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Monday, August 21, 2006

eBay Fee Hike Set to Kick In

Posted by @ 4:31 pm
9
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eBay announced recently that it was going raise some of the fees associated with trading on it’s iconic online auction site. While the fees are designed to increase revenue, potential vendor backlash could mean that revenue moves in the opposite direction.

The fee increase would mean that the existing difference between auction prices and store prices is significantly reduced. Under the old fee structure, the cost of listing store items was 27% less than auction items. The new fees will see this reduced to just 3% according to an article by Ben Carmy from the Seattle Times.

Vendor concerns have been heard throughout the internet, with one group actually staging an eBay boycott. The group put a request through to Google to create an eBay alternative, so that other disgruntled vendors would have another option available. This does highlight the control eBay has on the online auction market, as currently there are no real alternatives.

That said, not all vendors are sharing the concerns. One seller’s comments on an online message board herald the increases as a positive move. “Actually, I think this is good…Have you ever gone to eBay to search for cell phone accessories or anything of that nature? There are TONS of (items) that are so cheap there is no point in me selling my own. I’m glad they hiked it up.”

So while eBay aims to reinvigorate its online auction system, the success of their initiatives will be measured by the actions of their sellers. Generally all fee rises are met with some resistance, but if sellers are able to absorb the costs and still make money, the backlash should be relatively short lived.

It also highlights a real gap in the online market. Until another company creates a genuine competitor, eBay will be in a position to dictate the terms…and nobody likes a monopoly (except for eBay execs).



Rene LeMerle Rene is the marketing manager of ineedhits.com - a global search engine marketing company. He also leads the marketing for Gooruze.com - a web 2.0 style community for online and digital marketers. Rene has been in the industry since 1997 with much of that time spent helping businesses embrace the best of the internet and digital world.

View Rene LeMerle's profile






Discussion (9 - comments)

Actually, eBay is an effecinecy monopoly.

From Wikipedia:
An efficiency monopoly exists when a firm is satisfying consumer demand so well that profitable competition is extremely challenging…

I think you have it upside-down when you state:

The success of their initiatives will be measured by the actions of their sellers.

The actions of the buyers is what is driving eBay. As long as the buyers show up, the sellers will follow.

The real trick is for the sellers to acquire the buyer on eBay and move that buyer to purchase from the seller again and again — on eBay or off.

By Brian - August 21, 2006



What brings shoppers to eBay? Low prices and large selection. That is provided by the Sellers! You can’t find it on eBay if it were not for the sellers. This is going to account for a 27% increase in cost of doing business on eBay, that cost gets past on to the buyer. If the buyer can then find it cheaper, they will move on, if the buyers move on, so will the sellers.

More and more people are going to find they can get it for less off a website than they can on eBay. I sell on both. My website prices are lower than my ebay prices because my overhead on a website is lower. Yet, I still sell more on eBay because people have not learned that they are paying more yet. When they do, eBay will be in trouble.

By Hot Stuff Leather and Lace - August 22, 2006



I have been a “power seller” on ebay for years and have business experience emcompassing 25 years. Ebay is one of the most poorly run companies I have ever have the misfortune to do business with. They sell nothing, own nothing and provide absolutely no support to even their top sellers. It’s like dealing with the old monopolistic phone company. It would be laughable if it wasn’t so damn irresponsible. Why do you think their stock keeps dropping? Don’t ask me how any can screw up a multi-billiion dollar no capital internet business, but they’ve done it! If there was even a remotely competitive alternative out there, professional sellers would flock to it. Then ebay could go back to what it does best: selling Pez dispensers.

By Anonymous - August 22, 2006



I was already fed up with Fee-Bay
and so i created a new auction/ store site It is http://www.thehillgallery,com
I just want to sell my items affordably and allow others to do the same. I really want everyone that joins me to make money.

By Laurel Hill - August 23, 2006



You know you don’t have to use your an aution to sell your items. You might try http://www.sellwitheAds.com It’s a clean site simple and is getting better all the time.
Bill

By Anonymous - August 23, 2006



I’m also fedup with fees I was on Ebay for 5 years, you pay to put auctions up and you pay after auction fee( 5.25 )well I just started a new auction site http://www.multisiteads.com/auctions/
for everybody and with no after auction fees.

