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AuctionBytes Blog The AuctionBytes Blog has been giving a voice to online merchants since its launch in 2005. Named one of the world's top 30 blogs in 2008 by "Blogging Heroes." Weigh in with your thoughts on the joys and pitfalls of selling online.
Wed June 2 2010 19:59:57

eBay CEO on Seller Fees: Still Cheaper than Amazon

By: Ina Steiner
Sponsored Link
eBay issued a press release about CEO John Donahoe's interview with Wall Street Journal tech columnist Walt Mossberg at the All Things Digital conference today. John hit some of his favorite themes, but in reviewing the press release and media coverage of the interview, it's clear he also went off-script.

Talking Points

- Auctions are a minority of eBay's overall business. "A lot of the inventory on eBay today is brand new. Now, they're not necessarily the same items you'd get in a retail store. But what you have on eBay that you don't have anywhere else are items that have been returned or refurbished, items that are cheaper. eBay gives you a choice of inventory."

- There are many winners in ecommerce. In discussing competition, John mentioned Amazon, Etsy and Wal-Mart, but said there can be many winners in ecommerce. "Wal-Mart is the largest offline retailer in the world. Costco competes in the exact same segment with the exact same business model very successfully. So does Target. The same thing can happen online. Amazon can be successful and eBay can be successful, too."

- eBay is working on mobile shopping and vertical shopping experiences. John discussed the growth in mobile shopping, and said eBay was the largest seller of fashion in the world and is driving more vertical shopping experiences on eBay.

Going Off-Script

- The user experience needs much improvement. John said the user experience on eBay's online marketplace has "gone from a 2 to a 4 in the past year - "it's twice as good, but there is a long way to go," according to Dow Jones newswire.

- eBay was "nickel-and-diming" sellers for years. When Walt asked whether sellers were being "nickel-and-dimed by eBay's many fees," John said, "I think for years, eBay was nickel and diming. But over the past few years, we've restructured our fees. Today, consumers can list for free and businesses can list in the fixed-priced format. We've tried to simplify and streamline our pricing. We're still cheaper than Amazon."

Here's a link to All Things D coverage and a link to a video clip of John discussing the Skype acquisition and divestiture.




Comments (88) | Permalink
Readers Comments

eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Gary Overton
       Web Site
Wed Jun 2 20:11:58 2010
I'm old and somewhat senile but I think I am paying as many fees as ever. I pay to list, I pay when something sells, and I pay a PayPal fee. I also pay a store fee.
That is 4 separate fees. If that is not nickle and diming I would like to know what is.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: pete
       
Wed Jun 2 20:19:35 2010
But Mr CEO as a seller that once used only the eBay platform we now sell more items on Amazon...so it's actually cheaper for us to sell on Amazon..no more re-re-re-re-re-re-list fees like eBay charges, this guy is a jackass
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: JD Needs To Get Out More
       
Wed Jun 2 20:48:12 2010
JD: "Now, they're not necessarily the same items you'd get in a retail store."

No... just your ordinary "dollar store" junk. You can find one in almost every shopping center and dying mall.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: The Sight Of Him Irks Me
       
Wed Jun 2 20:53:04 2010
His voice, his demeanor, his sanctimonious way of ''talking-down'' to people, and his Bush-like ''smirk''. He's like a petulant child with a new toy. I cringe every time I see his face.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: RicRoe
       
Wed Jun 2 20:59:46 2010
In this case, I must agree with Mr Donahoe. eBay does not nickel and dime sellers anymore.

With redundant and overlapping fees -  listing fees, Final Value Fees, Store Fees and PayPal fees, eBay can not be accused of merely nickel and dimeing sellers.

The reality is that eBay now quarters and dollars sellers at every opportunity,while looking for new ways to separate sellers from their money such as account holds and subscriptions.

eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Getting Tired...
       
Wed Jun 2 21:40:58 2010
''We're still cheaper than Amazon'' - John Donohoe

Am I missing something?

Media category FVFs on Amazon - 15%

Media category FVFs on eBay - 15% of the first $50 PLUS another 5% to a grand.


My store subscription used to be 15.95 a month.  Listing fees used to be 3 cents each item.  

My subscription is now 49.99 a month. That's over a 200 percent increase.

My listing fees are now 5 cents.  That's a 66 percent increase.

5000 items in the store used to run $150.  Now it runs $250.

Add 12 months and that's $1600 or so in ADDITIONAL fees this year compared to last, just for the privilege of selling on eBay.

