Will eBay's new fees please?

Picture a person of large girth who, while enjoying a gigantic feast, nodded off at the table only to wake up hours later still sated but rather envious - not to mention anxious - that the other guests had moved onto dessert. And now it is hard for him to move.

That is the image that eBay's recently announced changes to its listings fees conjures up.

For those who missed it - and that will likely be the majority - eBay today announced that it was cutting the price of putting something up for sale on the site by a third. The site said it would make up for the lost revenue by increasing the commission it charges when a sale is completed from 5.25 to 7.5 per cent.

The change was hinted at last week by the company's new chief executive, John Donahue, who said that eBay - long a synonym for 'online auctions' - needed to shift its emphasis towards 'fixed-price sellers': people who were just looking to shift goods, without the fuss of an auction, and whose goods make up an increasingly large proportion of the site's core revenue.

At first glance, it seems a sensible move. Attract more people - hopefully new ones - to list items on the site by making it cheaper to do so, but don't hurt your books by making up the loss elsewhere. (Financially at least, that will been the objective. According to Mark Lewis, eBay's managing director in the UK, the shift in fees will be 'value neutral' from a revenue perspective.)

But on reflection, it may in fact fall flat by working against the very people it is arguably most important for the site to attract: namely, first-time sellers who are keen to sell the odd item, probably not for a lot of money. Just the sort, in other words, who - because they buy books there - have worked out they can now do the same thing on Amazon, which looms large as a competitor.

Overall the new fees will make it slightly more expensive to sell low cost items on eBay. To sell a camera for £100, for instance, eBay will now charge £6.70, where previously it would have charged £5.85. Amazon, by contrast, charges £8 - a competitive rate.

EBay is also still unable to compete with Amazon's promise that it 'doesn't cost a penny' to list items for sale, which is a powerful marketing tool, even though Amazon's more simple fee structure means that, the most costly an item is, the more you pay to sell it there rather than on eBay.

EBay - which recently reported strong results and is still the world's 'preferred online marketplace' - needn't be looking too worriedly over its shoulder just yet.

But the emphasis it placed today on the benefits the new fees will give long-term sellers - for instance that they can now reduce their fees by getting better feedback from buyers - will do little to reassure analysts and investors about the site's ability to attract new users. And it is the latter that hold the key to the site's long term growth.

Comments

[David Devonport]

Its not so much the price hikes that is causing today's furore over at the "bay" (there is usually a gripe everyday),there is always a smoke and mirrors act around this time of the year to justify the price rise.No its the insane new plan to not allow sellers to leave anything other than positive feedback for the buyers,whilst allowing any buyer to ride roughshod over a sellers reputation with impunity(you have to be an "ebayer" to appreciate the implications,or even be interested actually,that is causing major ripples in the community.

[Oliver]

Hi,

the reason amazon will ultimatly fail is that it is trying to do 2 (0r 3!) things at once.

The advantage of ebay is that its mainly used or cheap. You can track down random items that dont appear anywhere. The difference is that amazon.com is great for garanteed products, you know what you are going to get, at a price (if its new and from amazon). Amerzon marketplace is really bad value and a little risque to say the least, love it or hate it PayPal holds up ebay to a great extent, and keeps consumer confidence.

When you browse amazon today you get: buy this item used from their marketplace, this has been an option for some time now. That sounds all well and good but all the items are the same price as the new one from amazon and you get a garentee and dont have to go down some dodgy back alley to get your prized DVD!

So now we have ruled out amazon for its market place because the items are over prices and unlikly to be as good as the slightly more expensive (20p, come on its not that much....) amazon equivilent. There should be only one alternative....eBay...well not exactly amzon have sneakly added in another option that allows you to buy straight from their supplier eg. simply gadgets. Again all good you think. But it makes it look like you are buying through amazon (ie getting the garentee etc) but actually your buying of eBay. So now your paying premium rates for a item you could have bought on eBay

With this service you dont return items to amazon (which is what you would expect-if you buy it through them you would expect them just to be shipping it from somewhere else) or do anything else therough them so its a complete rip off.....

So still to the real amazon.com or ebay.co.uk and dont panda to amazons weak new ploys to con you into letting them take a large cut home...

