View Full Version : Ebay Changes

01-30-2008, 02:25 AM


EBay adjusts pricing to encourage low-cost sellers By Eric Auchard
Tue Jan 29, 11:22 AM ET

Online auction leader eBay Inc (EBAY.O) on Tuesday introduced price changes and tighter sales standards in a bid to retain quality sellers, improve customer service and revive flagging growth.

In a speech to eBay's top store operators and market makers in Washington D.C., CEO-in-waiting John Donahoe will set out a plan to reward the company's best sellers with sales incentives and priority ranking in search results for auction items.

Key changes involve lowering fees for listing items within auctions or for independently operated stores run on eBay. It also involves raising some of the fees sellers pay once sales transactions are successfully completed. And eBay plans to raise minimum standards to discourage abusive sales practices.

"Sellers that describe items accurately, ship on time, and ship at a fair price will enjoy preferential pricing and discounts on eBay," Donahoe said in prepared remarks. "We're serious about making eBay easier and safer to shop."

EBay is seeking to reverse slowing revenue growth in its marketplaces business, which is roughly half the level of three years ago. The company telegraphed that changes were in store last week when it reported its 2007 year-end results.

The moves initially take effect February 20 in the United States across both auction bidding and fixed price markets. In coming weeks, similar changes will be introduced in Germany and Britain, eBay's No. 2 and No. 3 markets. Eventually, the pricing and other rules changes will take effect worldwide.

In the United States, eBay plans to reduce insertion fees -- the cost of listing new items -- by 25 percent on most auction items and by 50 percent on most store items.

The fee changes, which vary by country, are intended to encourage sellers to list more items and use more pictures to illustrate listings, moves designed to encourage shopping.

Final value fees, or the price sellers pay for successfully completing a sales transaction, go down as the value of items go up. The pricing changes lower the up-front risk if listed items don't sell. "Put simply, we will make more of our money when sellers are successful," Donahoe said in a statement.

Long-serving eBay Chief Executive Meg Whitman said last week she planned to step aside at the end of March and be replaced by Donahoe.

There were 532,000 stores operated with the eBay network in the fourth quarter. The company no longer discloses the overall number of sellers who participate in its auctions business. But it boasts 1.3 million people make some part of their living selling goods or services on eBay sites globally.

Along with fee changes, eBay is making its minimum standards more stringent for anyone who sells on the site, primarily to discourage behavior like charging excessive shipping fees or not describing listed items accurately. Sellers with high customer dissatisfaction ratings will be given lower priority in searches consumers perform on eBay.

Analysts said the changes were welcome but that eBay has a lot more to do to revive its growth in its auction business.

"While the moves are bold, I don't think they are going to change the face of competition," Scot Wingo, chief executive of ChannelAdvisor, a sales consulting group that advises online merchants who sell through eBay and other sites.

But Wingo said eBay was headed in the right direction by cutting fees that have pushed some merchants off of eBay, reversing a pattern of fee increases seen in recent years.

Lower fees could help woo back sellers of books, music and videos -- items that typically sell for under $25, he said.

"These guys have had a very tough time as (auction listing) prices and then store prices went up," Wingo said. "That drove a lot of selection off the site," he said, both to rival Amazon.com and to Web sites these merchants set up themselves.

Deutsche Bank analyst Jeetil Patel, one of two out of 27 analysts who recommend investors sell eBay shares, has argued eBay must drastically cut its sales commission structure in order to compete with Amazon, which will require "hitting the Reset button on (its) business model," he wrote last week.

"We think the structural issues may take years to overcome, given the economy, competition and financial impact," he said.

EBay lowers some fees, raises others By AMANDA FEHD, Associated Press
Tue Jan 29, 6:16 PM ET
EBay Inc. is rejiggering its fees -- raising some, trimming others -- to
meet rising competition and maintain its share of the online auction
market it helped start a decade ago.
But those who keep tabs on the Web site, including its top sellers,
say the changes are a step in the wrong direction.

"It's too little too late," said Steve Grossberg, one of eBay's top
100 sellers and the founder and president of the Internet Merchants

Grossberg, a Florida-based vendor of video games, spoke by phone from
a conference of 200 of North America's top eBay sellers in Washington,
D.C., where incoming CEO John Donahoe announced the fee changes
Tuesday. EBay makes 80 percent of its revenue from the top 20 percent
of its sellers.

