On August 22, eBay Inc. is going to start raising it's fees in hopes of boosting the companies growth. EBay (EBAY) is going to raise the fees paid by sellers using online stores with the hope that many of these sellers will revert back to using traditional auction listings.This past January, eBay decided that it would be a good move to reduce rates for it's approximate 500,000 online stores to enhance this part of their business. This mistake proved costly to the online auctioneer's growth. As a result of this pricing change, statistics showed that earlier this year around 83% of all the items listed on eBay came from stores, but this only accounted for 9% of all sales made on the site.
Sellers aren't happy with the changes, but, according to Chief Executive Meg Whitman, the overall eBay experience took a turn for the worse as the site became overrun with listings that were often duplicate items priced to move. Last month Whitman explained that "the marketplace has been overwhelmed with identical, often poorly priced items that have diluted the magic of the eBay experience."
The end result... slower growth than either eBay or Wall Street was expecting.
What will the fee change mean to sellers? The ultimate impact of the rate hike should not be too heavy on sellers, (in some cases amounting to around $1.20 per item) but of course there is already a lot resentment and of course, eBay boycotts. Under the old rules, store items cost 27% less to list than auction items, but after next Tuesday the difference is going to fall to around 3%.
As much as eBay sellers complain about the new rate changes, in the end I think that they will all still be on the site, selling the same goods that they currently are through their online stores. They will just have to go back to doing business the old fashioned way. Robert Peck, an analyst with Bear Stearns said in a note to his clients that "Sellers, while they may not like paying more for the same service, usually choose to do what is most economic to them - and in this case, the volume of dollars generated from eBay is usually too significant to walk away from."
Time will tell if this rate change will put the company (whose stock price has fallen around 40% this year) back on track, but for the time being Wall Street seems to be taking a favorable view on the recent developments. Shares of eBay have traded up 6.1% on the day so far to $27.40, picking up $1.58.











Reader Comments (Page 1 of 1)
8-17-2006 @ 4:05PM
Michele S said...
Um, stocks are most likely up due a numbers manipulation involving a listing sale, that was shady at best (please do some research on this and make sure to READ THE FINE PRINT). I truly wish reporters would go to the eBay Stores Board and actually read what is going on there. There are several informative posts that actually have facts and figures, not just opinions. As for sellers just relenting and going about their business as usual on the great eBay; maybe not this time. The fall-out is larger than many think and the trust in eBay, even by those who are staying, is virtually gone. And further more $1.20 may not be a lot to people who have money to throw away, but it adds up and I think its reprehensible to assume otherwise.
8-17-2006 @ 4:23PM
D&G said...
Logo of eBay has been copy pasted from the homepage?
8-17-2006 @ 4:25PM
Larry A said...
I agree with Michele S that you should go to the ebay stores board and read it!
I don't know about other sellers, but my increase due to the fees would be 300% - 500% and raise sales fees about $2.80 - $7.00 an item. It depends on what you're selling as to how much you will pay in fees.
Ebay is manipulating the numbers! Raise fees for stores, promote auction listing specials (but you don't get the discount for 45 days?) but hey, it makes it look like auctions are really off and running again for their investors. The problem to this is, ebay has no buyers for auctions. Buyers WANT to buy from STORES and not wait for auctions. I can't remember the last time I actually got any bids on my auction items. I've closed my store that had made me a powerseller.
Ebay wants the small $ items gone yet they still take the money from the sellers with penny listings with high $ shipping. There is no logic to ebay anymore. They keep enhancing things and making it worse for sellers and buyers. Buyers can't find what they're looking for, searches are too complicated and stores are not in the searches. If they didn't want stores, why do they keep promoting them and at the old fee prices. Kinda makes you go.......hmmmm???
8-17-2006 @ 4:40PM
DaWhip said...
Trying doing a little research for yourself first, before regurgitating and posting an article that has already been run on several other news sites.
If you bothered to check the facts and figures you would have found them to not only be inaccurate, but slanted in favor of eBay and not the everyday seller.
No reduced fees were generated by eBay to Store Sellers in January. The upcoming fee increase represents increases in the 400-500% range, not the 6% touted by the eBay PR machine.
Feel free to visit the eBay Discussion Boards for Store Sellers here: http://forums.ebay.com/db2/forum.jspa?forumID=21 to read what really is going on. But only if you truly want to paint an accurate picture.
8-17-2006 @ 5:39PM
Tony P. said...
The decrease to Stores' fees was in January of 2004. ebay sent out this PR drivel and it now appears all over the 'net. Bear Sterns & others are sending their clients info based upon NON-researched PR info.
Same info they sent one week before the Enron fiasco. Only what the company PR sent out.
Ebay's highest-stocked seller has over 300,000 items in his store. His monthly bill will go from approx. $8,000 to over $25,000. Even in the Financial World, that wouldn't compute out to 6%.
