EBay fee hike sparks seller rebellion
EBay's new fee structure has small stores fearful about their survival.
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(FORTUNE Small Business) -- Editor's note: This story was originally published Jan. 30; it is being republished to add links to follow-up stories.
If eBay's fee changes were meant to shore up market share at a time when sellers are increasingly migrating to competitors such as Amazon (AMZN, Fortune 500), initial response suggests it may do the opposite: eBay's veteran sellers are furious, with some forecasting ruin for their businesses.
"Ouch!" said Laura Ricciotti, a seller from Windsor, Ontario, about Tuesday's announcement of a new fee structure for the online auction giant.
Ricciotti said the new fees, set to go into effect Feb. 20, will pinch her already tiny margins selling children's books through her eBay (EBAY, Fortune 500) store, Read With Me Books, which began in 2000 with posts for a few auctions for baby clothes and other finds.
"Sellers need to remain competitive in their pricing to do well in eBay's global marketplace, and it will be very difficult to continue to do so and still see a profit," she said, under the new scenario.
And that was one of the gentler reactions
Sellers on eBay's normally rancorous message boards were apoplectic, using phrases like "extortion" to describe the news. On Wednesday several began calling for a general strike, under which sellers would withhold listings for a week.
Ebay's complex new rules affect sellers in almost every part of a transaction.
It reduces upfront costs such as listing fees, which will drop from a starting price of $0.20 to $0.15 for traditional auction listings, and makes gallery photos free. However, eBay is adding more costs to the back end for many sellers with higher final-value fees, the commission eBay takes after a sale. Top sellers will be rewarded with greater visibility and protections, but - in perhaps the most controversial aspect of the shake-up - sellers will no longer be able to leave negative feedback for buyers.
"I gotta confess I didn't see this particular way of handling it coming," said longtime eBayer and author Julia Wilkinson of the changes in treating feedback against buyers. "I had to read it twice."
Wilkinson, author of The eBay Price Guide (No Starch Press, 2006) and publisher of http://www.yardsalers.net/, said she can't recall seeing sellers so upset. Her email is running six or seven to one against the new fee structure, she said.
Sellers, analysts and industry watchers all seem to be asking the same question, said Ina Steiner, editor of the influential trade publication AuctionBytes.com: Will it work?
If the reaction is any gauge, the answers may not be what eBay is looking for.
"Net-net, sellers are not impressed with this at all," she said. "No one is saying 'this is going to help me sell more.'"
Usher Lieberman, an eBay spokesman, said the new plan is good for sellers. The company's calculations show that up to 60 percent of them will see savings. EBay isn't worried about the explosive reaction among sellers, he said - they have a lot to absorb right now.
"We have a passionate community," Lieberman said. "If we weren't hearing from them on this, we would be worried."
For Mitzi Swisher, who created her online store VintageGoodness with a modest severance from her outsourced newspaper job in Columbus and a passion for all things vintage, the changes are frightening.
"How do I digest all this?" the 32-year-old said. She plans to gather up all of last month's numbers from VintageGoodness and run them through the new plan, to see how it will affect her profits. One thing jumped out at her right away - final value fees for inventory in eBay stores will jump to 12 percent from 10 percent.
That's a percentage many consider excessive. Swisher, who has discussed the plan with friends and colleagues, noted that one fired off a barbed quip about tithing: "Someone said, 'God only wants 10 percent.'"
Jim Moskowitz, a Swarthmore, Pa.-based seller who specializes in lesser-known classical music artists, took particular exception to the way the announcement was made. In making its formal announcement before a conference of 200 of North America's top eBay sellers in Washington, D.C., eBay spotlighted all the changes that sounded good, but downplayed issues they knew wouldn't sit well with sellers, he said.
Despite the calls in message boards for a Boston Tea Party-like rebellion to fight the fees, some sellers see little room for protest.
Swisher, for example, gets some exposure for her merchandise via her blog at http://vintagegoodness.blogspot.com/, but said eBay is where the buyers are. She can't just walk away.
Mark Gordon, a seller who deals in vintage collectibles from San Antonio, Texas, through his eBay store, Alamo City Comics & Collectibles, sees a darker fallout. He said the core auctioneers that helped eBay become the phenomenon it is today may start jumping ship.
"It's a great time for Google (GOOG, Fortune 500) to jump in," Gordon said.
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