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eBay hikes fee
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August 20, 1999: 7:24 p.m. ET
Sellers cry foul as online auction house adds $1 charge for reserve auctions
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NEW YORK (CNNfn) - What does online auctioneer eBay Inc. hear for its new $1 reserve auction charge?
A lot of raspberries, apparently.
On a day when the San Jose, Calif.-based company's stock surged 9-1/4 to 123, eBay (EBAY) was getting cyber-pelted Friday after announcing that, as of Aug. 30, it was going to add a $1 charge for reserve auctions.
The reserve price is the lowest price at which a seller is willing to sell and is higher than the opening bid. eBay never reveals the reserve price to bidders. The company said on its announcement board that some sellers were setting "unrealistically high prices" with no intention of completing the sale.
In addition to the price hike, eBay is also requiring that the opening bid must be 25 percent of the reserve price.
"Has eBay lost their mind???"
Messages like "eBay fees cause defection!!!" and "has eBay lost their mind???" lit up Internet chat rooms Friday afternoon as angry sellers vented their frustration with the new charge, which will be added to the listing price of 25 cents to $2.
"Good bye eBay!!!" one message read. "I have been buying and selling antiques longer than eBay has been selling Pez dispensers and I believe (I) know what I am doing and do not need a new father telling me how to do my business."
eBay (EBAY) spokesman Kevin Pursglove said the reserve auction fee is a response to complaints from customers who were frustrated by reserve price auctions.
"A lot of people were bidding and the reserve price was never met and they were totally up in the air," he said. "A lot of our users said they were staying away from reserve auctions and that was leading to reserve auctions having a very low level of success."
The low level of success, Pursglove said, led in turn to increased complaints and administrative costs for eBay.
"This is one of the top seven or eight things people would write to us about," he said.
eBay's stock surged on Friday
Janice McClelland of Norris, Tenn., an eBay user for just over a year, said the reserve auctions were popular. She said eBay itself had praised reserve auctions because they "stimulate interest in your item and stimulate bidding."
"People are up in arms over this," she said. "It's really bogus. Their spin is so transparent."
"Strike a balance"
McClelland also said the company's 10-day warning of the charge falls short of a 30-day notice policy. She also said the extra dollar is hurting people make a full-time or part-time career out of auctioning hundreds of items online.
"This is just totally unfair," she said. "And it's non-refundable."
There are those who abuse the reserve auction system, McClelland said. Some sellers boost their prices and then contact the highest bidder for a possible private sale, thus beating eBay's commission fee.
"It's really insulting to punish everyone because of a few bad apples," she said.
McClelland said many people were moving their business to other online auction sites. She also said she believed the move is an attempt to recoup losses for from recent outages and take the edge off a planned free listing event, designed compensate for the outages.
Pursglove denied the reserve auction charge was related to either the outage or the free listing, which was supposed to happen last month, but has been delayed.
"We're dealing with two groups of people," he said. "Prior to the announcement (of the fee) most of the complaints came from bidders. Now I imaging the criticism is coming from the sellers. We've got two different groups of people, who may have conflicting interests. What we're trying to do is strike a balance."
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