By Anonymous - September 5, 2006



I don’t understand why eBay keeps raising rates. I hope they don’t go too far. My wife started using http://www.oltiby.com and it seems that I will follow the lead.

By solisy - January 24, 2007



I rarely use ebay to sell online nowadays,
I have for the past couple of months been selling items at AuctionBidz,
http://www.auctionbidz.com.au

it’s a new ebay alternative and best of all it’s free!
Cheers.

By Anonymous - August 24, 2007



EBAY AND THE BIG LIE

It’s been years since Ebay has really been a user friendly company, especially when it comes to sellers. Their customer service is, by far, the worst I’ve ever experienced. This is easy to prove, just try any of the following: See all the hoops they make you go through to get a refund on an unpaid item, or try to have a patently unfair feedback removed, or try to fight an unfair PayPal chargeback, or try to contact an actual, living customer service representative — and if you do succeed in contacting one, see how helpless they are at resolving your problems.
But now, eBay has reached a new low in their disrespect toward their sellers. They have cloaked their largest fee increase in the company’s history, as a benefit to the entire eBay community. And they have portrayed their short-sighted changes to the feedback / selling rules, as a positive change for sellers. This “Big Lie” strategy has used by various purposes in the past — from getting sleazy politicians elected to leading countries (including our own) into wars.
Now, eBay is using this same tactic in an effort to put a positive slant on the changes they have outlined for February 20th. This time, I hope, it won’t work.

In their announcements concerning the changes, President Bill Cobb and VP Jim Ambach made a number of statements, concerning these changes. I’d like to look at eBay’s own statements, and compare them to the facts:

Lie #1 — Bill Cobb states, “Our goal for these changes is to continue to improve the overall experience for our customers, both buyers and sellers.”

Truth #1 — While these changes may improve the experience for some buyers, they drastically worsen the situation for the overwhelming majority of sellers. And if the changes should cause a mass exodus of small sellers from eBay, these changes will then hurt even most buyers, as well.

Lie #2 — Bill Cobb states, “We’re making a fundamental change to the economics of selling on eBay, resulting in three significant price reductions.”

Truth #2 — The overall fee changes will NOT result in a reduction for the vast majority, excepting those who’s items do not sell (they will save a nickel, in most cases). For most everyone else, this is a massive fee increase of 40%, or more. Most of the trumpeted “fee reductions” are for expensive add-ons, that are rarely used by the majority of eBay sellers.

Lie #3 — Bill Cobb states, “First, we’re reducing the up-front risk for all of you by lowering insertion fees for auction and fixed price listings across the board…and we’re balancing that change by adjusting some final value fees.

Truth #3 — When one balances something, it is presumed that they give and take equally. In this case, eBay is giving a token listing fee decrease (a 5-cent reduction on most listings), and ‘balancing’ it with a whopping 67% increase of the final value fee. In practice, this will increase the cost of selling a $25 item from $1.91 to $2.74 — 43%. This is by far the largest fee increase in eBay’s history. I fail to see the balance.

Lie #4 — Bill Cobb states, “All of these changes came as a result of listening to your ideas and concerns … You told us that you want free Gallery. You said you’d prefer fees for success, not listing. But more than anything, you told us that our overall pricing structure is simply not working for you, and that high insertion fees, in particular, have been a big deterrent in moving more of your merchandise onto eBay.”

Truth #4 — I wonder how many sellers feel that a nickel off the listing fees would be a major improvement in their listing structure? And how many of those same sellers would think that a massive final value fee increase would be a fair trade off? It is true that the free Gallery is a plus, but If Bill is really listening, and he really wants to eliminate the ‘big deterrent,’ I have a suggestion. Lower the across-the-board listing fees by 67%, or 50%, or even 33% — and add only a commensurate increase to the final value fee, when an item sells. This would have been a true way to eliminate the “big deterrent in moving more of your merchandise onto eBay,” and it would not greatly detract from eBay’s bottom line.

Lie #5 — Bill Cobb states, “I know that all of the changes we’re making in pricing, seller standards and incentives, and feedback are big ones … and that not everyone will like them. But the overall package is what you should focus on … and the overall package is strong. I think we’ve demonstrated that we’re committed to making improvement to the overall customer experience and that requires higher standards and bold changes. That said, the vast majority of our changes work to strengthen our relationship and they’ll be great for the marketplace as a whole, and certainly great for many of you.”

