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eBay to introduce new fee schedule for its sellers

Feb. 15, 2008

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eBay said it will soon introduce its new fee schedule for sellers, along with some other administrative changes. The new fee structure is slated to begin Monday. Some sellers are so angry over what they perceive as a bad deal, they're planning to boycott eBay from Feb. 18 through to Feb. 25.

In the past, eBay sellers have banded together to boycott eBay and will probably do it again many times over, and usually for the same reason: its ever-increasing fee schedule and, in the views of some, policies and guidelines that truly ignore the needs of sellers. For the most part, these efforts have failed either to change eBay's mind or even to make any significant dent in its overall daily or weekly traffic.

However, this time things appear to be somewhat different, with more sellers publicly saying they will boycott the large auction site.

Overall sales commissions have reached new highs, and many sellers are infuriated by new feedback policies that forbid them from making negative -- or even neutral -- comments about buyers. For their part however, buyers still have free rein to comment on sellers as much as they want.

But some sellers are in fact switching, either because they cannot afford to stay with eBay, or simply no longer want to, claiming that eBay's fee structure keeps rising all the time.

Debi Pieraccini, who until Feb. 12 was selling Christian and Jewish items on eBay, is among them. For its part, eBay has pretty much shrugged off the complaints, noting the additional protections it has put into place to guard against buyers using the feedback system against sellers for vindictive reasons.

Additionally, eBay representatives have pointed out that the traffic one typical seller receives on eBay compensates for the slightly higher fees.

Pieraccini is relaunching her operations at OnlineAuction.com, which was created by a former eBay power seller. Fees are very reasonable compared to eBay, she said. "Last month my fees at eBay were $700, which was more than I actually made."

Few sellers believe eBay will ever be displaced, precisely because of its volumes -- it basically invented the e-commerce auction category and still dominates it more than 10 years later. Also, eBay's overall monthly traffic has been increasing steadily for the past four years.

Pieraccini added that "some people depend entirely on eBay for their income. I am not one of them."

The new fee structure and feedback guidelines have "pulled the rug out from a lot of sellers," Pieraccini lamented. Nancy Baughman, founder of eBiz Auctions, said she would be forced to cut back on her two part-time employees' hours because of the changes eBay is implementing. "All of these changes are hitting us at once. It is getting harder and harder to make a living off of the site."

Some eBay sellers are getting out of business entirely. Corey Kossack, president of Club E Network used eBay for years to sell videos and DVDs. The site's policies and fees were one reason he left. "I started an eBay business in 2005 that quickly became one of eBay's larger sellers," Kossack said. "In just two years, my company did $1 million in revenue on eBay."

Stan Lisk, another self-described eBayer said that he and his wife have always looked for other ways to sell their wares, from listing on Craigslist to selling directly from their own Web site. "But unfortunately, eBay has the millions of followers and is still the best at bringing them in," he said.

Kossack knows, of course, that for many sellers, there are no alternatives. The investment in time and inventory is too costly to maintain without eBay's promised volumes. "I think it would take a company with a huge commitment and deep pockets to give eBay a run for its money," he said.

When he spoke in front of the eBay Live Town Hall last summer, he specifically told the president of eBay North America, Bill Cobb, that eBay needed to reduce its insertion fees to reduce the risk of selling in the eBay market.

"After big applause from the audience, Bill said they would consider looking into it," Kossack recalled. "Eight months later, they have done exactly that -- but now are jacking up eBay final value fees so high that they are driving sellers out of the market," he complained. "If you ask me, eBay is losing their way and is not looking out for its most important customers, and those are the sellers. Without the sellers, there is no marketplace full of great deals for consumers."

Kossack pointed out that "part of what fuels growth on eBay is the public display of eBay success stories, so that aspiring eBay entrepreneurs see the success and want a part of it. But as eBay continues to make it harder and harder for even its top sellers to flourish, more entrepreneurs will seek out other avenues to run their businesses. They may go to other auction sites, or they may go to other sales channels or start new businesses entirely."

More than likely, eBay will continue to dominate for quite some time, Kossack acknowledged, but it will also experience major declines in its growth.

Overall, sellers feel less and less loyal to eBay and the general feeling many observers are getting is that many would drop it without hesitation.

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Source: eBay S.G.A.

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