Recently, eBay announced an increase in fees and other measures specifically targeting eBay store owners. Now, you would only expect fees to increase once in a while – we all realise that eBay is a business after all.
There are three things that I want to address:
- eBay’s justification of the fee increases
- eBay’s removal of store listings from search results
- eBay’s one month notice of the fee and visibility changes
I would also like to state outright that I am writing this with some bias. My wife runs an eBay store called Discount Craft Supplies, and sells exclusively via the Store Inventory format. It should be noted that most items in the store are priced well below $5.
The annoucement
Cutting to the chase, Bill Cobb, eBay North America President, had this to say in the July 2006 announcement.
Amid all this change, one thing has remained constant: auction-style listings are the foundation of eBay. Auction-style and other core listings made eBay what it is today - and they’ll always be front and center on eBay.com. They account for about 91% of the gross merchandise value sold on eBay.com. But recently, we’ve been wrestling with some troubling facts:
- Store Inventory listings now comprise about 83% of active eBay.com listings on average.
- While eBay.com core listings typically sell in about two weeks, Store Inventory listings on average take 14 times longer to sell. In some media categories, Store Inventory listings take more than 40 times longer to sell than core listings.
- And, when you compare our operations costs for an average Store Inventory listing and an average core listing - factoring in the duration of each - our cost to host a Store Inventory listing is more than 50% higher than for a core listing. In fact, current Store Inventory insertion fees don’t cover eBay’s costs for hosting them.
It’s vitally important - to your business and ours — that we maintain a healthy balance between listing formats on the eBay marketplace, and ensure that inventory conversion across the site remains strong. So we’re taking action.
Fee increases
Let’s start with the fee increases - which were quite steep. For owners of eBay stores that operate on moving large volumes with small profit margins (like my wife), the news was devastating. Ina Steiner, of AuctionBytes explains.
eBay is increasing both listing and commission (Final Value) fees for Store inventory effective August 22. Listing fees will rise 150 percent for items under $25 and will rise 400 percent for items priced at $25 and over. Commission fees will rise 25 percent for items $25. For items priced over $25, the percentage increase in rates is variable depending on the selling price.
Furhter to this, the commission changes for eBay Australia were higher, going from 5.25% to 10%.
So you might be saying “well, why not just do Buy It Now auctions?” Well, there is a really good reason. eBay charge 50c for a Buy It Now auction, on top of the initial insertion fee. So, if you were selling scrapbooking paper at 99c, you can quickly see how that doesn’t make any sense.
Search result visibility changes
That brings me to my next gripe. As of writing, Store Inventory items no longer appear below the Auction listings when a buyer performs a search. The buyer now has to specifically click on Buy It Now, and even then store items only appear if no auctions are found.
My wife’s traffic, funnily enough, plumetted once they introduced this, and of course, sales have suffered.
Notice period
The third gripe has to be the notice period. eBay sent an announcement to all store owners one month before they were going to introduce the new fees. Worse, they only gave two weeks notice about the listing visibility changes.
So what has the fall out been since the announcement?
A lot of Power Sellers (yes, people who generate $3000+ sales a month) aren’t too happy. Some store owners who are being screwed over by these measures are shutting their stores down, either moving to auctions only, or moving to completely different sites (such as OZtion).
Finally, eBay created an ecommerce marketplace centred around the concept of stores. eBay provided a place for low-margin, high-volume sellers of small items to set up shop, and these people have, until now, prospered. To all of these people, many of them small businesses, eBay has said “f**k off”.