Truth #5 — When Bill refers to overall package as ‘strong,’ one can only assume he’s referring to the odor. What eBay has really demonstrated is their short memory. Remember that this site was started by Pierre to give his girlfriend an outlet to buy, sell and trade Pez dispensers. It was created for little people just like me — who sell collectibles and other small items at a small profit. And while I sell small items, I sell lots of them — paying yearly eBay/PayPal fees of close to $10,000 annually. But, time and time again, eBay has pushed people like me — their originally users — out the door. They do this to make way for the high end items and mega-retailers they seem to covet. Bill says, “the vast majority of our changes work to strengthen our relationship and they’ll be great for the marketplace as a whole.” If he is confident that this is true, why not put these changes to a vote — and let the buyers and sellers decide. After all, it is we who pay all the eBay’s fees, thus paying these executives their salaries. However, Bill does get one thing right ….. not everyone will like these changes!

Lie #6 — Jim Ambach states, “Let’s take a quick look at all the things we’re doing to strengthen our partnership with our sellers:

1. Reducing insertion fees 2. Free Gallery on all listings! 3. Reduced Feature Plus and Pro Pack fees 4. Increased listing exposure for sellers with great DSRs 5. Pricing discounts for PowerSellers with great DSRs 6. Protection from chargebacks for PowerSellers 7. All addresses are confirmed addresses for PowerSellers on their eBay listings that are paid with PayPal 8. Unlimited PayPal protection for PowerSellers 9. Repeat Feedback credit 10. Rolling 12-month Feedback Percentage 11. Personalized Seller Dashboard

Truth #6 — Jim forgot to mention a few things, that might not “strengthen our partnership with our sellers.”

1. A stunning increase to final value fees — many, many times higher than their minuscule reduction in insertion fees.
2. The free Gallery (which I must admit is the one positive in all this mess) is really much more of a benefit to buyers. For sellers who previously used Gallery it will actually hurt them, since now all listings will have the Gallery pic — so their listings will no longer stand out. Many other sellers got by without using Gallery in the past, so getting it free will probably only be a minor perk.
3. OK, lets have a show of hands, how many sellers have ever used either ‘Reduced Feature Plus’ or ‘Pro Pack?’ It’s like if McDonald’s raised the price of a big Mac to $10, while lowering the price of their cookies a few cents.
4. As an honest seller, I already have a big advantage over dishonest sellers. When buyers check my feedback, and compare it to theirs, they invariably come back and shop with me. 5. Ebay’s “Pricing discounts for PowerSellers” only eliminates a small portion of the fee increases. Even with the full 15% Powersellers’ discount — fees will increase monumentally. At the risk of kicking a dead horse, with or without the small discount for PowerSellers, THIS IS STILL THE LARGEST FEE INCREASE IN EBAY’S HISTORY!
6. I’ve had experience with PayPal’s chargeback protection. Last year, an overseas buyer purchased an item from me, and as always, I gave them a choice of shipping options ….. CHEAP — with no insurance and they must accept responsibility should the package become lost or stolen ….. or, NOT SO CHEAP — with insurance and I will accept responsibility for delivery. They chose cheap, and sent an email stated that they would accept full responsibility. We shipped the item the next day. Two weeks went by, and we were contacted by PayPal, letting us know that there was a dispute against us. This buyer has claimed that the package has not arrived. Of course, since there is no tracking number on the package, we had no way to know if he was telling the truth. We told eBay that: 1. We have 100% positive feedback with thousands of transactions, so we are not in the habit of cheating our customers. 2. We have a customs number and postal receipt proving that the package was mailed. 3. We still have the email from the buyer, stating that they requested no insurance and that they would accept responsibility.
PayPal said the customs number is not trackable and they asked for the tracking number. Of course, we did not have a tracking number, since the buyer did not want insurance. PayPal took a day to make their ruling, and after “looking at all the facts,” they deducted the full amount of the payment from our PayPal account. Therefore, we not only lost the item, but we had to pay for the shipping charge, as well.
This scenario has been repeated with us several times. And this is the same PayPal who is going to protect sellers from chargebacks!
7. When they state, “All addresses are confirmed addresses for PowerSellers on their eBay listings that are paid with PayPal,” they are not telling the real truth. If you read the fine print, it says that this will apply to most (not all) countries. 8. See #6.
9. The “Repeat Feedback credit” is a double-edged sword — multiple negative feedbacks will also count against you when this change takes effect!
10. This is mainly an advantage for poor or dishonest sellers. I have built up a nearly spotless feedback record over 10 years, but the first 9 years will soon disappear. This is great if I have lots of problems I want to hide. But now, one vindictive buyer can ruin my reputation — and I won’t have a long record of positive comments to counteract the damage.
11. I’m not sure what a “Personalized Seller Dashboard” is, but I doubt it will be the highlight of my business life.

