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eBay raising transaction and subscription fees

January 18, 2005

Small business owners selling on the Internet using eBay are unhappy after the largest and most popular Web auction site announced on Tuesday it is raising a number of transaction and subscription fees, effective midnight on Friday, Feb. 18.

This comes just one year after a similar fee restructuring in Feb. 2004.

The fee changes apply to eBay and eBay Motors. While most of the fee increases are relatively small, for eBay Store owners it's the monthly subscription fee hike and Final Value Fee increase - eBay's take from items sold at auction - that has sellers up in arms. The fee for the Basic eBay Store subscription will be raised from $9.95 to $15.95 per month - a 60 percent increase. The base FVF jumps from 5.25 percent of the final selling price to 8 percent.

The subscription fee for Featured and Anchor Stores will be unchanged. eBay Store Inventory format listing insertion fees will also remain unchanged.

Gallery fees for all items will be raised 40 percent from $0.25 to $0.35 per listing. eBay will also be increasing the size of the Gallery image on search and listings pages by 56 percent. It claims this change will make it easier for buyers to see details of the item before clicking into the listing. Buy It Now fees will no longer be charged at the flat rate of $.05 per item, and will instead be determined based on the Buy It Now price, ranging from $.05 to $.25 per item.

The fee for 10-day duration listings will be raised from $0.20 to $0.40 per listing.

“The increase in monthly fee is bad enough, but the jump in final value fee is outrageous. I'll do some calculations and see if discontinuing gallery will offset the FVF increase. Too bad. My store will be changed or gone by Feb. 18.” --- an eBay customer.

"What is really hard to comprehend is the 8 percent FVF on Store items!," said a power-selling toy store owner on eBay's bulletin board on Tuesday. "So many sellers use their stores to push some low cost merchandise since it was so much cheaper to move than to put it at auction. But not now. Why couldn't they at least compromise and charge the same FVF as auctions? At this point I could accept that. Plus an extra .10 for auction gallery and Buy It Now fees are up. This is going to kill me."

Store sellers will continue to be eligible to receive 50 percent off of the Store Inventory listing Final Value Fees for the Store Referral credit.

The Reserve, insertion and Final Value Fees for Business & Industrial Listings in certain categories will be changing for select high item price capital equipment categories in Business & Industrial. The fee changes for capital equipment categories include lowering the Reserve fee to $5 from a tiered system (refundable if the item sells), raising the insertion fee to $20, regardless of starting price, and lowering the Final Value Fee to a 1 percent flat fee, with a $250 maximum charge.

The insertion and Final Value Fees in other categories will not be changing.

Additional listing upgrade fees will remain the same as for Pricing for all other Business & Industrial listings outside the specified capital equipment categories will remain the same as for eBay will also introduce Buyer Protection covering up to $20,000 per item in these capital equipment categories this spring. eBay will offer the protection at no cost to the buyer or seller.

eBay Motors will also see a change to its Reserve listings, which will now be charged a $5 flat fee for all vehicles categories except Pocket Bikes. This fee will still be refundable if the item sells. That's up from the $.50 - $2.00 tiered fee that currently exists.

The fee for 10-day listings will be changed to $8 from $5.

"We understand that fees directly impact our members, and take care to ensure that any decisions to changefees are made only after careful consideration of this impact. These changes will help us continue to sustain and develop a thriving global marketplace, while balancing the needs of our buyers and sellers around the world," said eBay in its announcement.

Hani Durzy, a spokesperson for eBay, on Wednesday, said, "We carefully evaluate our pricing structure on a timely basis. Any pricing changes we make are what we consider to maintain the vibrancy of the marketplace. For us, it's about balance. These price changes are generally impacting store owners, particularly those listing in inventory format."

One store owner on eBay's bulletin board posted several different pricing scenarios for store owners who sell 100 fixed price items listings weekly. "For a seller like me - who sells stock items at fixed prices - the store is still the way to go despite the fee increases based on (my) analysis," she said.

Many store owners and potential owners, however, aren't buying eBay's justification for raising fees. An informal poll on eBay shows many store owners who are ready to shut down or move because of the fee increases.

"I was going to open a store in the next couple of months, but no chance of that now with the new fees," said one eBay customer.

A power-selling automotive parts store owner echoed the negative sentiment on the discussion board.

"I will have to rethink the store thing and will definitely stop using Gallery pictures in all my regular and store listings. The increase in monthly fee is bad enough, but the jump in final value fee is outrageous. I'll do some calculations and see if discontinuing gallery will offset the FVF increase. Too bad. My store will be changed or gone by Feb. 18," he said.

Another power seller, however, felt many complainants were guilty of knee-jerk reactions and tried to calm them down by providing a math reality check.

"Let us look at a store selling $1,000 monthly. The increase in Final Value Fees represent an extra $25.00 (or so - depending on the value of the goods you sell) and an increase in monthly subscription $6.00 for a total fee increase of $31. If your store sells $1,000 monthly, will you quit eBay or close your eBay store because fees went up $31 (3.1 percent of sales)?," he asked.

"I honestly think that the no unless you have a better alternative," said the store owner.

Many said they would be looking at other auction sites with lower fees, but others were wary of such a move given eBay's dominance of the online auction market. As of Tuesday, there were approximately 131,800 stores on eBay.

When asked about the volume of complaints coming in as a result of the announcement, Mr. Durzy said eBay said the negative feedback was expected.

"It's no surprise to us. We'll continue to answer their questions and explain the reasoning behind the increase," he said. "We know people don't like price increases. For some members it may result in higher prices, for some members a bit less. It depends on the listing. We expect, and know, our community is out there evaluating how it impacts them. Everybody is different."

Source: eCommerce Guide

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