Monday, February 1, 2010

eBay's Huge Fee Increase

A big announcement was made last week about how eBay will greatly reduce seller's upfront fees. Please make note of the word "upfront," which is important. By the title of this post, you can tell that I have ignored the commentary about how it is a fee decrease. For people with a low volume like me, it is a huge fee increase.

By upfront fees, eBay means the listing fees which are applicable whether the item sells or not. By reducing those fees, eBay is saving sellers money. The trouble is that the final value fees have gone through the roof.

For those who have not read the announcement, I'll give some information.

1. It will be free to list up to 100 auctions per month... that is if you start them at $0.99. It is very hard to find items on eBay. Why would sellers take collectible items and start them at $0.99? I wouldn't. They'd sell at $0.99 or thereabouts. I would lose money.

2. The final value fee is now a flat 9% regardless of selling price. This raises the final value fee significantly for most items priced at under $1,000. The good news is that the fee is now capped at $50.00, which is great for people who sell very expensive items. I have never sold a book for high enough to have a final value fee of $50.00, so I won't be saving money.

3. For items starting at above $0.99, eBay is now offering new lower listing fees. There is a big catch... sellers must now subscribe to an eBay store in order to get the new lower listing fees.

$0.20 fixed-price listing fees for a Basic store at $15.95 per month
$0.05 fixed-price listing fees for a Premium store at $49.95 per month
$0.03 fixed-price listing fees for an Anchor store at $299.95 per month

Read between the lines: you have to do a high volume in order to get lower listing fees. This leaves me out. It is price discrimination against the small sellers. As we've now known for nearly two years, eBay no longer wants us.

Forget the lower listing fees that are only available to store subscribers. We need to discuss the final value fees. Someone made a couple of excellent charts that show just how bad it is. I have copied them from this message thread.

This one is for people like me who will not be opening an eBay store:

I will admit that I thought it was an exaggeration when I first saw it. Unfortunately, it has now been copied into so many message threads and backed up by so many people that I am speechless. Just look at it. I have nothing to say.

This is the chart for the high volume sellers who have an eBay store:

Even this one is a significant fee increase, and most importantly, these people will be paying a monthly subscription on top of the fees. Think about that for a moment. This is a huge fee increase for most sellers except for the extreme high volume sellers whom eBay loves so much.

Also consider that all sellers must accept PayPal, which gives eBay even more money and adds to sellers' costs.

Here are my thoughts:

The most significant part to me is the requirement to have a store subscription to get lower fees. I left eBay over a year ago to get lower fees, and I did not have to subscribe to anything. Bonanzle offers lower fees with no subscription.

Bonanzle does offer a subscriber option, but this is for a few perks such as the ability to use Google Analytics. It has nothing to do with fees. I chose to pay for a $200 one-year subscription to Bonanzle because I decided to support the site and I wanted to have access to Google Analytics data. I do not get lower fees because of it. All Bonanzle users get the low fees! My subscription was just renewed on Friday, January 29, and I feel like my $200 for the previous year was well spent, especially because I probably saved around $1,000 in eBay fees by selling on Bonanzle.

Why would I want to become a subscriber to eBay where the fees are much higher no matter what? It makes no sense.

I hope that the higher fees will pull some of the garbage off of eBay, but my gut feeling tells me that this will not be the result. The 100 free $0.99 auction listings per month could prove to be detrimental to the site. People like me who know the value of collectible items and who know how hard it is to search on eBay will not use the free listings.

Unfortunately, the average uninformed eBay seller will not know better and will likely flood the site with free listings. Some of these people are like the seller I mentioned in a recent post; they have no idea what they are doing, and those people will remain on eBay despite the high fees. They are the ones who will flood the site with garbage.

Another change not mentioned above is that eBay store results will now be mixed in with the core search results. This will make it even harder to find the good, vintage books. My conclusion is that I will soon have to limit my searches to "auction only" in order to weed out the fixed-price items. Even that could be problematic due to the 100 free auction listings per month. It is a shame.

It was sometime over a year ago when I stated that eBay was at either the beginning of the end or the middle of the end. At this point, I feel like eBay is now past the middle of the end and is approaching the end of the end. When I state that eBay is at "the end of the end," I mean the eBay we all knew and loved. That eBay is ceasing to exist.

I don't want eBay to fail; it is still the best place to find vintage books. However, eBay seems destined to sink its own ship, and I feel like this year may be the year that another venue, such as Bonanzle, begins to take a strong-hold on the collectibles market.


Paula said...

The problem is that ebay can charge whatever they want because, unless sellers want to go to fixed price listings, they are the only site with enough buyers to make auction style listings feasible. They have a monopoly on this.

But their moves in the last 2 years are CRAZY, because what they are doing is encouraging and slowly forcing ebay sellers to become online retailers. And once that happens, ebay has no moat - if you are not using auctions, you can go ANYWHERE! Ebay has a death wish! It is committing suicide! But it is a long slow sellers and buyers alike just love auctions, and will try to stay at it until ebay chokes the last bit of profit out of it.