That monthly cost is just the 'rent'. The Final Value Fee has risen by 25% - from an 8% valuation to a 10% valuation. Again, 25% is not 6%.
As more fiction pours forth from ebay, be sure to simply write it up. Or, do a bit of research within the link posted in comment #4. I promise you this...it is quite interesting.
8-17-2006 @ 10:23PM
Jay Beswick said...
I'll be brief if thats posible for me! The rise in stock or revenue may be sellers like me who are now dumping inventory. I sell patches and I am listing 18 to 30 for the price of one, prices of 2 months ago! If I know I will not be part of ebays expansion plans then dumping is needed. Sales are surprisingly active, never as good as it was pre 911. Few sellers in the auction arena, mean a smaller pie to be sliced, but this will be temporary.
At 18 plus sew on patches for the price of 1, unless they bid up, there will be no profits. For ebay buyers of course these are good times and as one buyer put it to me, my losses are his gain, as he plans to resale these later when the dust settles. I am not alone, while boycotting ebay was nice for 2 weeks, to be practical my return has been to cycle out inventory in this narrow window created by several protest. When sellers level off with less accumulated product, there will de another decline in listings. With ebays 10 cent insertion fee stimulating listings, there is that artificial boost that someone else mentioned.
What I still feel is being missed, is the percentage that is still not sold on auctions or stores, that is paid for or factored into successful or completed transactions. 6% or 25% or 400% addresses successful sales. If the ratio of items listed to items sold is 1 to 1 or 1 to 5, there is accumulated upfront fees that radically change the true profit margins.
Some of the huge stores will see this as only a speed bump comparing increase to a fix building cost and huge advertising budgets and these will move forward barely blinking. The housewives who chase yard sales they to will survive it, because it was just extra food or gas money. Those hurt are the 1 or 2 employee businesses that work out of their homes, people who left careers for a shot at being home with their kids or grand kids. If it was just fees without changes in search results, then there would be less anger. But even then, its all about that ratio of items listed to items sold. With extensive dialog since July 19th, the number one reason sellers migrated to the stores from the core auction was this success ratio.
So statistically dumping inventory means there will be a spike in ebay revenue, I am guilty of contributing to that. But, I can not sell at a loss and survive later down the road. Its a temporary boom filled with low prices and good deals, but come next fall sellers will still be on ebay, but not in their current venue.
I have 300 items to remove tonight and I am wondering now if it wouldn't just be easier to close my store and start over from scratch.
Per last night, my apology! That situation is well in hand and in the hands of proper authorities.
King
8-18-2006 @ 1:11AM
jhackman said...
the whirldwind of criticism generated by this move has prompted many* ebay shop owners to jump ship and look for somewhere else to sell their stuff. seems like a fair move to me, and i tried one myself which i thought was pretty good (swapace.com). i like it cause it's free and quite fun and easy to use. i don't know if it will meet *everyone's* needs (well im fairly certain that's impossible) but i'm sure some of you will find it to your tastes :)
8-18-2006 @ 6:22AM
B Hall said...
Keep in mind that eBay marketed stores very aggressively right up until the notification of the fee increases. They pushed stores VERY hard, claimed that stores were the future of eBay, encouraged sellers to stock their stores with lower-priced items and slower-selling stock.
Then one day they decided that they were "troubled" by stores and are now doing everything in their power to make sure that stores die a slow, painful death by starvation.
For some of us, it's not about the fees, it's not about the lack of exposure. It's more about the stability of the eBay platform. This month it's stores. What will it be next time?
8-18-2006 @ 7:31AM
Junkyardjims said...
Worldcom, Enron, Ebay...enough said.
8-18-2006 @ 9:28AM
Tim M. said...
That's funny, you included this:
Last month Whitman explained that "the marketplace has been overwhelmed with identical, often poorly priced items that have diluted the magic of the eBay experience."
But you left off Bill Cobb's statement from his recent "Resetting the Balance of the eBay Marketplace" announcement to sellers:
CORE LISTINGS: ....Also, in response to the requests of many large sellers, we're raising the 10-item multiple listings limit to 15, effective Aug. 22.
[ http://www2.ebay.com/aw/core/200607191343242.html ]
So how is Bill's raising the limit of 10-identical items to 15-identical items per seller, helping to offset Meg's "overwhelmed with identical" problems?
It is constant double-speak like this Mr. Fowlkes, that has sellers losing all respect for eBay and it's BOD.
8-18-2006 @ 9:37AM
Oscar said...
"Robert Peck, an analyst with Bear Stearns said in a note to his clients that "Sellers, while they may not like paying more for the same service..."
But it is NOT the same service! The listings will have increased fees and reduced visibility.
8-18-2006 @ 8:44PM
graham said...
Let's face it neither Cobb or Whitman are what you might call dynamic people with good ideas. Cobb, judging from his letter to the ebay market place is at best inarticulate and unsure of his reasoning. Ms.Whitman on the other hand is just full of annoying and patronizing blather, with endless shallow justifications for the fees charged.
