Thursday, March 02, 2006

The Unannounced ebaY Fee Increase

The Unannounced ebaY Fee Increase
2 Mar 2006

On 18 January 2006, Bill Cobb, president of ebaY North America, announced a price increase for ebaY US. Of course, in the normal ebaY way, it was announced as fee adjustments, made to appear as if it was a minor increase, and that some fee decreases would mitigate the fact that ebaY has increased their fees every year, despite year over year record breaking profitability. As always, the business community looks at this and says that ebaY is justified in charging whatever the market will bear, but it once again puts the lie to ebaY's propaganda about being community based.

The fee increase went into effect on 22 Feb 06. The way the new fees were structured, ebaY reduced the fee on items listed at 99 cents or less from 25 cents to 20 cents, and increased the final value fee on the most common ending price level, an additional one quarter percent (.25%). They made some features free, including picture show and sales reports plus, and reduced fees for the second and third tiers of picture manager (all pretty worthless features, much less expensive and more reliably found from third party service providers). And though they did not increase the store fees, TAG does expect an increase in store fees, probably in the May/June time frame.

What ebaY failed to mention, was that there was a fee increase they did not tell their sellers about. TAG wonders if this fee increase, which probably borders on the illegal, was even too sleazy for ebaY to mention in public, or if ebaY felt they could slip it in without anyone noticing. Once word got out and they were questioned about it, they would have probably used their old, "it has always been that way, we just didn't enforce it" line, a complete lie that seller's have the invoices to prove. Fortunately an erudite TAG subscriber did notice, and let us know about it.

The increase ebaY forget to mention, comes into play when a seller revises a listing to decrease the price of the item in that listing. In the past if the seller decreased the price of a listing, so that it took the listing into a lower fee category, ebaY would refund the difference. Just as, if the seller increased the price of a listing, ebaY would add the extra fee to the seller's bill. Now what ebaY is doing, is not refunding the difference in fees, in the case of a decreased price, but is still adding the increased fee when an item is revised to increase the price. This also probably applies to the reserve fee, when the change to the fee is based on a lowered reserve price. ebaY explicitly mentions, " Reduce the start price of your item. (You will not receive credit for the difference in your insertion fees.)" but does not address other fees, such as listing duration fees, or other items you might revise. See the revise your listing info at -
http://pages.ebay.com/help/sell/edit_listing.html

For example, if you look at the fee schedule at -
http://pages.ebay.com/help/sell/fees.html

If you start a listing at $59.99, the insertion fee would be $2.40. You then later revise it to $49.99. ebaY will not refund the $1.20 difference, they will keep it. But if you start an item at $49.99, you will be charged $1.20, and then later revise that to $59.99, ebaY will charge you the extra $1.20 to bring the listing fee up to $2.40.

The only place you can see this fee change is on the revise your listing page. But since that page is included in the user agreement by default (as are all ebaY's little back door hidden information), ebaY will claim you agreed to this change by using their site. TAG argues that this is an illegal rule, keeping fees they are not entitled to, but until someone successfully sues them over this issue, or media attention shames them into a change, it will be the ebaY law.

Want more information on the Online Auction and Trading Industry? Go to -
http://www.auctionguild.com

4 comments:

prying1 said...

Thanks for the heads up on this one.

Will it ever end? I have to wonder how many complaints the .gov gets on ebaY and when someone over there will end up in the slammer?

thinktwice said...

It seems that http://www.ioffer.com offers same protection as ebay and more easy
to use user interface. As well as buyer and seller friendly community
and free listing fee. See review at http://www.reviewcentre.com/reviews92911.html

jessi said...

Seller could compare the fee for ioffer.com at
http://www.ioffer.com/info/fees_and_credit_policy

with ebay complex fee scheme at http://pages.ebay.com/help/sell/fees.html

As most wholesale seller, their profit margin is only 15%, ebay fee
will take you 9%, and ioffer.com is
flat fee per month $40 + 1.5%total transaction fee. Which one make
more sense? Does seller work without salary for
ebay or ebay help seller?

tag said...

TAG has written about iOffer on many occasions, and we think it is a good site for sellers to utilize as one of the places to sell their merchandise. The biggest problem for iOffer (as is true for all the multitude of online auction and trading sites) is that of sell through. Their is no way for us to figure the sell through rate on iOffer, but anecdotally, it appears to be in the under 10% range - as is true for most OAI/OTI sites, other than ebaY, Amazon and CraigsList, and some of the niche sites, such as Eggbid and Gemm. We definitely think sellers should use iOffer, but they need to go in with realistic expectations - which would be enhanced if iOffer provided more info up front about what sellers can expect, and how to best utilize their site to maximize sales. - TAG