2/15/08

Seller ratings policy and fee hikes are under review at eBay

Close on the heels of a late January announcement of fee changes aimed at eBay’s sellers, the company is implementing cuts in sellers’ fees in the media category, which includes such items as books, music and movies.

Don Davis , Editor in Chief

Close on the heels of a late January announcement of price cuts – and hikes – aimed at online auctioneer eBay Inc.’s sellers, the company has revealed cuts in sellers’ fees in the media category, which includes such items as books, music and movies. The company also promised to review its seller rating policy, one that has prompted a seller-driven call to boycott sales for a week beginning Feb. 18.

Starting Feb. 20 in the U.S., eBay will reduce its “insertion” fees to list items by 25% to 50%, John Donahoe, president and CEO-elect of eBay said in his keynote address at eBay’s third annual eCommerce Forum on Jan. 29 in Washington. EBay planned to offset that change by increasing the “final value” fees it charges when an item is sold.

The company also is eliminating fees in the U.S. for its Gallery option, which is intended to induce sellers to include more photos of the item for sale.

The fee changes were being made in the name of protecting buyers, Donahoe said. But the action brought complaints from sellers, particularly small players whose posts on an eBay sellers’ blog cried foul, with some terming the increases “extortion” and many calling for a sales boycott.

Whether the threatened boycott carried any weight hasn’t been acknowledged by eBay, but some form of seller complaints found their mark. The company announced a media fee reduction in a Feb. 11 posting by Lorrie Norrington, president, eBay global marketplace operations, on the company’s General Announcements news page in its community section.

“We heard your comments about the need for media and category-specific pricing,” Norrington said, noting that “we are accelerating our plan to phase in category-specific pricing for media. This fee cut will coincide with the site-wide pricing changes previously announced to take effect on February 20.”

Insertion fees that were previously 20 cents, 40 cents and 60 cents in three price tiers are slated to drop to 10, 25 and 35 cents, respectively.

A longer-standing issue is a ratings system change that ties negative seller ratings from buyers to payment restrictions. Too many low ratings could put sellers into a 21-day transaction hold until the buyer approves payment through eBay’s PayPal transaction service.

Per Donahoe’s speech, “eBay will begin decreasing search exposure for the listings of sellers who have high rates of customer dissatisfaction. Also, the company will begin requiring a safe payment option, such as PayPal or a major credit card, for sellers who have lower rates of customer satisfaction or who sell in categories that have a high number of buyer complaints.”

The payment hold has sellers up in arms because a few low ratings can bottle up payments. Some smaller sellers note that fee hikes are eliminating profits and, combined with the new bad ratings risk, means eBay is effectively driving them away.

Norrington’s post promised to watch the results of the new policy. “We will run these changes as announced in Washington, D.C., but we will closely monitor the data. If buyer trust in the marketplace is not improving as intended within the next six months, we will take action.”

Topics:

Criticism of eBay, John Donahoe, Mobile software, PayPal, Virtual communities

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