Scot Wingo President and CEO of Channel Advisor gives us a heads up regarding possible eBay fee structure changes...
Scot Wingo is a man in the know... and he has many sources for his information... I would look upon this report as being as close to accurate as is possible when dealing with the unpredictable animal that is eBay. If these changes to materialize, what are your thoughts about how fee changes will effect the bottom line of eBay and more importantly, your business?
We are in favor of providing more store items in the general search and we of course appreciate any fees reductions, especially when it comes to listing fee charges...
- But will it really allow more fraudsters to enter the market?
- Could these fee reductions be implemented on a tier basis? - Volume sellers (and non -fraudsters) receiving the biggest breaks...
- Finding - or the Search capabilities of the eBay system are a problem for any serious merchant and we agree with Scot that this must be addressed!
What are your thoughts?
Comment Below:
January 16, 2008
eBay fee change buzz...
As I've covered since mid-Q4, eBay has been telegraphing some big changes coming to the fee structure. The only thing we don't know is what and when.
It seems some top sellers are getting calls from TSAMs outlining in general the fee changes that are evidently going to be announced next week with eBay's earnings (eBay is set to announce 1/23 at 5pm EST). The tidbits I'm hearing:
- Certain categories will go to low listing, high FVF for fixed-price listings - based on who is being told this, I'd say we're looking at BMV, auto-parts and other 'high density/low conversion' categories.
- Bulk discounts - eBay is being vague here, but it looks like they are finally considering some kind of break for sellers that are doing a ton of listings.
None of this is surprising at this point. I was at a Wall St. event last week and spent lots of time with the folks answering a common question that went something like: "If eBay lowers fees and fixes finding, won't they stem the tide of GMV to amazon 3P?". My answer to this one is long-term, yes, short-term there's some risk there we should all keep an eye on.
Back in December, I introduced the "3F" program for fixing what ales eBay. The trick is each F has to be solved in the right order or else it could actually make things worse. I worry about this fee announcement next week for this very reason. Here's the exact wrong-way to do the 3Fs that could destabilize eBay's marketplace even further:
- Fees - Let's say that eBay significantly lowers listing fees. This is the right thing to do, but not first (actually it should come last - more on that in a second).
- Finding - after fees let's say they work on Finding.
- Fraud - Finally eBay addresses the fraud issues.
Here's the problem with this order:
- When you lower fees, listings shoot way up. Does anyone remember the Store in Search (SIS) "debacle" of Q106? I'm
- If you haven't FIRST fixed finding, the site is flooded with fixed-price items, thus your auction-listings are starved of traffic and get into a death-spiral.
- The fraudsters love low listing fees, this gives them the ability to just completely hammer the site with all kinds of wacky stuff.
IMO the correct order needs to be:
- Fraud - Get policies, higher registration bars (buyers and sellers!), etc. in place to keep the bad guys off (and keep them off once booted) the site.
- Finding - This probably means Finding 3.0, it's hard to go from 1.0 in 98 to 2.0 in 08 and nail it. I suspect it's going to take another big turn of the crank - what I call Finding 3.0 to get the finding experience on eBay 'right' and most importantly ready for a surge in listings from reduced fees.
- Fees - Once you have fraud and finding locked-down, you can then safely adjust the fee structure and sleep at night knowing you're not going to drive away the auction-loving-buyers nor the fixed-price-loving buyers when you 10X the number of listings on the site.
The current information points to Fees/Finding (no fraud) vs. the recommended fraud/finding/fees so it will be interesting to see what happens as the fee reductions roll out and listings surge.
January 17th, 2008 at 8:55 pm
I’m not really seeing that much fraud on eBay, but then, I’m mostly a seller and not a buyer.
While I’d welcome any fee reductions, I’d really like to see eBay take a few million in ad money and put together a crack support team.
If they had a great customer support system,(very hard for a company this size, I know) they would be untouchable for years to come.
Even with all it’s faults, eBay is the best way for most people to sell on the net and is truly a great company.
But it’s having a lot of growing pains. It could do a lot for it’s buyers sellers, and in the long term it’s shareholders, if it put together a support team that is unprecedented for a company like this, they certainly have the money to do it.
When all is said and done, eBay will adapt and survive just fine I’m sure.
I agree with an earlier post by Scott in which he basically said it was ridiculous for the media to keep predicting eBay’s demise, eBay isn’t going anywhere for a long time, but I really think the company could use a few licensed auctioneers in it’s top tier management team.
January 28th, 2008 at 2:07 am
Interesting viewpoints on to fee or not to fee…
Being the giant industry for cottage based sellers- I believe Ebay should contribute its help to avoid a failing economy.
For the little sellers it’s been tough and it’s always escaped me why items were charged on a single item basis. I think the present price is too high anyway. Every time a .40 listing doesn’t sell, it depletes the profit of the next item that does sell and so on and so on would have thought .
Think about this- if Ebay allows a seller to list a quota of let’s say 5 or 10 items at the current listing price. That seller could enjoy a 50% listing fee discount for the next 5 or 10 items and so on and so on.