In addition, here are a few more serious flaws in this new sellers’ program:

12. There are many new penalties to sellers who do not meet eBay’s criteria for success. For low-volume seller’s, one vindictive buyer has the power to increase your fees and lessen the exposure of your eBay listings.
12a. Sellers can no longer punish abusive, dishonest or deadbeat buyers with negative feedbacks — sellers can ONLY leave positive feedbacks!
12b. The new one-way feedback structure eliminates any constraints on the buyers. They can use feedback as a weapon to extort concessions from sellers, and sellers will have absolutely no recourse, or protection.
12c. Buyers can, in some cases, cause sellers to have to wait for 21 days for their PayPal money, by simply withholding a positive feedback. Here’s the eBay policy in their own words: “When eBay suspects the transaction may result in a dissatisfied customer, PayPal will delay release of the payment funds to the seller until the buyer has left a positive feedback, or 21 days have passed without a dispute.”
Notice that this can affect sellers, even without there being a clear problem. This policy can be instituted even if PayPal suspects there “may” be a problem. That is a little scary to me.
12d. eBay can now force many sellers to accept PayPal, even if they don’t want to. They claim that newer sellers must get PayPal or a merchant credit card. However, the cost involved in obtaining a merchant credit card makes it prohibitive for most low-volume sellers. This leaves PayPal as the only feasable option. And who is it that benefits financially by PayPal’s usage? Monopoly anyone?
12e. Buyer’s can anonymously hurt sellers by leaving a low rating on any of the “Detailed Seller Ratings” categories — on any of the four seller attributes. Like feedbacks, these DSRs can be used by buyers as a weapon by buyers, against sellers. What makes this particularly disturbing, is that eBay benefits by this practice. If a buyer gives a seller a low rating, the seller will lose their PowerSeller discounts on eBay fees. Which will mean more money for eBay. So the entity who I’m counting on for protection, greatly benefits by not protecting me.
Here’s what can now happen; if a seller states in his description that they use priority mail for all packages, the buyer can now demand that they use another service. And if the seller refuses, the buyer can leave a 1 on the “shipping cost” attribute. This will hurt the seller in numerous ways (higher fees, lower visibility to their listings), but they will have no way to determine who stabbed them in the back.

In conclusion, eBay has instituted a widespread series of changes, and they have tried (and lied) to project these in a positive light. They have made an attempt to imply that these changes have widespread benefits to the selling community. But, if sellers take the time to even give even a cursory glance at these changes, they will find that in fact, they benefit only two groups — buyers (especially the dishonest ones) and eBay itself.

I am an eBay powerseller who has been a loyal user for the past ten years. As an honest and hard working seller, these changes are quite upsetting to me. However, when eBay tries to tell me that they are for my own benefit, they become even more repugnant. If they just were honest about it, eBay would announce something like, ‘We want to make more money off your labor and we want to make a big, public show of protecting buyers — even as it comes at our sellers’ expense.’
It has become ever increasingly clear, that eBay does not respect sellers, does not care of our concerns, and does not choose to truly try to reach out to us in a spirit of mutual benefit. But at some point, anyone with any self respect has to say, “enough.”
I have never been one to stay where I am unwanted. If these changes become a reality, I will let eBay know that they have gone too far. I will stop providing them with thousands of dollars in annual fees. I will stop recommending them to my customers and friends. And I will find other venues to use, in order to sell my merchandise.
Maybe if enough sellers follow this example, eBay will finally stop treating its sellers as second class citizens, and instead, work with us, to fix the company’s problems.

Sincerely Yours,
Brian Moran
Winter Springs,
FL

By buymytoyz - February 2, 2008




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