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Angst about 'FeeBay'
Sellers are angry about new costs, but the company has a profit margin to think about.
January 21, 2005: 10:28 AM EST

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NEW YORK (CNN/Money) - Wow, a lot of people are grumpy at eBay these days ...

Matthew Mutch: "This is disgusting, but what does eBay care?"

Steve Connell: "Give the little guy a chance!"

Raelyn Stockwell: "I'm leaving eBay."

These are just a few of the comments from a huge anti-eBay petition on the Net, created to protest the online auction site's move to increase seller fees. Take a cruise through it, and you'll see some pretty angry comments.

Jennifer Suissa: "Shame on you feeBay!"

Well, it's good to let off a little steam, because the petition probably won't amount to much else. Just look at the numbers. Sure, it looks impressive with an estimated 20,000 signatures. But online petitions can be stuffed pretty easily. More importantly, that angry mass doesn't even add up to a tenth of a percentage point of eBay's 56.1 million active users.

"Well, I wanted to do something at least. Everybody else was just complaining," said petition creator Elaine Ma, a college student in Toronto who makes a few bucks selling handmade clothes and jewelry through an eBay store. "Maybe this will be some sort of wake-up call for the company."

Sure, the company probably heard an alarm ringing. The jangle was its earnings report released Wednesday, which missed Wall Street forecasts by a penny a share and showed a narrowing profit margin.

But Thursday eBay felt the fire as its stock tumbled (Research) 19 percent in heavy trading on Nasdaq.

Whatd'ya do when your margin gets squeezed? Hey, if you can, you raise prices. And eBay, as the big kahuna marketplace on the Net, can raise prices.

"Sure, you think you have alternatives to eBay, like Bidville or Overstock," said Ma. "But the fact is buyers go to eBay. That's what they know. And sellers have to go where buyers go."

Tough break for the little guys where auction fees can really eat into their margins. Ma says she pays $5 in fees for a $30 product. Indeed on a percentage basis, some of the increases look pretty steep. For example a store subscription -- basically an offering that lets someone set up their own little virtual shop -- is going from $9.95 to $15.95 a month. If I reported that your rent or mortgage payment was going up over 60 percent, you'd have a tizzy fit.

But hey, it's just a $6 hike. I'd be more angry if I was a high volume seller having to shell out a few more cents per cheapee item.

Nevertheless, many folks have opted for the tizzy fit, at least until Feb. 18, when the new fees go into effect. EBay, which didn't get back to me right away for this piece, hasn't shown any sign of relenting. And online selling is still a young business. You could argue that the previous fee structure was simply an "introductory" price structure designed to build the business.

But you never know. A competitor, one with some wherewithal, could decide this is the time to do some heavy marketing and use some aggressive pricing of its own to take away some of eBay's market share.

Is Yahoo's signature on that petition?


Allen Wastler is Managing Editor of CNN/Money and appears on "In the Money" on CNN. He can be emailed at Wastlerswanderings@cnn.com.  Top of page


Wastler's Wanderings
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