Amazon's store is 39.99 a month with unlimited listings. That's 479.98 a year.

Please correct me if math does not add up.  After all, I'm not a college educated business guy like the eBay CEO...





eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Troglodyte
       
Wed Jun 2 21:49:57 2010
I have to say that a few of the nickel and dime fees have been eliminated like the gallery photo fee.

If you have a certain level store, then there's no charge for additional photos beyond the first one, for supersizing them, or for Picture Pack.

However, ebay still charges 10 cents per listing for scheduling which is free if you use some third party services like Auctiva, and ebay now charges a WHOPPING 50 cents per listing for exposure on ebay.uk. No one apparently ever told Donahoe what www means.

FVFs are also a lot higher. So whatsoever ebay giveth, ebay taketh away.

And then they LIE about it.

Donahoe's chronic diarrhea of the mouth is just overflowing with LIES and DAMN LIES.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: We called it Feebay years before JD arrived!
       
Wed Jun 2 21:54:31 2010
He actually said ''We're still cheaper than Amazon.'' Maybe for backroom deals like Buy.com got but not for most everybody else selling on eBay! Ha!

True story: Items I used to sell on eBay for an average price of $7.00 go for $25.00 on Amazon. Not once in awhile but all the time, quarter over quarter.

So, are my fees to Amazon higher? Heck no! Things sell for higher prices, sell more often, and the entire seller experience is far less labor intensive, fraught, and demoralizing....all of these things are quantifiable in real net profits (by any B-school's metrics)...

Also, having great success selling for FREE on craigslist! NO fees of any kind and yes, I accept paper payments, I savor every penny I don't give to Paypal and thus, JD's golden parachute...

eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: On Lies and Secrets This user has validated their user name.
       
Wed Jun 2 22:25:14 2010
It seems like Donohoe is spinning as fast as he can.  If things were truly better on ebay, why would he be so defensive about conditions on the site?  Phrases like: "amazon can be successful and ebay can be successful, **too**", "**Still** cheaper than amazon", "it's twice as good but there is **a long way to go**" are not what corporate winners say.  His rhetoric isn't coming from a position of strength or confidence, but from defensiveness and he is comparing ebay to its competitors in a way that admits they are better than ebay.  Donohoe is not good at managing the ebay corporation and excuses after being in charge for this long shouldn't wash with shareholders or analysts.  Where are the results?
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: fallonthalia
       Web Site
Wed Jun 2 22:26:07 2010
So, eBay fees are cheaper than Amazon's fees?  NOT!  Amazon does not have listings fees.  On eBay, sellers pay listings fees every 30 days (if an item takes a few months or several months to sell, that really adds up).  In media both take 15% FVF.  Paypal takes 2.9% + 30 cents for each payment.  I have found that I often am paying eBay/Paypal over 20%.

Usually what I sell on Amazon I sell for a higher price than what I could get for it on eBay.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Patricia This user has validated their user name.
       
Wed Jun 2 23:17:05 2010
You can see this interview on video:

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&
cl=20136721&src=finance&ch=1316259


When
asked about the seller discontent - Donahoe replied:

"as the large sellers move online they squeeze out the small sellers - just as they did with the mom and pop stores".

I guess there still aren't enough large sellers on Ebay (especially with buy.com leaving) so he went back to old reliable - giving sellers a week of free listing fees and hungrily waiting for them to relist and relist and relist!

He sounded like Ebay was the hottest thing on the net today.  Delusional is how he really sounded!

I wondered how his home life was and how well guarded he must be at all times.  So many small sellers utterly destroyed from his actions.  I wouldn't want to be him - not for all his money!
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Digby
       Web Site
Thu Jun 3 00:15:10 2010
I just had an email from ebay saying my auction had ended with no sale !
Would I like to drop my price and re-list it ?

Yes I would lie to re-list it, but no I can't afford to drop my price.

I am writing a letter (physical letter) to ebay everytime they send this email to me, asking them to drop their listing fee ! And why they had to increase them a few years ago ?

I just wish other sites would get more sales, then we could all leave ebay.

eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
This user has validated their user name. by: Ed Gadfly
       
Thu Jun 3 03:00:06 2010
''Wal-Mart is the largest offline retailer in the world. Costco competes in the exact same segment with the exact same business model very successfully.''

