eBay New Fee Structure - Get ready to make MUCH LESS on you auctions

I'd like to preface this with a sanity check. If I'm wrong about this, let me know, because this really ticks me off.

eBay, in a GREEDY move, just screwed just about everyone that wants to list an auction style item that will sell between $25.01 and $1150.00 starting March 10th. An item selling for about $500 will now cost MORE THAN DOUBLE what it does now.

I ENCOURAGE ANYONE WHO SELLS ON EBAY TO SEND THEM A MESSAGE THAT THEIR NEW RATES STINK LIKE A PAPER MILL.

They are pulling a fast one by reducing insertion fees, but SLAMMING you with the Final Value Fee percentages. I'm not even going to analyze the insertion fees, as it's only meant to distract you from the percentages and are only marginally different in comparison.

Under the current fee structure, eBay gets you for 8.75% of the first $25. That is $2.19. Then, from $25.01 to $1k, your percentage is 3.5%. That makes $34.12. After $1k, it's 1.5%. (Example: Item sells for $500. Your final value fee is $18.82. Not too bad to swallow, even though most get robbed for an additional 3.9% + 35¢ from PayPal to take the payment.

THE NEW FINAL VALUE FEE IS A FLAT 9% with a $50 cap. That means that same $500 sale price item now costs you $45 to sell on eBay (not including insertion fees). PayPal on top of this is just adding insult to injury.

THIS IS HIGHWAY ROBBERY. More than double the final value fee.

If nobody says anything to eBay about this, we all get screwed. From an approximate 3.5% final value fee for most items to a 9% final value fee is downright ludicrous (regardless of the $50 cap*). I urge anyone that sees this post to contact eBay and let them know that they are getting WAY too greedy and need to re-evaluate their price structuring for final value fees.

Link here to new seller fees.

[SIZE=-2]* - the only way you make out on this deal is if your item sells for more than about $1150. It seems to me that most items on eBay sell between $25 and $1k anyway, no?[/SIZE]

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I just got the email too.

eBay has lost it's mind.

Their only focus now is providing perpetually escalating returns for their shareholders. Good old-fashioned American Corporate Greed! They don't give a damn about their sellers and the reason for their success.

I hope this comes back to bite them is the ***. They so richly deserve it!

Peter

:sigh:

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This sounds like a replay from 2 years ago. I'm not seeing any of the alternate sites from that "seller's revolt" that have made much progress in the interim.

I have been a student of E-bay (my job in the past actually), for 12 years.
Its biggest problem is that it's a publicly traded stock that fears becoming de-listed. So Meg Whitman was hired (now fired) and that was the beginning of the end of all the fun.
Originally it was profitable fun for (buyers & sellers) for about 5 years, with ebay making a modest fee, before E-bay then decided they wanted a bigger chunk of the action- and the fees steadily rose. That was the death knell.

I give it 3 more years tops before is collapses and something way better takes over.
They're hoping to stoke up dedicated Regional sites (Europe for example) since Europeans have only just warmed up to the ideal of emptying out their Caves (Cellars).
I'll bet European fees will not be as high percentage wise as what we'll be paying.

I can't go on and on but the key with e-bay now is to only buy, not sell. If you must sell, you're window is November & December.

They've caught on to all our weaselly work-arounds the fees so we're at an impasse. It is now almost 100% overstock secondary sales. In which case only dumpers (AKA Asian merchants) will find the increase in fees worth it still.

OK. That's it.

eBay has sucked for some time now. No news to me!

I am not a huge fan of ebay, I used to buy / trade guitars and guitar parts all the time. But now as previously mentioned, the seller fees and feedback rating system makes it pretty much a buyers market only (if that).

I am much more likely to find what I am looking for on the FS/FT forums both here and on the other enthusiast forums I frequent. Ebay is just my last resort.

Although I did buy a HID kit there for a very good price.... but that again was a last resort.