Instead of building on its strength (auctions) ebay is trying to be something it's not, where it won't thrive.

In the meantime, what will happen now? Although inexperienced sellers will probably clog the site with garbage, I also think they will be the first ones ripped off when they do offer something worthwhile. First, ebay will take a huge chunk of the selling price, plus fees and another 3% for Paypal. Secondly, it will be harder to attract bidders when your item is buried in a sea of store items and 99 cent auctions. So it might be great for buyers who really know how to use ebay search, but the inexperienced sellers will probably not get what their items are worth. That makes me feel kind of bad, because although I love a bargain, I hate to feel like I'm taking advantage of someone. Anyway, we'll see how it goes - my prediction is there will be some good buys but it's going to be tough figuring out how to sell and make it worthwhile.

Jennifer said...

eBay = Walmart

They can both do whatever they want, and often it is not good. I have an increasing list of items that I can no longer buy at Walmart because the quality is inferior. I don't want "everyday low prices" to be more important than quality. I want my cheap items to be usable! Target sells better quality freezer bags for about the same price, for instance.

Here is another good article about the fee increase:

Vendio article

The Vendio writer noted that the casual seller is the one who is affected the most. The casual seller is the type of seller who traditionally has brought all the good stuff to eBay. Why drive those people away?

The ignorant people at eBay think that people no longer like auctions. They are too shortsighted to realize that eBay's changes have driven auctions into the ground, thus resulting in a decline. By adding store items to core, auctions will suffer even more. Why auction something off when nobody can find it?

I prefer auctions as both a buyer and a seller. I would have left eBay at least six months sooner except for my stubborn desire to hold onto auctions. I finally had to give it up.

I know that I am selling many of my books for less than what I would have gotten in auctions. On the other hand, I am paying very low fees so I am probably ahead in the end.

If Google ever decides to do auctions, then eBay is doomed. Google is the one entity that could immediately destroy eBay.

I first used Amazon in November 1996. Amazon has diversified from selling only books to selling most everything since that time, yet Amazon is as easy to use as it was in 1996. The same cannot be said of eBay.

I could go on and on forever about this topic. There is so much that could be said.

stratomiker said...

It sounds like The Peter Principle, which was a fad psychological buzz in the 1970s that preached if you try to keep getting bigger and better, you'll eventually blow yourself up.

I agree eBay is trying hard to destroy itself. Those big sellers they are catering to - who actually buys all that junk?

I was holding onto eBay because I'm lazy, and I didn't want to learn something new. But I started listing on Bonanzle today, and it's pretty easy, just different.

These last changes at eBay are just too much. Yes, they are actually driving people away. I saw a bunch of the 99 cent auctions and they are all junk. I guess 12 years of eBay as it was is all we're gonna get.


Jennifer said...

I have followed AuctionBytes a lot in the last couple of years, and eBay has been trying to get bigger and more profitable the entire time. At every stockholder meeting, they talk about increasing their profit. Do they really need more profit? Apparently so, based on this stupid fee increase.

Instead of being happy to be the best at online auctions, they wanted to be better than Amazon and Craigslist. Why not be the best at being eBay?

Each time eBay has tried to change, it has driven more people away. I have been following the message boards with interest this past week. We have more people really, really upset. Quite a few people have closed their stores or plan to close them. Their fees will be higher. Of course, eBay states that 95% of users are happy with this latest announcement. They probably mean 95% of their big business customers. They don't care about us.

The end result is that eBay is wrecking what it once was piece by piece.

Kathleen said...

Outrageous but Ebay keeps topping itself with insult to injury.

I definitely agree with you about sellers with their cheap listings. Talk about obnoxious. They are nothing but problems.

Similarly are the people I attract if I open or sell an item at a low price.

I avoid both like the plague. It is just not worth it.

Lauren said...

Thank you for the breakdown on the fee increase, Jennifer, that's really helpful.

Ebay spams my inbox with so much junk (Lord, how I hate those "recommendations just for you!" emails that NEVER contain anything remotely connected to anything I buy) that I end up not keeping up with their constant changes.

I saw the header of a recent email and it gave me a (bitter) chuckle, it was something like "Better buyer protection at ebay", as if ebay hasn't been bending over backwards for buyers at the expense of sellers.

I haven't even bothered with ebay recently but haven't yet made the move to another site out of laziness. I will have to look into an alternative now.

Jennifer said...

There are a few people who claim that the latest buyer protection changes are the last straw, but I don't see where it is any different. EBay is acting like it is offering even more protection than ever, but the deck is already stacked against sellers and for buyers, so what is the difference?

I have been very interested reading all of the commentary about the changes, especially since I have been able to do it in a detached fashion. Since I already removed myself from selling on eBay, I no longer am greatly affected by what they do, at least as a seller. As a buyer, I have concerns.