The online marketplace announces pricing and policy changes for sellers.
Katie Evans , Managing Editor, International Research
If the marketplace changes eBay.com announced today could be summed up in two words, those might be the most apt.
EBay has released its first marketplace update of the year, and while it is a complex package of changes, the consensus from industry observers is that the updates are focused on making the marketplace more attractive to sellers, and specifically more attractive to them than selling on rival Amazon.com.
A brief statement released today by eBay announcing the changes is focused nearly entirely on merchants and how the updates will benefit them. “We believe the new pricing structure makes eBay the most competitively priced commerce platform in the U.S. today,” it reads. “These changes continue to make eBay the partner of choice for merchants.”
Michael Jones, head of merchant development for eBay, says that the new changes coupled with the fact that eBay doesn't compete with merchants by selling on its own, as Amazon does, makes eBay the best marketplace for sellers.
“We strongly believe we now are the most competitively priced marketplace for sellers,“ he says. “And we don’t compete with sellers. We are not a retailer, we don’t buy product and we don’t make products. We are solely here to help sellers succeed and compete on a global basis.”
The focus on merchants is likely a move to appease eBay sellers who feel eBay has gone too far in recent years to add safeguards that appeal to shoppers, says Scot Wingo, a longtime eBay observer and CEO of ChannelAdvisor, a vendor that helps merchants manage stores and list on marketplaces such as Amazon.com and eBay.
In 2012 eBay redesigned its site, making it cleaner and easier to navigate, updated its logo, and introduced new buyer protections. Wingo says many sellers think eBay has fallen short, however, in protecting them against dishonest buyers who use tricks to try to unfairly get discounts, circumvent return policies or try to get products for free.
“Ever since introducing all of the great buyer protections, many eBay sellers feel that eBay leaves them out in the cold whenever there is a claim,” Wingo says. Under the new rules, if a buyer files an unreasonable claim against a merchant, for instance, stating that the item received was not new even though the seller listed it as a used item, and eBay finds in favor of the seller, eBay will remove any negative feedback or ratings the buyer posted regarding that sale. The new fee structure and such seller protections are aimed to address seller complaints, and to attract more sellers to eBay over Amazon, Wingo says.
“It looks like eBay is really coming out swinging against Amazon's marketplace (and others) as they are saying phrases such as ‘We don't compete with our sellers’ and ‘We are the most competitive platform,’” Wingo writes on his ChannelAdvisor blog.
EBay even includes in today’s release a chart that compares its new fees with those charged by Amazon in an effort to illustrate that eBay has the lower fees.
The chart compares final value fees charged to merchants operating eBay stores with Amazon.com’s fees. It shows, for example, that a merchant operating an eBay store that sells a desktop computer will pay a final value fee of 3.2% of the selling price if it qualifies for eBay’s top-rated seller discount, 4% if it does not. If sellers maintain a very high bar of performance, measured by customer feedback and shipping performance among other factors, they are rewarded with a 20% discount on their final value fee. The comparable fee on Amazon.com, eBay says, would be 6%.
Still, when examined, the fee changes don’t always mean a better deal for sellers on eBay, Wingo says. Amazon’s 6% includes payment processing, he says. EBay charges 3% for PayPal, so that even the sellers who get the eBay discount pay 6.2% compared to Amazon's 6%.
Amazon did not immediately respond to a request for comment.
Wingo says, taking into account the new fee structure, eBay merchants whose average items sells for less than $100 and sell 12,000 items a month or less will likely save a bit, while sellers above those thresholds will pay slightly more.
“The average selling price on eBay is between $50 and $75,” Wingo says. “I think they may have felt they were a little expensive for lower-priced items and a little too reasonable to those selling higher-priced goods.”
He adds that eBay also cut final values fees in categories where its sales growth rate has been slowing. For example eBay’s computer sales volume has been tapering and it decreased the final value fee it charges eBay stores for sales of such items. Meanwhile, sporting goods and collectables, which have been strong, collect a higher 9% fee.
Below are highlights of updates that will most impact eBay sellers:
Store fee cuts and free listings: Merchants operating the largest category of eBay stores, called Anchor Stores, which require them to meet certain seller performance ratings and allow them to manage up to 5,000 listings a day, will get a break on store fees. Store fees for Anchor stores will decrease by $120 a month to $179.95 from $299.95, or by $1,440 a year. Anchor store merchants will also get 2,500 free listings per month. However, listing fees for Anchor stores that list more than that amount will increase by 2 cents or 66% per listing. The other eBay store tiers, Basic and Premium, will not get a break on store fees. Basic stores will get 150 free listings per month and Premium will get 500 free listings. Premium listing fees after that amount is reached will increase from 5 cents to 10 cents and Basic listing fees will remain the same at 20 cents.
Final Value Fees: eBay is introducing flat-rate final value fees. EBay used to charge Final Value Fees after each sale based on the merchandise category and a complex calculation of the selling price with various percentages based on price tiers. EBay is simplifying the fee structure, which long confused merchants. Merchants without eBay stores will pay a flat 10%. Merchants with stores will pay between 4% and 9% based on four categories of merchandise.
Unpaid Items: In May, eBay will introduce changes to help merchants deal with unpaid items. Since eBay’s infancy, consumers would go through a two-phase commitment—commit to pay, and then actually pay. This forced retailers to hold inventory, waiting for the consumer to pay. Recent updates that have addressed this include Immediate Pay, which lets sellers require a buyer to pay immediately using PayPal. Other updates in the pipeline for May include: Enabling a merchant to keep items available for purchase until the buyer pays, and cutting unpaid item claim filing times by two days.
Feedback: Another source of frustration for sellers is when they receive negative feedback or ratings, work with a buyer to resolve a problem and then have difficulty getting the poor feedback or ratings removed. This glitch especially irritated merchants because in order to qualify for the 20% top-seller discount on final value fees, merchants must have less than one half of 1% worth of negative feedback. Starting May 1, eBay will remove poor feedback and ratings when an issue is favorably resolved.
Easier account management: Sellers can update their shipping, payment and return policies in one central location. Also, in late May, eBay will allow sellers to select 'same day' from the handling options as well as exact order cut-off times. For example, a seller can say, “Ships today if ordered by 5 p.m. central.”
Jordan Insley, owner of eBay electronics store Quick Ship Electronics, says the changes are an effort by eBay to fix headaches and hurdles merchants were encountering. "They are looking at this as an opportunity to clean up a lot of issues," he says. "EBay has done a great job bringing buyers back to the platform, now they are streamlining operations to make things easier for sellers." He also thinks the changes reflect eBay seeking to attract bigger merchants or to turn casual sellers in to full-time ones by making it easier and more affordable to manage a store with many listings and customers.
“The changes are appealing to those who are only selling on Amazon right now,” Wingo says. “And eBay starting to amplify concerns about Amazon competing with their sellers for sales might keep exclusive eBay merchants selling only on eBay.”