I'm not surprised at all. I tend to agree eBay will go under in time solely on account of the need to produce (unrealistic) returns for shareholders. Once any company starts publicly trading stock it's pretty much the beginning of the end. The goals of providing decent shareholder return ( at least what's considered decent by today's standards ) AND keeping customers happy are just about always contradictory. In another thread I outlined the reasons why:

Nowadays the success of a company is often associated with the price their stock is selling for. While the two do not necessarily correlate, fact is if the stock price is higher then that means the company has more access to capital. Therefore, companies desire to have their stock prices rise. However, in order for stock prices to rise there has to be demand for the stock. This means Wall Street must see the company as successful AND growing. Those working on Wall Street are literally trained to see a solid company with a stable customer base as a failure if profits don't increase year after after, preferably by double digits. Now think about this for a second. Sure, a very small company may be able to grow by double digits for a while, assuming they want to. Some businesses may intentionally want to remain small because they do very well in one niche area. Those in change may have no desire to branch out to other areas they're unfamiliar with. So even for small businesses continued growth isn't always possibly or desirable. A company can remain perfectly viable and healthy for generations without increasing profits or market share every single year.

Now consider what happens if a business is already large. It's totally unrealistic to expect continual growth. After all, ultimately the customer base is finite. If you already have most of those customers, what more can you do? And yet Wall Street expects these businesses to continue to grow, and will dump their stock, and hence access to capital, if they don't.

It is in this type of environment where the type of behavoir we're seeing here florishes. A corporation gets a new CEO who needs to grow the company or increase profits to bring their stock price up. If the company already has a large market share then growth may not be possible. So the new CEO temporarily increases profits by cutting workers (hey, isn't that really creative, now why didn't I think of that? ) and/or raising prices of whatever it is selling ( again, how innovative :shakehead ), takes an obscene bonus for doing little more than gutting a once viable company, and then leaves. Customer service and moral drop, the company loses customers, eventually folds, everyone else loses their jobs. Former CEO moves on to the next victim. A few people become very rich for doing essentially nothing, most others end up working jobs with lower pay and benefits than before, assuming they can even find work. People who bought the stock before the new CEO took over often reap huge profits ( again, like the new CEO, these people really did nothing to really deserve to EARN this kind of wealth ). Everyone who buys it much later loses their shirt. Ironically, the people who made the company what it is ( or was ), namely the customers and grunt workers, are the ones mostly getting the shaft in the end.

In the end I've come to the conclusion that if you own a company, never, ever go public. The minute you offer stock, you're effectively making a deal with the devil. Sooner or later the system we have in place will lead to the end of your company. The only way to change things is to change the idea of what constitutes a successful business. I sadly don't see this happening anytime soon.

To add to this, part of the problem is that investors have been so spoiled by decades of mostly double digit returns that they think this is the norm. It wasn't always this way, and that's why the system of public-traded companies actually worked well for a long time. Companies had ready access to capital, investors had a piece of the pie and made reasonable returns on their money compared to keeping it in a bank. I really have no idea how to fix it, either. For that to happen their needs to be a sea change in investor expectations. Investors should learn to expect lower, but steady returns, as opposed to meteric growth. Even with small companies, meteoric growth isn't a given. It certainly isn't with larger companies like eBay. eBay might be able to get away with gouging sellers in the short term. In the long term however, I'm sure non-publicly traded auction sites will siphon off their customer base. For a long time eBay was great for both buyers and sellers. Now as a buyer, I've noticed for the most part many items there are no cheaper than online stores such as Newegg or Amazon. And the situation appears about to become worse. The only way eBay can save itself IMO is to start buying back some of its stock.

Great post jtr1962!

Sad situation. It's such a bummer when something that was once good, changes for the worse.

Very succinctly put jtr1962, excellent post. :goodjob:

eBay's CEO seems determined to alienate the very users who are responsible for his company's success. eBay is rapidly losing it's core identity as a unique member driven marketplace. It won't be too long before it resembles something like an online version of Wal-Mart, dominated by high volume sellers of cheap, mass-produced garbage. In fact, it already does.

Greed will be their undoing, suicide by CEO. :duh2:


Peter

Another chime for jtr1962's post.

I've spent less and less from that auction site, there just aren't as many good deals for the items I'm interested in. With other goods, buying from the big online merchants is easier and safer. I won't miss that auction site.

Easy to fix, just don't use it anymore. That's my plan.

MarNav1 said:

Easy to fix, just don't use it anymore. That's my plan.

Click to expand...

That's easy enough to say, but here's the challenge.
How do I FIND discontinued or collectable items in a certain category and buy them? Ebay is the ONLY Wide/Deep player in this market space.
I've been working on an Art Book project for 4 years now.
90% of the items I've collected either came directly from ebay purchases or were transacted using PayPal ( Ebay property).
Overstock.com is just what ebay wants to become. But no way I can find certain items elsewhere. Someone just needs to buy it, hire me to clean up the Usability and turn it into a smooth, mutually equitable trading environment. Who that 'someone' may be is unknown.
Oh. I financed 100% of my purchases with sales on Ebay as well.