"I think you are going to see a listing decrease, you are going to see
some sellers leave the site or pull back quite a bit and think of
other ways to make revenue, and it's going to backfire," Grossberg

Listings on eBay's various sites in the fourth quarter rose 4 percent,
reversing two straight quarters of declines, the company reported last
week. The number of people actively using the site has stagnated,
rising just 2 percent from a year ago, while revenues have risen

The price changes, which take effect Feb. 20, are complex. It will
cost 25 percent less to list an item for auction and up to 50 percent
less to offer something for a fixed price. EBay's commission on items
sold for fixed prices over $100 will also decline.

Its commissions on auction items selling for more than $1000 will
remain at 1.5 percent, while its commission on cheaper items will rise
as much as 67 percent.

Under the old rules, for example, a purse auctioned for $25 would have
cost the seller $1.91, including 60 cents for listing the item plus
eBay's commission of $1.31. Under the new structure, the seller would
pay $2.74, including 55 cents to list the item plus a higher
commission of $2.19.

"EBay does sincerely want to compete. They are reacting to the
competitive threat of Amazon," said Ina Steiner, editor of
AuctionBytes.com, a trade publication for online sellers.

Amazon already has "cherry-picked" a lot of eBay's high-volume
sellers, Steiner said.

Company spokesman Usher Lieberman said the company's internal pricing
experiments and number-crunching show listings overall will rise in
response to the changes.

"We've heard from our sellers for a long time that they've wanted us
to reduce their upfront cost and risks, and we've done that,"
Lieberman said. Lieberman predicted the changes will result in savings
for more than 60 percent of sellers.

EBay most wants to encourage growth in fixed-price sales, the area
where it sees the most potential for growth.

One of its main rivals in fixed-price sales, Amazon.com Inc., charges
no fee at all to list an item, though it charges a commission as high
as 15 percent.

Sellers told The Associated Press that Amazon is more straightforward,
takes less time and that they make more money using it, partly because
Amazon pays for payment processing.

Randy Smythe, a former eBay seller in Southern California, said eBay's
sellers take more risks than Amazon's because they have to pay before
an item sells.

Smythe sold music and movies on eBay for nine years, bringing in up to
$4.6 million a year. He stopped in 2006 because he saw increased
competition from those who were gaming eBay's fee structure, charging
less for CDs upfront but more on shipping. He found he was keeping
just 2 percent of his gross revenue, and he now blogs about the
industry instead.

"What's going to happen is it's still going to be too expensive to
sell on eBay and make good money," Smythe said.

Donahoe said eBay is at a crossroads. He told the sellers the new fee
structure will be driven by their success.

Donahoe said a majority of sellers will see their prices fall.

But sellers said the changes will increase their costs.

"I don't see any real incentive for the average seller to list more
with this new fee structure. I think their 'bread and butter' core
auction listings will continue to diminish as a result," said Bill
Hamilton, a Georgia-based top seller who specializes in collectible

The new fees affect only sellers in the United States. More changes
are coming in Britain and Germany.

The changes come as longtime Chief Executive Meg Whitman announced she
would retire at the end of March. Donahoe, president of eBay
Marketplaces, which encompasses its shopping sites and classifieds,
has said he will aggressively change eBay's product, customer approach
and business model.

Martin Pyykkonen, an analyst with Global Crown Capital, said eBay's
rising fees have in the past caused sellers to look elsewhere on the
Internet for places to practice the online skills they perfected at
eBay, whether it's their own Web sites, Amazon, or other shopping

"The more savvy sellers look at a multitude of options. It's not like
Amazon is taking market share from eBay in a big chunk, it's more of a
gradual shift. This commission going up will be a telling point over
the next months to see what kind of reactions it gets," Pyykkonen

01-30-2008, 03:19 AM
Ebay has lost track of the idea that the buyer, not the seller, provides the money. They need to advance the cause of the buyer to improve their dire situation - if raking in billions can be considered dire.

01-30-2008, 06:19 AM
I got that email and thought it was a spoof.

Did you see the part where there will be no more neg. feedback?

01-30-2008, 07:13 AM
Under the old rules, for example, a purse auctioned for $25 would have
cost the seller $1.91, including 60 cents for listing the item plus
eBay's commission of $1.31. Under the new structure, the seller would
pay $2.74, including 55 cents to list the item plus a higher
commission of $2.19.

I don't get it !

...looks like ebay will get a lot more ...looks like no cuts in fees or savings are to be made ...

your first article goes on about 25 percent and 50 percent savings for the seller .........

the next article has that above quoted...which reverses it .

all the best.markj

01-30-2008, 07:42 AM
Recently e-bay introduced a new "look". When I tried to run my favorite searches it took me to a new page and wanted me to reset up the search---after the years it took me to actually search for what I wanted instead of showing ten thousand "machine" cd's or "Roadking" crap instead of the harley parts I want to see. I sent them a letter letting them know I think the new "look" SUCKS! Do I expect to get a responce? No. Will I be looking elsewhere instead of jumping thru their new set of "training hoopes"? YES! These web sites are going to have to learn we/I am NOT at their mercy! Like telivision and constant advetizing instead of actully entertaining me there is a solution. TURN IT OFF! Go somewhere else!

