Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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As with OpticsPlanet, the changes are likely to result in a bigger selection at the eBay store of online jewelry beading supply seller Beadaholique. The retailer sells a mix of fixed-price and auction items, and paying the Anchor subscription fee should cut its fees between $3,460 and $3,930 a month on its fixed-price listings alone.
“It will allow us to have a little more latitude in that we can test market items since we’ll have more money on our hands to list,” says Chris Bellomo, Beadaholique co-owner. His eBay store typically offers nearly 14,000 SKUs-8,000 to 9,000 of which are sold at a set price. Of those, about 2,000 don’t sell well and rotate on and off the site, says Bellomo. “Now we can afford to keep them up,” he says.
But just because Beadaholique will have more listings on eBay, Bellomo and his partner Sarah Diamond aren’t sure that its sales will increase. In fact, Diamond says that the fee changes may encourage Beadaholique competitors that don’t now sell on eBay to begin, and those that already sell on eBay to add more listings. “With more items on eBay, I’m concerned we might actually sell even fewer items,” Diamond says.
But competition is exactly what eBay wants, says eBay’s Lathi. “Competition is healthy for the marketplace,” he says. “EBay’s marketplace is designed so that the merchants who can deliver quality and value will thrive.”
At the same time as it appeals to retailers with a lot of stock, eBay also wants to retain the occasional hobbyist seller. That’s why sellers will now be able to auction up to 100 items for free every 30 days. When an item sells, eBay will take 9% of the sale price or $50, whichever is less.
EBay currently allows sellers to auction up to five items for free every 30 days and charges the lower of 8.75% of the sale price or $20. After exceeding 100 free listings, sellers are subject to new listing fees and commissions that vary depending on the item’s starting and sale prices. The fees range from 15 cents to $2, depending on the item’s starting price. EBay’s current range is 15 cents to $4.
EBay is eliminating its third listing option, its Store Inventory Format, which offered merchants a store within eBay where they could pay a subscription fee to receive discounted fixed-price listings, but those listings did not appear in eBay search results. Since those listing were difficult to find, the format was “pretty useless,” says ChannelAdvisor’s Wingo.
The most likely losers in this new fee arrangement are retailers like 3balls.com, which uses the auction format to sell used golf equipment. The company’s eBay fees could rise 30%, says Leigh Bader, the company’s president.
The majority of his inventory sells on eBay for between $50 and $100. On a $50 sale that had a starting price of $40, the retailer will pay $5.25 to eBay, 29% more than the $4.07 it paid using the previous pricing format. And for a $100 sale that had a starting price of $75, 3balls.com will pay $10, 30% more than $7.70 before.
But Bader will not abandon eBay, both because it attracts many shoppers and because eBay’s mix of secondary markets and hard-to-find items is simply a better fit for 3balls.com than other marketplaces, says Bader.
While introducing new fees aimed at altering merchants’ views of eBay, the company is also trying to change shoppers’ impressions of the eBay brand.
To shift consumers’ associations the marketplace ran a holiday season print, online and TV ad campaign with the tagline “Come to think of it, eBay” that featured high-end designer items and new products, as well as overstock and out-of-season goods. Since the holidays eBay has shifted its advertising spend online, says an eBay spokeswoman. It is all part of eBay’s efforts to reinforce its unique value proposition, says eBay’s Lathi. “We have the world’s largest marketplace that has things you can’t find anywhere else.”
And eBay is also trying to address customer complaints. The lack of a buyer protection program was one reason many shoppers shunned eBay, says Neel Grover, CEO of online discount retailer Buy.com, which sells on eBay and also operates its own marketplace.
But since Jan. 26 eBay has been giving buyers and sellers access to customer service representatives to resolve disputes. If a seller cannot resolve the issue, eBay will refund a buyer’s money, including shipping costs, although the policy excludes categories like real estate and vehicles. Previously, eBay only offered that kind of guarantee when consumers paid with eBay’s payment service, PayPal.
“EBay has always been a cool place to find great deals or a second-hand or hard-to-find item, but there’s a big segment of consumers that want trust and convenience,” says Grover. “Now it offers consumers more of that trust.” It also brings eBay in line with its competition, he says. “Amazon has the guarantee, we have the guarantee and shoppers have come to expect that.”
Shoppers also expect to be able to find what they’re looking for in a search. But that wasn’t the case with items listed in the Store Inventory Format not showing up in searches and a lack of structured data that grouped like items together.
“There are times when our search works well and other times where it doesn’t,” says Christopher Payne, eBay vice president of search. “We want to reduce the number of times it doesn’t.”
To fix those problems eBay is making a large push to increase its structured data, says Payne. At the start of 2009, 8% of its items were structured; a year later that figure was up to 20%, he says.
EBay is also testing other search improvements in its newly launched Garden by eBay, an experimental space launched Feb. 9 where eBay shoppers can try out, interact with and offer input on the online marketplace’s new products and features.