Here's my E-bay's Law if you're interested...

Law of Need Threshold - Why People are Willing to Suffer on the Internet Altar

"A venture, ideology, method or product can be successful (based on pre-defined parameters for success) even at a substantial loss in midterm or long term experience quality as long as the perceived overall personal and collective benefits outweigh the minutiae of detractors in the view of the interaction participant(s) " .
---- Archie Cruz, 2002

Simply put – people willingly suffer untold misery as a result of flawed technology if they believe that doing so will:
- buy them inclusion into a community they want desperately to be a part of
- result in automatic psychotherapy
- help them advance educationally, financially or emotionally
- help them earn or save an incremental amount of money

The operative word is 'Percieved' – since end-user or consumer value is often neither absolute nor readily articulated. It's often 'felt' or percieved by the customer or community by concensus and not by emipirical measure.
It's therefore important for a performance optimization method, process, product or initiative, to seriously consider the impact of cultural influences, even while promoting positive change in customer behavior towards logical and metrics based measures for experience quality and value.

Accurate forecasting is therefore another critical part of change management in service of countering the Law of Need Threshold. Unless a credible case can be made for change, there is always resistance to potentially upseting a seemingly balanced status quo.

The Big Message here is: Webdesign excellence at the initial launch of a product or shortly after a successful public beta launch, can earn dividends in the long term term with respect to optimizing the performance and scalability of the product throughout it's life-span. However, due to the insidious Law of Need Threshold, there's no guarantee that a perfectly launched product will succeed.
------
A perfect case example of the Law of Need Threshold in action is E-Bay– the online trading community, based on the auction model.

Ebay's social and financial success over the past 15 years has been in direct opposition to well recognized best practices and benchmarks for User Experience and E-Business Process Efficiency and Effectiveness.

The cardinal contradiction in E-bay– it's sustained popularity, even considering the inefficiency of it's Website's 'Usability'– is that a Website that failed to meet the most basic heuristics for sound user experience actually grew exponentially from it's launch until recently in 2009. In fact, E-Bay has survived and profited respectably, even as legions of contemporaneous e-commerce ventures have faltered and failed. An analysis I conducted of E-bay for over the past 12 years, led me to conclude that it was a prime example of the Law of Need Threshold in action. Indeed, upstart competitor, Overstock.com doesn't even come close to competing with E-bay for market penetration, name recall, loyalty,transaction volume or profits. This even as Overstock.com demonstrates that its superior user-experience and 'professional' Web UI design, have not automatically lead to an optimized relationship between visitors,the Website and the overall experience. In the end, unless your last name is Obama; it's not really about the 'O', to reference a catchy Overstock.com Ad campaign– it's really about the magic of 'Cool'.
So to add a new dimension to my Law of Need Threshold. Customers want 'Cool' factor in e-commerce as well as that they'll become rich and happy.

Overstock.com failed to deliver the homespun spontaneity that's made E-Bay endearing to so many of it's users for many years. E-Bay failed to deliver enough timely improvements in the user experience end of things to keep people hanging on even as they jacked up fees. It's impossible to guess how long either of these two companies can continue without major improvements.

So what do I predict for the future of E-Commerce sites that wish to capitalize on the Law of Need Threshold without actually causing the user to suffer needlessly?

1) Online auctions will vanish and be replaced by Offered Price + Make Offer paradigms with 30-90 days time horizons. No more wasted years watching auctions and sniping at them in the last few seconds.
2) Abandonment of the messy interface and architecture and replacement of it with 'all business' UI's that scale down gracefully to broadband enabled handhelds.
3) Evolution of Website interfaces through strict initiatives to streamline the user experience through a winnowing of the millions of possible Interface models or templates, into a collection of rules (templates) that will guide and inform designers on precisely how to style a Website's user experience through constraints in the UI.

Interesting, well stated. For vintage items and out of production, this can be a boon for many. Wth the scarcity, so to comes the price and whether one is willing to suffer for the cause. For my interests, the vintage parts were selling at near equal prices to the current models. I wasn't willing to pay that premium and opted to replace with the contemporary versions.