Really? WalMart has has a huge variety of items - most of them cheap and of mediocre quality, Costco features a smaller selection of hi-quality items. WalMart lets any riff-raff with a pulse through the doors, Costco charges a membership.

WalMart locks their employees in stores, denies them overtime and cheats them out of breaks. Costco employees are unionized - paid an honest wage, given benefits and are not exploited.

Not really the same business model at all.

When I am not on this sight I feel alone, lost among the ''pod people.'' IMHO the remaining sellers at eBay are the clueless, the collaborators and the cowards. Google Vichy France and then take a look at the yellow-starred ''community'' at the Faux eBay Live.

How's that 2-tiered seller system working out for you - the anonymous DSRs giving you better placement and lower rates? How stable is that business you built on the changing sands of eBay policy?

eBay is the place to go for returned and refurbished... syncing smoothly with Uncle Grifter's Nordstrum experience. eBay's international flavor can let you buy an item for Mom that could have been nicked (scratched) in America or nicked (shoplifted) in England. Maybe if my mom's name began with ''M'' and ended with ''g.''

To appreciate the comedy of eBay small sellers first have to leave. Sorry. It's done, sick a fork in it. Get a job with more fun and better pay - a position in a slaughter house, or a hospital laundry would be a good start.

Captain John is piloting the Titanic wearing wearing vintage Coke bottle bottom glasses while Uncle Grift and his entourage (the cast of Glee) try to figure out how to make their kool-aid cold.  
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Eddie
       Web Site
Thu Jun 3 03:30:02 2010
"We are still cheaper than Amazon"

eBay should beat Amazon on fees hands down.  Amazon set their fees for Marketplace based on the profitability of Amazons own sales in the same sector.  If Amazons profitability is high, the fees are high. Amazon does not set Marketplace fees with an intention of being competitive with the wider market, their aim is not to cannibalise their own direct sales, without equivalent profitability.

If you read Amazons accounts the giveaway is in Amazons annual report:

"Sales of products by marketplace sellers on our websites represented 30%, 28%, and 28% of unit sales in 2009, 2008, and 2007.  Since revenues from these sales are recorded as a net amount, they generally result in lower revenues but higher gross margin per unit. Since we focus on profit dollars rather than margins, we are largely neutral on whether an item is sold by us or by another seller."  

So Amazon make broadly the same profit whether they sell directly, or through Marketplace.  But Amazons profit is necessarily such that it compensates them for the risk and costs of sourcing stock, holding stock and shipping stock.  eBay carries none of these risks or costs, and so should not need to be compensated for doing so.

For eBay to charge the same as Amazon would be to take a profit to cover those costs - but they are costs that a seller on eBay faces, not eBay themselves.

Yet eBay do not see Amazon as a competitor that they can readily beat on price, but a target that they can aim for in their own fee setting, in doing so they are taking the eBay sellers compensation for the risks and costs involved in sourcing, holding and shipping stock.



eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Ebay's Slow Death This user has validated their user name.
       
Thu Jun 3 03:54:36 2010
JD is a complete MORON!

''A lot of the inventory on eBay today is brand new. Now, they're not necessarily the same items you'd get in a retail store. But what you have on eBay that you don't have anywhere else are items that have been returned or refurbished, items that are cheaper. eBay gives you a choice of inventory.''

First he says the items are ''Brand New'' and then says they are ''Returned or Refurbished.''  Yeah, women like wearing last years fashions, which have been returned to a store, after being worn by a stranger.

''Wal-Mart is the largest offline retailer in the world. Costco competes in the exact same segment with the exact same business model very successfully.''

Me and a lot of other people shop regularly at Costco and don't shop at Wal-Mart. As was already pointed out, they are totally different business models and shopping experiences.

''But over the past few years, we've restructured our fees. Today, consumers can list for free and businesses can list in the fixed-priced format.''

You bet they have ''restructured'' their fees!

Before the April Fools Day dump I was doing fine. The lack of sales and fee increases have clobbered me the last two months. About a month ago, I lost my TRS and discount. Two days before the end of May I closed my store and am letting my 1300 items roll off, trying to catch them before they roll over and cost me $.50. It has become impossible for me to make any money on Ebay anymore.  That moron says that listing is ''Free''! Nice choice of words. Most people don't get the distinction between ''Consumers'' and ''Business''.  Buyers probably think we get to list all our stuff for free.

And, no Ebay is not cheaper than Amazon. I am doing fine on Amazon, and actually sell things there.  Selling something on Ebay anymore is a rare experience.

