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You have, by now, probably have heard Ebay's announcement that they are lowering fees for listing items, raising minimum selling standards et al in an attempt to improve the overall experience for eBay customers. Hmmm let's look at this further...
The Good: Starting Feb. 20 in the U.S., eBay (EBAY) is reducing its fees to list items (called "Insertion" fees) by 25 to 50 percent.
The Bad: EBay is increasing the fees it charges when an item is sold (the Final Value fees). According to President and CEO-elect of eBay, John Donahoe "Sellers prefer this structure, as it lowers their risk if an item doesn't sell." Uh wait a sec John. I'm an eBayer and I don't necessarily prefer this structure. What this means is that everytime I make money on Ebay, Ebay will now be making more money. For small ticket items this sucks. The greatest fee increase will come for goods selling for less than $25. EBay's fee for those transactions will rise 67 percent, to 8.75 percent of the final sale price. For large ticket items it's relative.
One of the items that is long overdue is that the company is making its minimum standards more stringent for anyone who sells on the site, primarily to discourage behavior that causes buyer dissatisfaction, such as charging excessive shipping fees or not describing items accurately. People charge the most ridiculous amount for shipping sometimes. It is truly disgusting what some have been able to get away with. So this is a welcome change.
Last week, EBay announced its fourth quarter earnings for 2007. Guess what? They're doing fine. As a result the need to make more money off of the people that sell items on Ebay is a joke. In a letter to John Donahoe at Ebay, the author asks, "...Could you make it so the sellers get to keep a bit more of the profit from their work?" 'Nuff said. EBay does very well, but it looks as though Mr. Donahoe is looking to do a little better. (I guess the $5.8 million he received in compensation last year was not quite enough..) According to the financial statements, total revenue for EBay went up by 28 and a half percent in 2007 over 2006. Gross Profit was up by over 25%.
I guess my point is is that there are always going to be some disgruntled folks on Ebay. You cannot please everybody all of the time. EBay however does need to be careful as they are treading a fine line having ignored disgruntled former eBayers who became frustrated with EBay in recent months. The fact of the matter is that EBay has struggled with flattening growth in recent years and at times drops in the number of items for sale on its site. EBay may fast become known as FeeBay for many other users of the auction based service.
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