eBay tests its users' loyalties yet again

In yesterday's dullish earnings report, eBay CEO Meg Whitman announced an increase in certain fees for eBay sellers. The fee hike was targeted at cheaper items sold conventionally, not at auction: A $10 CD, for example, will cost 28 percent more to sell. eBay's rationale for higher fees: Auctions account for 91 percent of all merchandise sold on eBay, but the site's listings are dominated by fixed-price store inventory which take forever to sell. And if the goods don't move fast, eBay doesn't make money.

"The marketplace has been overwhelmed with identical, often poorly-priced items that have diluted the magic of the eBay experience," said Whitman, with a turn of phrase betraying the her years at Disney. Another interpretation: When profits are down 14 percent and Google is breathing down your neck, every penny counts. So up went "insertion fees," which are charged for each listing, whether or not it sells, and eBay also increased the cut it takes on store sales, which now runs as high as 10 percent of the item's selling price. Add in the PayPal fees for credit-card processing, and eBay could be taking $1.64 out of a $10 CD sale -- a sixth of the purchase price.

With eBay taking such a large slice of the pie, will sellers stick around? At least some say no. "Bye bye eBay," writes Brian Groce, "As soon as I have the time I will be closing my eBay store." An acceptable loss, or a grim sign for future earnings? Tune in to Meg's next magical quarter.
Posted by Oliver Ryan 10:06 AM 9 Comments comment | Add a Comment

Recently I've tried selling items and theres NO MORE buyers! I've never had this problem before. Nobody wants to pay the extra fee. Thus, nobody will be selling if there are no buyers. Ebay really needs to think about the consumers rather than dollar bills!
Posted By tara sparta nj : 4:30 PM  

There are so many network externalities involved with online auctions. Right now, Ebay is the "King of the Hill". It will take a few more Ebay missteps before it loses its dominant market share. Maybe Ebay is just shrinking the size of the market?
Posted By H. Shawaf, Champaign, IL : 12:34 AM  

I for one welcome this change. I'm a long time and loyal eBayer but now anytime I need something, I go somewhere else because the item I need is often "dilute" within a maze of fixed price auctions.
Posted By Brian Miller, St. Louis, MO : 5:49 PM  

I was a Ebay weekly lister (Since Feb 02), but quit Ebay the last time they raised listing fee's. I am not surprised at all that they are doing this again to the people that made them what they are! If Ebay is worried about the almight dollar and bottom line STOP purchasing stupid companie's like Skype. Use better business sense and make ebay a better place for both buyer and sellers!! THEY ARE WHO MADE YOU EBAY!!
Posted By Kelly, Massena New York : 6:24 PM  

I feel that ebay is dead. High seller fees, no buyers.
Posted By joe palins, erie, pa : 11:17 PM  

As a longtime eBay shopper (and sometime seller), I think it's a good move for eBay to try and reduce the amount of fixed price listings in stores. eBay is an auction place, not a regular retail space. In a letter to eBay users, they did admit to shooting themselves in the foot by promoting the store listings. I will stick around for now, as a buyer, but will re-assess whether I want to be a seller.
Posted By Heidi, Norfolk, VA : 4:49 PM  

I think ebay should formally change thier name to greedbay.
Posted By paul, san francisco, California : 5:16 PM  

Why is it people who make incredibly bad decsions at one company get to be CEO at another company?
Clearly she has no idea that eBay has competition.
I bet the people at CraigsList are going to be laughinf all the way to the bank.

Way to go Meg.
Posted By Bob Smyth, Anahiem CA. : 11:27 AM  

We started using Ebay to sell items a number of years ago simply because it was so cheap. Lately we have started using other sights, because they don't have insertion fees. The percentage they take out of the sale tends to be a small amount higher, but we can leave the items on their site infinately free of charge, or take them off if they sell in our physical store. Now that ebay raised prices AGAIN, we are done with them. Sales through Ebay are down anyways.
Posted By Brian Chicago, IL : 5:48 PM  

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