Let's face it ebay is being run without vision and is indeed a truly reactive company with two steps backwards for every step forwards. The recent increase in costs for their stores function and the ensuing massive negative fallout is typical of the way it is run.
Cobb and Whitman may be powerful and believe they are in sync with their users, but the truth be told they are clueless without an ounce of creativity or comprehension of the underlying energies that have made ebay so big. This is stunning when one considers that they are supposedly leading the thing forwards towards more growth and prosperity.
This is truly a case of those getting wealthy through blind luck, feeling that they are all seeing and wise, their view of the market place is badly skewed and just plain wrong.
They have managed to create so many blind alleys for sellers and for those looking for products as to make searching, selling and buying one big headache. I have been selling on ebay for well over five years, I have closed my store and have now basically stopped listing altogether, the return is not worth it, the costs are outrageous and the playing field has been dramatically tilted in the favor of large sellers.
As the pressure from disaffected buyers and sellers builds, do not be surprised if ebay flip flops back to an earlier position.
The only reason that ebay is extant at present is because through default of their huge piles of cash, they can afford to buy fairly competent management, but this won't last if the exodus begins and all sellers start migrating to other auction sites and selling mediums.
If everyone who sells in a small way on ebay started listing on competing sites, they would backtrack in a heartbeat. GMC had their sales slashed and profits stolen by manufacturers such as Toyota who actually listened to the consumer base.
Ebay would be wise to emulate their actions.
8-20-2006 @ 3:22AM
Beth said...
Well, the article shows that Mr. Fowlkes didn't do much research or talk to the store owners!
1.There was no fee reduction in January of this year to the STORE owners - it was a "core" listing fee reduction. They are spinning it to seem like it was for stores, but it was not.
2.The sell-through rates of the store items have traditionally been less, because they have rarely been included in search engine results. Then eBay tweaks the search engines on a regular basis, and does not announce the changes. (Last example, they tightened the search engines to no longer include all forms of a word, leaving out thousands of listings that were formerly included. For example, if someone put in "red beads" in the S/E, then it would pull up results based on titles that had "red beads" OR "red bead" in the title area. No more - it is now exact words only.
3.They have chosen to import half.com listings, giving them preferential treatment over store listings. They also claim Express will be a big help to store owners. For those who sell NEW things, they'll get a few sales. But for those who sell vintage or collectibles, where does that leave them?
4.Sellers are NOT happy that communist China has been given totally free listings and free stores. Meg may say "the marketplace has been overwhelmed with identical, often poorly priced items that have diluted the magic of the eBay experience." yet her actions show the opposite - they seem to WANT the marketplace flooded with junk. They claim they had to give services away to compete. Well, maybe this wasn't the right time to add China to your country list!!
5. The figures you were quoting were indeed from Mr. Cobb's letter, but the math is so far off, we figure eBay has a special calculator that favors the number 6! For the average store owner, these fee hikes will result in an increased cost of 250% to 500% or more, depending on the number of listings.
7. Sellers might be more willing to accept the fee hike as part of doing business, IF we were getting something in return. We are getting MUCH LESS, and told to move our stuff elsewhere! I don't want to pay more for a listing and have a tiny chance that anyone will ever find it.
8. The REAL drain on the resource and bandwidth tanks are the Fee Avoiders - the scammers who list things for a penny with $20-$60 shipping charges. eBay does not charge FVF for the shipping portion, so the scammers sell their widgets cheap, and put the profits into the shipping. eBay fails to crack down on these, then penalizes the store owners with the higher fees. Sort of like a bully picking on the kid who doesn't misbehave, because they are afraid of the real enemy.
last for now - sellers are tired of being lied to, having experimental scripts run without their knowledge (leaving them often feeling like a sales failure or the king of the world, only to have it change again two weeks later!). And to pull all this fee increase nonsense right at the beginning of the busy time was considered as an outright hostile move towards sellers, who have already endured a year of other hikes, lies, manipulations, coding changes without notice, etc etc etc. We are TIRED of being jerked around. Store owners PAY to have their listings housed. Whether anyone finds them (or not) should be at the discretion of the store owner, and not for eBay to decide who can see them and when.
And if stores truly made up 83% of the listings as stated (well, if they used the same calculator that gave them the 6%, we should ignore that too!), then they should be busting a hump to treat that large MAJORITY well, not kicking them to the curb in favor of the 17%. And don't forget - their auction profit listings include things like McConaghey's sports car auction. Normal everyday store listings do not go for that much! ; ) Support the stores and skip the "cores"!
9-11-2006 @ 1:43AM
Dave said...
Tired of "HIGH" Ebay fees? Sucking the life right out of the little guy! Its your money, you work hard for it, so why should someone else reap the rewards? A New Alternative is Coming 2007! All listings $1.00! No End Of Auction Final value Fees! Ever! Lets bring the "FUN" back to Online Auctions. Do it the Dizzy Dave's Way! See Myspace Webpage for more info.
www.dizzydaves.com