EBay overhauls fees to woo angry Amazon sellers

The reduced fee means sellers' margins will increase, which may motivate them to list more items.

By Trefis Mar 22, 2013 6:07PM
Quick Take
  • 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.


Ebay Stock Break-Up

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.

 

Comparison of eBay Store Subscriber's Final Value Fee With Amazon.


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.

Tags: AMZNEBAY
17Comments
Mar 22, 2013 11:10PM
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Every time eBay announces a fee change, they call it a reduction when in reality, for most sellers it results in an increase.  In this case, a *huge* increase.  Listing fees (charged when an item is listed on eBay) are indeed going down, from a few cents ($0.20 in my case) to free.  However, the "simplified" final value fees are much much higher for any sale over about $90.  For example (again, specific to my case), FVF on an $1800 sale today works out to $63.  Under the new plan, I'll save $0.20 on the listing fee, but pay a final value fee of $129.60.  That's more than double.

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.

Mar 23, 2013 7:17PM
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BOOOO!  I would expect MSN Money to do some better research and crunch some numbers before taking an Ebay press release at face value.

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.



Mar 23, 2013 10:11AM
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For Business & Industrial, Heavy Equipment, there is a HUGE increase. 

Current rate: $20 listing fee, 1% final value fee, $250 cap.

New rate: $20 listing fee, 4% final value fee, no cap.
Mar 22, 2013 9:39PM
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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" ...

Mar 24, 2013 12:35AM
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eBay always does this.  Back in 2003 when they started their yearly fee hikes we against the flat out rape of the power sellers.  We were invested in being eBay sellers and they used it against us.  Now, after the Whitman years of transparent abuse, we have the new dimension of telling sellers that fee's are reduced when the reality they are doubled (or worse) in many instances.

EVERY TIME eBay stock rallies they do this.  More corporate greed.

Apr 22, 2013 6:58PM
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POOR Media research.  Got email from my eBay rep saying my fees will go up 2000.00. I even forwarded this article to my eBay rep to explain.  Poor journalism. Talk to sellers prior to posting such false and smoke and mirror fees.  This article is completely false and have the email proof from eBay stating to me from eBay my fees will go up.  Not only this they gave me this notice within 2 weeks which now means I will have to let an employee go.  MSN did a very poor job at researching this and actually talking to any sellers. Hopefully they someone there will get a clue and contact sellers. Id be happy to post the official eBay email I got showing my fees are going up 2000.00 a month and Ive been selling on eBay for 14 years.  Get the facts as I have the proof.
Apr 16, 2013 11:21PM
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In my case the "savings" are a 200% increase to my listing fee per item. In my years of experience collectors of sports cards (cards in general) enjoy the bidding process over the fixed price/buy it now option and when you are selling penny to a dollar cards the 30 cent hit a listing is brutal. Why eBay chose to offer the 5 cent listing fee to books, CDs and DVDs and not include trading cards has me scratching my head and after ten years of buying and selling in their marketplace I think I'm finally done....and don't even get me started on the final value fees, the double dipping Paypal equation and such....my eyes might pop out!
Mar 24, 2013 1:33PM
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I have used ebay for many years but there is a point where you can't stand fking ebay, and as a seller and buyer I am moving to this site--http://us.ebid.net/.
May 17, 2013 5:58AM
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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.

May 26, 2013 5:52PM
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This chart in incorrect because they did not include the PayPal fees.  
May 26, 2013 5:50PM
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It is not correct as they don't include the Paypal fees.  These are always included on eBay sales.
Dec 23, 2013 4:40PM
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How can I contact this idiot journalist/blogger Trefis and explain that his article is a joke???
Aug 29, 2013 12:06PM
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We have seen a pretty good influx of sellers cross over on onlineauction.com in the past year because of these fees. I think sellers, especially the small/independent ones, are getting the shaft a lot lately.
Aug 29, 2013 11:08AM
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At onlineauction.com you pay a small monthly or a yearly subscription fee without any final value fees. If you purchase the yearly Founding membership it comes with a personalized estore, at no extra charge, and the nice thing about the yearly subscription, is that it does not go up in price.
Jul 15, 2013 12:24AM
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I was so disgusted with Ebay I opened an Amazon account, I found this story while searching, trying to understand just how Amazon gets to the bottom line, which is boggling to me and I refuse to "BUY" something before I can get on the help boards. I have been there less then a month so have not had a funds transferred yet. Between fees (commission, selling and FVF) then postage how do I end up with more then I sold the product for? something isn't right here! I'll figure it out later but for now, about EVIL Ebay and the sidekick PAYPAL...
 
I can tell you evil EBAY will suck the life out of your product, 1/2 of my stuff I get for free, (well not free exactly I have time and effort in a perishable product) and the time it takes still doesn't make the big $$ (enter sarcasm here) I make worth it. My product got much smaller!
They started out with 21 day waiting period, got threw that, then a competitor bought from me and left negative feedback trying to intimidate me, back to 21 day waiting period BUT WAIT also limit how much I can list (which hasn't changed in a year). So now I refuse to list more than my 50 free listings or a whopping $2000.00 a month ... so this is how my new listing fees work out. Ebay pushes pushes pushes you to give free shipping. If you start that by the way, you can't go back, (so don't start) customers insist on "FREE SHIPPING" Most of my products I sell are $10.99...shipping is $3.50...FVF is $1.10...Paypal is $.65...shipping supplies $1.00>>>$4.74 is my take on a fixed priced $10.99 item with EBAY. I'm still trying to figure out if I a paying shipping threw paypal... Why I have to pay a commission on the postage cost? Infuriates me!! Home & Garden by the way is NOT 9% it's 10% with evil EBAY! 

Now Amazon which I am trying to understand... on a $10.99 item "MAKES PEOPLE PAY SHIPPING" WooHoo!  So the product is $10.99 I get a shipping credit of $4.99=$15.98 then the fees -$1.65...-$.99...-$.75 ... =$3.39 in Amazon Fees which leaves me $12.59, now down at the bottom it says ... associated transactions (postage fees in other words) $3.50...when does this come out? That doesn't leave me $12.59 it's $9.09 actually $8.09 with shipping supplies that's still allot more than what I make with the evil EBAY>>>$3.35 more, doesn't seem like much but it all adds up.

Now lets consider with all I do as far as free shipping and being a perishable product, ships 1 day after purchase (even Saturday night!!) and all with evil EBAY...do you know I make twice as many sales on Amazon with 3 day shipping and they pay postage as I do on the Evil EBAY? Does that make any sense to anyone?? I make 1/2 the money and 1/2 the sales on evil EBAY...I will tell you what though...AMAZON customers get treated better with me, they aren't trash pickers like Ebayers. I spend allot of time with cheap dumpster diver whiners on Ebay, Amazon has a much higher more educated clientele, they spend more, they are more apt to return to your store for repeat purchases...I'm happy with Amazon at the moment...NOW, if only I could understand these strange fees and there odd book keeping      
Mar 23, 2013 5:40PM
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I've been a seller on eBay for 14 years now.    If you are worried about fees then your product doesn't have enough margin to bother selling on eBay.    Double your gross money or don't fool with it is the rule of thumb when on the hunt.

The true costs of eBay are THEFT using "buyer protection",   shipper DAMAGE,  DOA product,  do it yourself buyer installer damage of product.  
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