers asked about and posted their individual cancellation rates. They ranged from as low as 0% to as high as 30%. The seller who had the 30% cancellation rate, like myself, was a five-star seller with a near perfect rating. The average of these 31 rates is 9.1%.
Applying this 9.1% to the group of 31 sellers and assuming their total number of sales mirrors mine, there is a loss of $15,400. This is an extreme number when considering the small number of sellers in this example. With millions of services offered on Fiverr, the losses for both the site and sellers are easily in the millions.
What is also lost is the time of the service providers. Some projects may only take 15 minutes, but others could take in excess of an hour or two. When multiplying even the minimum amount of time of 15 minutes by the 100 cancelled orders I’ve had, that results in a loss of 25 hours of work.
Though the financial and time losses are obvious problems, other issues including mistrust between sellers and potential buyers exists as well, creating a hostile environment. Next week, we’ll explore three possible improvements to Fiverr to decrease “mutually agreed upon cancellations,” and to improve the buying experience for all involved.
Have an experience with Fiverr or thought to add? Please comment below and thank you for reading!
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Michael Luchies is the Founder of TrepRep, Director of Content Programming for Pursuit, Interview Editor for Under30CEO, Entrepreneurship Lecturer at Illinois State University, TEW 2 contributor, and writer of all things entrepreneurship. Connect with Michael on Google+, LinkedIn, Facebook and Twitter.
Article Sources: Fiverr Forum, Fiverr Forum, Fiver Forum, Fiver Blog