Fee Increase
Leaves Some Sellers Angry,
Others Thrilled.
Much of my
email from readers this
month concerned the recent
announcement from eBay
that it will increase many
seller fees on February
18, 2005.
Since many
business people use eBay’s
online store system as their
primary ecommerce point
of sale, it’s no surprise
that most of the emails
I received were of the angry
variety.
One email
in particular caught my
attention because it urged
me to visit a website to
sign an online petition
protesting the fee hike.
The email
directed me to http://www.petitiononline.com/ebayfee/petition.html
and upon further investigation
I found that 22,548 digital
signatures had already been
collected (as of this writing).
Thank goodness
not all of them had my email
address.
This will
be the fifth rate hike in
as many years for the auction
giant and should really
come as no surprise. Price
hikes are a normal course
of business. It was the
size of the hike that has
many sellers upset.
The rate
hike involved the following
fees...
-
A basic
eBay Store will now
cost sellers $15.95
a month, a 60% increase
from the current $9.95
a month.
-
Closing
commissions on most
items sold through eBay
Stores will increase
by 50 percent.
-
Gallery
photo fees will increase
from 25 to 35 cents.
-
The
Buy It Now fee will
jump from a flat fee
of 5 cents to 10 cents
for items priced over
$10 and 25 cents for
items over $50.
-
Final
value fees will rise
from 5.25% to 8%.
Many of the
emails I received pointed
out that small sellers are
making very little profit
as it is so the increase
in fees will only serve
to drive these sellers completely
out of the eBay business.
Some sellers accuse eBay
of purposefully trying to
run them off, but I doubt
that’s the case. eBay has
no reason to drive away
the small sellers, but that
realization never occurs
to those who feel they are
being priced out of the
market.
Not everyone
is too concerned over the
fee increase. Jim Cockrum,
eBay Powerseller, publisher
of “Creative eBay Selling
News,” the world’s largest
newsletter on creative eBay
selling, and author of one
of the best selling eBay
books of all time “The
Silent Sales Machines Hiding
On eBay” has other opinions.
“I don’t see
the eBay fee increase as
a bad thing,” Cockrum said
in a phone interview. “I
actually see it as just
the opposite - it's a good
thing because eBay is eliminating
my competition for me. Who
leaves eBay when eBay increases
seller fees? It's not the
customers (or shoppers).
They don't go anywhere since
they aren't affected. Only
a handful of the weaker
sellers leave eBay when
fees go up.”
Cockrum recommends
that sellers use eBay
in non-traditional ways
to build their online businesses
so that future fee hikes
will not have an affect
on their business.
“Selling
on eBay continues to
be one of the more popular
ways to make money online,
though very few people are
getting rich with an eBay
business alone,” Cockrum
said. “Many Powersellers
don’t make enough profit
to cover their costs. The
key to really making
money with eBay
is not in selling items
at auction, but to use eBay
to drive customers to your
other online ventures. If
you do that, the rate hikes
do not affect your bottomline
nearly as much.”
Not everyone
shares Cockrum’s enthusiasm.
Many small sellers think
the government or a regulatory
board of some kind should
get involved to help keep
eBay fees in line. This
probably won’t come to pass
anytime soon, but who knows.
I can remember when a little
company called Microsoft
had free rein before they
killed off all comers and
came to monopolize their
market. eBay seems to be
headed in the same direction.
The threat
of regulation may be the
reason eBay is now attempting
to smooth the ruffled feathers
of the miffed masses. eBay
announced this week that
they would give a one-time
$15.95 credit to eBay
store owners and reduce
minimum listing fees for
inexpensive items from 30
cents to 25 cents, effective
immediately.
Too little,
too late? Could be. Many
sellers believe that eBay
may be writing its own obituary
with such stringent price
increases and such little
thought for the smaller
merchant. The online petition
predicted the long term
effects of the fee increase
to be:
-
Smaller
sellers will stop selling
on eBay and try to sell
somewhere else online.
They will never have
the chance to expand
themselves on eBay.
-
Larger
sellers may consider
starting their own online
store or sell elsewhere.
-
Prices
of auctions will increase.
Buyers will turn back
to retail stores. The
idea of eBay is that
you can find things
cheaper there, even
when adding shipping
and handling together.
-
Discourage
new sellers, decreasing
competition (which is
what the eBay market
thrives on for pricing).
Only time
will tell if the predictions
come true, but for the short
term many smaller sellers
are closing down their eBay
stores and moving up the
street to Yahoo.com.
Here’s to
your success!
Tim W. Knox
Small Business
Q&A is written by veteran
entrepreneur and syndicated
columnist, Tim Knox. Tim's
latest books include "Small
Business Success Secrets"
and "The 30 Day Blueprint
For Success!" http://www.timknox.com