[Tony]

My wife and I sell on both Ebay and Amazon.co.uk. We have found that both are reasonable in their own way, depending on how you use them. Regardless of the fact we do sell on both sites, each site has their own way of going about getting fees etc. The problem is the individual!!! When you signed up to the site...YOU agreed with all the rules and regs and fees. If you have a problem with them, the answer is simple, stop using the site!!!!!! You have to remember that you are using their website and know-how, and you pay them the fees for the privilege of using it. You may be a business, but remember THEY are a business too! Unfortunately there isnt a lot you can do regarding fees etc. Just liken it to the price of petrol. You dont like the price but you still need it and use it!!!!

[Aaron]

Tony, it is this precise type of simple mindedness that slingshots the UK deeply into the realms of rip-off territory. As customers of the eBay business we have a right to complain if we feel we are being overcharged for a service that appears to have a market monopoly.

If we complain, someone will hear, someone will investigate and change will happen. If we do as you suggest our passive attitudes to commerce and life on the whole will bring about our own spoiling.

[Jonathan Clark]

Given recent managent changes Meg Whitman who seems to have been a scapegoat for the poor decision with Skype is "retiring" from her role and John Donahoe will become the new President of the eBay Inc group of companies.
This has demanded new initiatives which the latest postings refer. As a regular and small time e-bay user(and a big supporter) I have nevertheless been frustrated by a number of its working practices. The feedback system is badly flawed, whilst PayPal was (is)a terrific idea it is now almost mandatory and you can see it becoming such a big cash cow that this could work against e-bay. There is also the threat of competitors. Amazon has been mnetioned, and is impressive, but the real threat could come from the new kids on the block such as Facebook and Myspace. E-bay hasn't addressed the real issues and if it wants to maintain its dominant position as the on-line auction market leader then it needs a more innovative methodology rather than a contrived new business approach which could well demotivate the core market who acts as an auxilliary sales force for them i.e a significant influx of new users.
Innovate, or die, is the clarion call for many businesses and e-bay are falling into the trap of rearranging the deckchairs on the Titanic rather than steer clear of the icebergs!

[Darren Forster]

Ebay obviously have to find a way to compete against their rivals that are charging nothing to list an item, and very low commission when the item sells (and also don't monopolise on their own pay system - PayPal). I've recently started using eBid and iBootSale to sell items as both of these are free, eBid also allows you to use BidPay which don't charge any commission for moving money around. All it needs now is for other people to see that EBay are ripping them off by charging to list the item, then charging when the items sold, then charging the seller money to retrieve the payment, and the charging the seller once again to move the money from PayPal into a bank account (all of which the seller passes back onto the person buying the item - either by overcharging for P&P or pushing their prices up).

[Jim Miller]

I think Ebay's new fee system is a good move on their part. Thanks ebay!

[Charles]

I would like to say that selling on ebay gets harder and harder,especially with the ever increasing fees. A few tricks to remember First, you must be aware of eBay's™ policies. Second, you need to insure that you do not violate these policies. And third, you must monitor your competition to insure that they too are not violating eBay's™ policies. You have to understand that eBay wants you to purchase every possible option because that is where they make their money. Don't use the list in second category if your profit potential is not there to support, any additional images or upgrades doubles your fees so don't do it. Always use the second chance offer , when you have sold a item and there were other bidders ebay will send them a email giving them a second chance offer so if it sells to one of these other bidders you win. If they do not purchase there are no listing fees , it is a way of getting free listings on ebay. There is also a little know tool you can use to evaluate your products selling potential. Example: If you are selling a Fujifilm Finepix A700 Go to advanced search ,enter the phrase of the item you are selling and select Completed listings only , now remember this sometimes you can select advanced search and ebay does not show you the complete advanced search. So do a regular search ,wait for the results then select advanced search and your phrase will automaticly be included. Now you can compare your price to auctions that sold or did not sell and evaluate wheather or not your item has a selling potential for the price you paid and how much profit you can receive after fees. The green Prices are auctions that had winning bidders and the red prices are auctions where the item did not sell. We hope this will help auction sellers we have more tricks and stratiges use the contact us page on our website https://www.mydiscountwholesaler.com And ask us a question or need advice on dropshipping or something else we will be glad to help as many of our resellers are ebay sellers also , we have a little knowledge on selling on ebay.