August 20, 2008, 12:00 AM

eBay cozies up to sellers with lower fees to try and compete with Amazon

eBay said today that it is lowering its listing fees for sellers. The move is an attempt to appease eBay merchants who are frustrated with the company’s policy changes aimed at attracting buyers and to keep merchants from moving to to Amazon’s platform.

With a press release headline that begins with the words: “EBay supports sellers,” eBay announced today it is lowering its listing fees. The move is an attempt to calm sellers who are frustrated with the company’s recent policy changes aimed at attracting buyers and a bid to compete with Inc.’s rapidly growing online marketplace. However, while eBay has lowered its listing fees, it’s also increased some of its commissions on sold items.

EBay will lower the fee for fixed-price listings to 35 cents for a 30-day listing, down from as much as $4 for a seven-day listing. Additionally, if a merchant with several pieces of a particular item, such as a blue T-shirt, sells one before the listing period is up, he can continue to post the blue T-shirt for free for the remaining days left in the 30-day window until the rest are sold, an eBay spokeswoman says. The merchant still pays a commission to eBay on each item sold.

In addition, eBay has restructured the commissions it charges on sold items, called Final Value Fees. For example, commissions for books, music, DVDs, movies and video games that sell for between $1 and $50 will rise from 8.75% to 15% of the value, while clothing, shoes and accessories that sell in that same price range will cost sellers 12% of the final price, up from 8.75%. However, fees for some categories will be lower. For example, computer networking equipment that sells in the $1 to $50 range will have a 6% Final Value Fee, down from the current 8.75%. The changes take effect Sept. 16.


“Final value fees have been rebalanced on a category-by-category basis,” eBay says in its release. “In most cases, the combined listing and final value fees paid by sellers will be lower.”

Colin Sebastian, an equity analyst that covers eBay and Amazon for Lazard Capital Markets, says eBay’s fee changes are a move to compete with Amazon, which has captured some of eBay’s business recently. “One of the key themes emerging in the e-commerce industry over the past two years is the shift of marketplace momentum to Amazon from eBay,” Sebastian says.


More emphasis on final value fees emulates Amazon’s pricing model and may encourage sellers to list more items for sale on eBay, he says. “Changes at eBay are a continuation of efforts the company began in 1Q aimed at rebalancing its sites, and generating more robust transaction volume,” Sebastian says.


“We aim to be the most competitive marketplace online, and this new, incredibly low pricing helps us achieve that goal,” says Lorrie Norrington, president of eBay Marketplaces. “A 35-cent listing fee virtually eliminates the upfront cost for sellers to put more of their great inventory on eBay and creates more opportunity than ever for sellers to build successful businesses.”

EBay says it also plans to make changes to its product search feature and to offer free buyer protection for certain purchases paid for with PayPal, eBay’s online payment system. Those changes will occur in phases through November.

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