Sorry for the rant----well maybe not. :~)


01-30-2008, 09:18 AM
The big change that I think is going to make a very positive improvement is that sellers can no longer leave negative feedback.

No more retaliatory feedback!

This was the fundamental reason that the Ebay feedback system was so bogus: buyers were very reluctant to leave well-deserved negative feedback because the seller would instantaneously leave a retaliatory negative for the buyer.

I've seen so many posts here "I got screwed by a seller with 100% feedback -- how is that possible?"

This is the only way that sellers like 800Watt have been able to retain their PowerSeller status: she won't reply to your emails, but she'll leave you a retaliatory feedback within milliseconds of getting a negative feedback.

01-30-2008, 12:03 PM
Well we have something in common, Lazlo.

800watt complaints.

01-30-2008, 12:09 PM
I don't have any complaints with 800Watt Jay, but that's because so many other folks here and on PM have posted theirs, that I stay away from her auctions.

01-30-2008, 12:15 PM
Then You guys Don't have any thing in common, Big surprise.

01-30-2008, 11:51 PM
Another FYI...


EBay's tweaks to feedback worry sellers By AMANDA FEHD, Associated
Press Writer

EBay Inc. says it's changing its user-feedback system to keep buyers
from leaving, but the plan has sellers worried they'll no longer be
able to weed out untrustworthy shoppers.

Buyers and sellers have been able to rate each other at the online
auctioneer since its birth in 1995, when eBay founder Pierre Omidyar
envisioned a virtual marketplace built on trust among buyers and

Come Feb. 20, a full spectrum of feedback is welcome from buyers about
sellers, while sellers can no longer give buyers negative star

The shift was announced Tuesday among a complex series of pricing
changes and initiatives that eBay hopes will improve buyers'
experiences as it struggles with stagnant user numbers.

It's a fundamental change to create trust and tackle fraud in a
marketplace where buyers and sellers never lay eyes on one another.
Steve Grossberg, a Florida-based top seller of video games and
president of the Internet Merchants Association, said the ban on
rating buyers is a good thing.

"When the seller leaves a negative feedback for a buyer, it drives
them away from the site," Grossberg said.

But eBay needs to work harder to stop bidders who don't pay up, he
said. The site does not require immediate payment,and sellers complain
they are just as exposed to fraud as buyers on eBay.

Company spokesman Usher Lieberman said about 6 percent of auctions end
in nonpayment by the winning bidder.

Sellers can require payment upon checkout for fixed-price sales, which
account for 40 percent of eBay's business worldwide. But immediate
payment is not required on auctions because the buyers are not at
their computers when they win an auction, Lieberman said.

Sellers have long used feedback to alert one another about fraudulent
practices like nonpayment. Sellers earn good ratings by delivering
quality products and using timely and reasonably priced shipping
methods. Buyers earn poor ratings by not paying for an item or
threatening the seller with a bad rating if they don't lower the final
auction price.

Both buyers and sellers use the information to assess their trading
partners' trustworthiness. Buyers can decide not to purchase from
poorly rated sellers, and sellers can eject poorly rated buyers from
an auction, for instance.

But sometimes sellers retaliate for poor ratings by giving a buyer a
bad rating. Retaliatory ratings by sellers have risen fourfold in the
past several years, Lieberman said.

And that's turned off buyers, he said. Those who stop using the site
complain more often about retaliatory ratings than other factors, such
as not receiving items they've paid for.

Grossberg, the trade association leader, said eBay has no incentive to
stop nonpaying bidders, because it charges its fees and commissions
regardless of whether a transaction goes sour.

Sellers wrote this week in online forums that they worry what the
change means for how they do business.

"Most of the sellers are having a gut wrench about the feedback
changes. It's a very abrupt change to something that has always been
sacrosanct in the eBay world," Bill Hamilton, a top seller in Georgia
who specializes in collectible gemstones, said in an e-mail to The
Associated Press.

The company does not keep comprehensive fraud statistics since most
fraud occurs outside of the site -- when, for example, the customer
uses a nonsecure payment method.

In the first quarter of 2006, eBay's reported loss due to payments it
made to settle fraud claims was .06 percent of revenue.

02-01-2008, 03:10 AM
Wondering how sellers are reacting to the recent Ebay changes?