EBay overhauls fees to woo angry Amazon sellers
The reduced fee means sellers' margins will increase, which may motivate them to list more items.
- eBay announced an overhaul of its fee structure, making it cheaper and easier for sellers.
- The overhaul is timed to attract customers unhappy with Amazon hiking fee for selling on its marketplace.
- The new fee structure designed to benefit small volume sellers through no listing fee and charging fee based on product category.
- Lower fees and higher margins for sellers may result in the number of listing on eBay growing substantially.
In a bid to attract customers unhappy with Amazon's (AMZN) fee hike for selling on its marketplace, and to do away with the disrepute earned from its complicated fee structure, eBay (EBAY) has announced fees cut for sellers on its online marketplace.
eBay is simplifying its “final value fees” with the percentage fee levied on each sale determined by product categories. Currently, the percentage fee is based on an item's price. Some of eBay's listing fees, a bone of contention among sellers, are also being ditched. Most of the changes will kick in mid-April, with others taking effect in May.
While this may be attractive to sellers to sell on eBay's marketplace over that of Amazon's, we believe that -- since eBay was the first mover in the business and its primary business was operating an online marketplace – a majority of sellers might already be operating on eBay. As a result, the move may not necessarily attract new sellers in huge numbers. But the reduced fee means sellers' margins will increase, which may motivate them to list more items on eBay.
Marketplaces account for about 40% of our price estimate for the company and 50% of its revenues. In the recent past, PayPal's growth has obscured marketplaces' strong performances, and we believe the segment still has a lot of growth potential.
Small Volume Sellers to Benefit
As a result of the changes that do away with the difference between fixed price listing and auction listing in many cases, sellers will now pay lower fees. The changes particularly benefit those who sell smaller volumes. We believe that the change will make eBay more competitive and provide another reason for sellers to prefer eBay over Amazon.
Under the new scheme, consumers will get 50 free listings per month -- and if the item sells, eBay will charge 10% of the selling price. The older fee structure included a listing fee of $0.50 for fixed price listing, for all the listings. For auction type listings, the first 50 listing were free with the listing fee going up as the number of listings increased. We believe the lower listing fee will encourage sellers to list more – increasing eBay's relevance as a shopping destination.
Large Volume Sellers Gain, But to a Small Extent
Amazon has never charged sellers listing fees, which is one reason why its marketplace has been gaining strongly against eBay in recent years. However, it does charge $0.99 per sale fixed closing fee, for every listing sold. This small fee is also waived if the seller registers as a Pro Merchant with Amazon. To compete for the large volume sellers, eBay will introduce new final value fees ranging from 4% to 9%, depending on the product category. We expect that the reduced fee, coupled with eBay's strong presence in the mobile world through popular apps and its new interface and expansion into emerging markets such as Russia and China, will attract sellers to its service.
We also believe changes in the fee structure will build loyalty among existing sellers on eBay, who will now pay less to use its services. Also, the higher margins provided as a result of lower cost (assuming that the seller quotes same price across various marketplaces) could attract more listings, and eventually more sales for eBay. As the changes will be implemented from the middle of the next month, these will have no bearings on the Q1 2013 results. We will look for any impact on gross merchandise volume on eBay's marketplaces over the coming quarters, to gauge the effects of these changes.
We have a $54 Trefis price estimate for eBay, which is 5% above the market price.
I understand that eBay needs to raise fees from time to time, but it is insulting to have them tell me that the latest change is a decrease. This is the largest single increase I've seen in my 16 years on eBay and has forced me to look for alternatives. I have already opened an Amazon store and started the process of building my own ecommerce web site.
Ebay in it's infinite greed never does anything that doesn't benefit them.
The comparison chart listed is deceiving - Ebay's side does not include payment processing fees, while Amazon's does. Also if anyone on your staff was willing to actually go the extra mile and do the math (a money site doing math? what a concept!), they would see the average seller's fees will be increasing across the board....in many cases doubling.
Many, if not most Amazon sellers already have or have had Ebay experience. While it's true that the fees were most likely responsible for why the former Ebay sellers left, their experiences with Ebay and how Ebay treats people are the ultimate reason why they won't be back.