I've got an older car and parts for it were readily found on that auction site. Yet, I can just as easily make a call to a local strip yard and he can source through his parts network. Recently there are others who have chosen to specialize and offer themselves online.

Simply, one door closes, another will open. eBay's move will allow newcomers who see these rifts and move in to fill that void. CL has done well but it too has many short comings.

Fantastic. I'm so glad I just now finally got around to setting up a seller's account.

(of course, the only thing of any value that I've bought or sold to private parties in the past year is flashlights, so maybe it doesn't even matter anyway.)

It hurts more for people like me who fabricate the items for sale. Not to mention markup resellers. Lets say it cost me $50 to produce an item and I list it for $100 on ebay. I don't pay a fee on the $50 profit, I pay the fee on the whole selling price, so my profit gets trimmed by double the ebay/paypal rates. I have to raise prices to compensate and that reduces some of the attraction for the product.

OTOH, ebay is exposure for my product. Since I do custom work (nothing to do with LEDs or flashlights), I list a few things and if someone wants something custom, the customer comes to me direct. Since it is not for an item I list, I am not circumventing ebay fees. I have earned customers and much return business though ebay exposure. ebay is national exposure for me. I have to put up with the fees.

A few years ago after fee increases, I thought to myself that the ebay/paypal clan wants 15% of the sales and they are nearly there. For many, ebay is realy their only overhead. Running a business out of a store front is expensive and local sales is too small to sustain this.

I hate fee increases too, but the cost of national exposure is not ridiculous. Once it exceeds 15%, than I begin to question if ebay is worth it to me. I hope business grows to where I no longer need ebay. Many have used them as a stepping stone on to better things while others folded on the way up.

I'm glad I don't sell anything on eBay.

I only buy used Swiss Army Knives and some flashlights, but I wonder if these new fees will drive the sellers I regularly deal with away or force them to raise their prices to the point where they are not competitive anymore.

I've been wondering all this time... where the hell is google to save the day with a free or cheap auction site? They could make hundreds of millions of dollars a year if they had an auction site even half as popular as eBay...

Those fees suck... The only thing nice I have to say is that I'm thankful that I get 20% off fees for being a powerseller with high ratings...

I will not comment on ebay exactly, but more some apects noted:

JTR1962 - The day that a start up company accepts its first dollar of venture capital, is the day it is committed to either a) Go public b) Sell out to someone who is public. There are very few methods available to raise the cash needed to start a significant company.

As a practical matter, stocks have value related to a combination of: a) assets b) dividends c) profit d) growth e) hype. Would you invest in a company that didn't think about these things?

Google resuce - Google is an interesting company and all, but let's not imagine that they are not there for profit either. The fee structure for google payments (and amazon) are roughly similar to paypal, so I am not so certain that they can / would enter this business with much lower fees. Google makes very high margins on their transactions, s othey might view on-line auctions as not being "profitable enough".

If you want to avoid fees on sales, then use craigslist or a BST like CPF on those forum types. Craigslist is much more locally oriented, but of course its price is right. (free)

A substantial portion of stuff selling on ebay now is just chinese knock offs trying to avoid import taxes. If they have to pay more in fees to sell - so what. I would like to see them have to pay sales tax on those sales as well, which would be quite easy to collect since all transactions are controlled by ebay.

Lowering the listing fees is a good move for keeping business, as sales listings are starting to drop off, at least in part due to so much stuff - not selling. I can stand paying a known fee to sell an item, but paying a lot to just list it with a low probability of a sale is not attractive. I am sure they are thinking the same thing. I don't use ebay much anyway, but it is fun to see all of the stuff for sale.

I will admit that the fees do seem like a lot of money. Customer use will dicatate at what point on the price / demand curve they are sitting.

I think the new fee structure is going to make the problem of multiple listings for the same item even worse. One big problem on eBay right now is sellers who might have 100 of one item to sell make 100 separate listings. You do a search for that item, and are flooded with page after page of the same thing. Now why can't eBay encourage sellers to use a single listing if they have many of the same item? You can see why the sellers are doing it. They hope the person searching will only see their listings. Nevertheless, it has to use a lot more server resources this way. Ebay should set up their fee structure so it costs a LOT more to list 200 of the same item in separate listings, as opposed to one listing. I'm just getting tired of the clutter. IMO it's making eBay a lot less attractive to buyers.