Maybe then we wouldn’t call it Fee-bay anymore.
January 28th, 2008 at 7:35 am
Kit,
Thanks for your input! Sounds like your suggesting a volume seller - tiered fee plan, I am behind that idea.
From what I have been reading, and it is all supposition until the official announcement is released this week… The listing fees will be reduced and the gallery fee eliminated (a great help there) but the final value fee will be increased to make up for the deficit on the front end.
Personally, if the new fee structure which has been leaked by “industry insiders” and journalists comes to fruition… I think this is a fair and equitable solution. Business people need to know what the costs will be on a sold item. As the system exists now, the fees are variable and unpredictable. Sellers are forced to undercut themselves on price just to move product in the first 7 day sales cycle.
Initially there may be some inexperienced sellers who re-list over priced merchandise too often. In the end I think the market forces will adjust those sellers behaviours and pricing will continue to be the primary consideration for quick sales. We all want to make sales, charging us an exorbitant up front fee has never furthered that goal.
Scott
January 29th, 2008 at 5:07 pm
Good comment and I’m glad to find a site that openly discusses Ebay’s marketing strategies. Thanks for this opportunity to contribute my opinions and ideas about Ebay.
As you said “but the final value fee will be increased to make up for the deficit on the front end.”
Bad move!
Ebay can juggle their costs any which way but sellers aren’t going to be thrilled at a higher FVF. Giveth & taketh away never works. I’ve always thought Ebay underestimated its sellers’ IQ. They surely will see no point in this strategy if it’s just a “wash”
I’ve been with Ebay on/off for over 10 years [when off, it was because I was just so disgusted with their shenanigans of playing their sellers like a harp] I personally felt that small time sellers were treated as disposable peddlers while Ebay catered to the high volume sellers.
When I first saw stores come up in search- I felt it was much like being at a flea market where the owner was handing out flyers for retailers with similar products. When someone searches my type of items- I’m on a limited time to sell it at auction. When the viewer sees the same item in a store - [where the item can sit there for months] - it discourages the auction format entirely. If they want to store shop- they should do an individual search.
I believe the #1 goal of any large service company is to gain the respect and loyalty of its customers. Had Ebay made this their priority - many small time sellers could have survived. But Ebay concentrated on stores and bulk listers and ignored the little guys.
As a result, there is a huge group of sellers who drift in and out [like myself] hoping the next time that Ebay would have acknowledged that listing fees were too burdensome and they couldn’t really progress to store status in a reasonable time frame.
Lowering fees now is just an admission that sellers’ outrage was warranted about the previous raise. Sellers ain’t stupid and know that lowering fees now is not for their benefit - but for the benefit of Ebay’s own sagging profits. Thereupon, Ebay just doesn’t “get it” yet. Fair business practice is what makes companies’ profits soar.
January 29th, 2008 at 5:19 pm
Hello Kit…
Thanks for adding to the discussion…
I am all about being open to every viewpoint.
You may want to read my latest post about eBay Spin Techniques here:
http://allbusinessauctions.com/blog/2008/01/29/ebay-spin-leak-news-of-lower-fees-for-sellers-for-weeks-then-raise-the-fees-what-a-country/
Can you believe the USA Today headline? eBay lowers fees by 50%?
Next line in the article then goes on to say… But raises final value fees by 67%…
January 31st, 2008 at 5:02 pm
Hey Scott- thanks for the link about Meg resigning. It seems more like she’s sneaking out the back door with a bag of cash before the jig is up-
This whole scenario on ebay Seller central boards [and other boards] has become very heated and schrapnel is flying everywhere. It has caused much suspicion and mistrust as to ebay’s actual modus operundi [sp] regarding no more negs for buyers and the 21 day holding period of seller’s payments through Paypal.
SEE http//forums.ebay.com/db2/thread.jspa?threadID=2000507205
The gist of this post is that - ebay has begun to hammer the buyers with reminders that they have a right to file a disupte.
They appear to be promoting disputes or as others see it as luring buyers to file disputes. Why? Because the 21 day hold on the funds in Paypal goes into effect and this inflates ebay’s cash holdings - which just might be interpreted by stocktraders as an increase in profits.
You can do the math……tra la
[grin]
February 2nd, 2008 at 7:49 pm
eBay just announced they will be lowering their listing fees by a small amount. They made a full scale announcement that they have listened to the public and are doing the right thing…WRONG. What thet hid and did not tell you is that the FVF are increasing SUBSTANTIALLY.
So what is the net effect?
- More crap and fraud on eBay
- More fixed price items
- Less Margin for Sellers
- Less items sold on eBay
- and so on into the death spiral of profit hungry corporate jockeys squeezing water from the rocks.
February 2nd, 2008 at 7:58 pm
Hello Marr,
Thanks for your comment!
Sales is what counts, fixed price or auction is simply a choice of efficiency and cost. eBay is a tool used to generate sales. Use the tool to your advantage… Adjusting your usage method and frequency is a business decision everyone must make on their own.
Reacting to change in a positive way will only help your business.