John D is trying too hard to be Jeff B - the problem for John is Jeff is a good guy with good ideas and John is too obsessed with power and money to have an original thought. Back in "the day", Ebay had it's own funky thing going - that's why everyone loved it. Now it's trying to be a big box store and be everything to everyone. It's lost it's personality.
While Ebay's carefully worded press release may get shareholders a little excited now...it will be short lived. The few sellers that do wade into the murky waters of Ebay will quickly learn there are other (better) options out there, and they will take their cool and/or funky stuff elsewhere. Competition for Ebay and Amazon is on the verge of exploding - as soon as one of the many alternative shopping sights gets the right exposure, Ebay will sink like a rock. I suppose there will always be a market for cheap m****duced items, so Ebay will survive, but they will never again thrive as they once did.
This one sided article lets me know that anything I read here should be with a grain of salt. Disappointing.
Wot, not another “reduction” in eBay fees … when will it all end?
As usual, the devil is in the detail that most of the simple regurgitators of corporate media releases never examine …
‘eBay said the fee changes are a "part of an ongoing effort to reduce the basic upfront cost of selling on eBay for all sellers, and to make it easier for sellers to see at a glance what it costs to sell."’—
In fact, this latest “reduction” in fees represents a quite dramatic increase in fees for items of any value >$50 (a flat 10% instead of a tiered scale) and is a further indication of the parlous state that Donahoe has brought the eBay marketplace to as it continues its slow slide into insignificance …
The very many negative comments on the ecommercebytes blog are informative …
Regardless, this latest “reduction” in fees has nothing to do with competing with, or any pressure from, Amazon; this latest nonsense is simply Donahoe’s latest attempt to prop up eBay’s GMV and maintain eBay’s fragile façade for Wall Street …
This latest desperate fee grab by eBay will undoubtedly drive away many more sellers of other than “under $50 junk”; it will probably be cheaper to take anything of value along to your local traditional auctioneer, where at least your item(s) will be seen …
Clearly, eBay is in trouble and the headless turkeys nominally in control of this “Concordia” are alternatively yanking the helm from hard-a-port to hard starboard … all the time getting closer to that rocky coastline … Not even the furious pumping of the clunky PayPal will be able to keep this rusting old scow afloat much longer …
Still, at least we can still tell that an eBay/PayPal spokesperson is being disingenuous—when their lips are moving!
And, the ugly reality for consumers dealing with the clunky, manipulative, unscrupulous eBay/PayPal complex ...
"eBay-Facilitated Shill Bidding Fraud on eBay Auctions: Case Study #5" ...
EVERY TIME eBay stock rallies they do this. More corporate greed.
With ebay making major changes in fees, charging more from the sellers and putting a restriction on the minimum resolutions required to upload the product's photo.. I believe the best would be to look for an alternative which is best in the competition and which allows you to keep all your earning to yourself and not share it. Where sellers can:
1. Create Free listings
2. No Transaction Fees
3. Auto sync with ebay..carry all your listings from ebay along with the ratings and feedbacks in just a click.
4. Free integration with Google products (which auto populates the product description form for you, saving your precious time) and Google Shopping (which tells anyone who search on google to buy a product that it is available on our website, which by the way we pay for and provide you the service absolutely free)
5. Payment option like Paypal and Amazon for the most secure transactions
6. which does not allow you to leave a feedback for a cancelled transaction
7. a platform that not only list your products but also organise your customers and market your product in your network
8. a platform where you are just not dependent on ratings but also can leverage your social and professional profiles using log in through facebook, linkedin or google accounts
9. A platform that allows you to know the counterparty and build trust on the basis of work profile, school, college and other such dimensions.
10.Unlike ebay it has just one website (not different website for every country) so you can sell products worldwide and buy awesome products from across the globe as well
11. Unlike Ebay you can upload any resolution image and do not need only high resolution images to upload
12. Last but not the least it is absolutely free
And so the website that gives you all this is www.truegether.com
We have released our beta version and the new website with all these points said above will be launched soon in June, 2013.
We request all the sellers to list their product and leave us a feedback to help us improve more and give you a splendid experience of selling online.
Copyright © 2014 Microsoft. All rights reserved.
The NBA star could receive as much as $300 million in the 10-year deal, according to reports.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.