Selling on eBay

by Craig Stark

1 February 2010

Changes, Ver. 2010

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Some things never change. Take eBay. What never changes at eBay, of course, are changes. Year after year we get them, sometimes twice a year. The reason for this is that eBay is essentially a re-active venue, one that reacts to changes in the marketplace, and as often as the marketplace changes (and shareholders apply pressure), that ol' wheel keeps right on turnin'.

Contrast this to a pro-active venue like Amazon. Unlike eBay, which was essentially an accidental success, Jeff Bezos launched Amazon some 15 years ago with a vision. This vision manifested out of an unusual business plan that included no expectation of profit for four to five years - this, recall, in the teeth of a "" conflagration in which just about everybody else was hell bent on explosive growth ... you know, that thing that shareholders covet? We all know what happened: The bubble burst, and Amazon persisted, despite squawking from its own shareholders, ultimately turning a modest profit in 2001. For the past several years, in the wake of Amazon's now impressive growth and eBay's comparatively ho-hum performance, eBay has been playing a thinly disguised game of copycat.

What's different about the ca. 2010 changes is that eBay seems to be edging back, in part, sort of, to its roots. Let's discuss this in the context of the three most common complaints we hear from eBay sellers:

  1. eBay has turned its back on what made it successful. In its formative years, eBay grew largely on the strength of its auction format, which in turn was driven primarily by small sellers. Items offered for sale were diverse, to say the least, and sometimes unique - and plentiful. It was fun to shop there. Sell there. Be there. In recent years, however, as eBay has shifted its focus from auctions to a fixed-price format and large commodity sellers, lured by sweet deals, have lumbered in, the venue has become heavily populated with items that can be had most anywhere. Needless to say, this has significantly diluted the original eBay experience, and the small seller has suffered in kind.

  2. Search is broken. eBay search works against the small seller (and the underperforming seller), giving priority to items offered by mega sellers, Powersellers, etc.; and those interesting and/or unique items we once encountered in abundance are now in shorter supply, not to mention more difficult to find. Part of this difficulty pertains to a search engine that can be downright mystifying at times, often defying our most determined efforts to locate what we're looking for. (If you haven't experienced this, try searching for your own items periodically.) Aggravating this is the priority given to Auction and Fixed-Price items at the expense of Store items, the latter of which appear dead last in searches and often not on the first page.

  3. Fees are too high. And keep getting higher.

Let's address the last complaint first. The new fee structure is simply too complex to make a blanket statement about - i.e, that fees will be higher or lower for booksellers. But let's face it; for most of us this will prove to be a hefty, in some cases crippling fee increase.

Insertion Fees

I'm not sure I've ever read anything issuing out of eBay HQ that was more misleading and patronizing than the announcement that was trotted out this time. It's one thing to promote something in a positive light; it quite another to hype something via prevarication. It would have been far better, in my opinion, if they had simply detailed the changes, perhaps discussed how they might benefit us, and offered some suggestions on how to minimize their impact.

Instead, we're fed this crapola: "Our lowest fees ever coming this Spring: Free auction-style listings, fixed price as low as $.03." Sounds good, doesn't it? What isn't clarified until later, however, is that free insertions for auctions can be had only if one offers items at an opening bid of under a buck - a very risky thing to do these days - and those $.03 fixed price insertion fees can be had only if one coughs up ... hack, hack ... $299.95 a month for an Anchor Store. Fortunately (well, sort of), for $49.95 a month you can opt for a Premium Store and retain the $.05 insertion fees that you've been paying, but if you have a Basic Store now, this represents an over 300% increase. And you very likely won't want to keep your Basic Store because you'll now pay a whopping $.20 insertion fee if you do - a 400% increase. (Note: Items listed with product details will continue at the present insertion rate of $.05 through December 2010.)

Now, let's move down to the third statement in the announcement: "For the vast majority of sellers, the new fee options will bring significant savings with dramatically reduced upfront cost."

Maybe "misleading" isn't a strong enough word?

Final Value Fees

But let's not stop with those dramatic increases in upfront costs. Let's look at where we're really going to get hit - in final value fees. If I had to pick my favorite line from this announcement, it would be this: "One easy final value fee of 9% of the winning bid - and never more than $50 - regardless of your start price or final selling price." Easy for whom? Well, take a look at the following chart, which compares old and new fees:

Unless I'm missing something, it seems to me that it will suddenly become easier for eBay to extract more money from us. I should hasten to point out that this chart represents fees charged to sellers who run Auctions only. If you're a Store subscriber, you'll pay somewhat lower, but still punitive auction FVFs for items under $1400, as shown in the next chart:

Based on these two charts, it's clear that, if you operate a Store and even occasionally sell items for $1400 or more, you'll need to have a minimum of two eBay IDs (and I would recommend a third ID for buying purposes). Also, if you've previously used only Auctions and/or especially the Fixed Price format, it will more than likely make sense for you to open a Basic Store. (I'll leave the math to you.)

In any case, the most important thing to take away from this is that FVFs for Auctions have increased substantially.