Ebay just flushed my business down the toilet.  I know I'm circling the bowl with a whole lot of other Sellers. It's getting pretty crowded in here.

Donahoe truly does have, ''Chronic diarrhea of the mouth''!  Unfortunately, anybody who sells on Ebay is sitting below him. Time to leave.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Tired
       
Thu Jun 3 06:04:38 2010
How does this guy get away with the things he says???  It seems the BOD must be as stupid as him... That speaks for itself.  What a total bunch of clowns!
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: Marvin This user has validated their user name.
       
Thu Jun 3 06:40:51 2010
Does anyone on ebays board of directors know what their CEO is saying and doing? How can they set back and let this man go out time after time and say the things he does? Why is he still there?

Take these statements from the interview with donahoe posted June 2, 2010:

"eBay was "nickel-and-diming" sellers for years".  "What you have on eBay that you don't have anywhere else are items that have been returned or refurbished"

For any CEO to admit his company has been "nickel-and-diming" sellers for years and to hold sellers to ridiculous seller standards and claim it is to ensure buyers have the best experience possible then be proud his company is allowing returns and refurbished items to be sold should be grounds for the board of directors to dismiss him on the spot.

Returns are items purchased by a consumer who for one reason or other were dissatisfied with the product and returned it. If the original buyer was dissatisfied with it why would the ebay buyer be happy with it? Refurbished items are broken/defective products that have been fixed, but by who? The seller? donahoe does not say "Factory refurbished" so that's a pretty open ended statement.

The user experience has gone from "2 to a 4 in the past year"? "It's twice as good"? The only way this statement can be true is if the scale only goes to 4. Yet he precedes this statement with "The user experience needs much improvement". What he says makes no sense.

"eBay can be successful, too." which implies it's not.

eBay is the largest seller of fashion in the world?

Hey john, ever heard of the Spanish fashion chain Zara? Or Karmaloop? Or Hennes & Mauritz out of sweden? Provide ebay fashion figures and let's compare them to these companies, then tell me ebay is the worlds largest fashion seller!

"We’ll never be a retailer. Initially, eBay started selling long-tail inventory".

You are admitting what everybody else except ebay and analyst seem to know which is you took ebay in the wrong direction.  Long tail means that a large number of small sellers offering a diversity of products is more valuable and profitable than a few select large sellers.

"eBay gives you a choice of inventory".

Whose choice? ebays? Definitely not the sellers items. The only choices are the inventory out and viewable by the consumer. Products stuck back in the store room out of site offer the consumer no choices. To pad ebays site with hits store items were dumped in core and the search function is of such poor quality many items that would give the consumer a real choice are never seen. When you say" there’s more inventory than people are aware of" you got that right!!!

"Things like cash and credit cards can be lost. PayPal cannot".

When was the last time you had cash in you wallet and opened it up and it wasn't there? When was the last time you went to the bank to withdraw your cash and told you couldn't because it had been seized? Lose your credit card and you can have it back in 10 days or less. Paypal can keep your money for months or never return it! How much money in paypal accounts are you withholding from customers right now?

donahoe, you were asked "How big is your phishing problem? I get emails fairly often warning me that my PayPal account is in trouble for some reason".

Your answer "Phishing was an issue for eBay a few years ago. But over the last five years, we invested quite a bit of money fighting it, and I think we’ve done a good job". YOU SIDED STEPPED THE QUESTION, YOU DID NOT ANSWER THE QUESTION. Why? How big is your phishing problem? Simple enough to answer, not that bad, pretty bad, awful . . .

When asked "So who’s your main competitor?

You rattle off Amazon, Etsy, Walmart. . .  If anybody had asked meg whitman when she was CEO of ebay that same question she would have laughed in their face, ebay had no competition. Any competition ebay has today was created by john donnahoe.

donahoe quote "StubHub is a marketplace. It never buys tickets. What it’s doing is enabling season ticket holders to resell the tickets they aren’t using. Sometimes for above-market prices. . . "

OK stop there. If you buy a ticket off stub hub and meet the seller at the event to pay for the ticket aren't you breaking California law? If somebody in New York sells their ticket on stub hub to another New York resident wouldn't they be violating New York's markup laws? Hey Mr. CEO, you sure ONLY season ticket holders resell on stubhub? Do you know what the companies you run do?

You then go on to say "What StubHub has done that the scalper market never could, is that it’s completely transparent". CEO school 101 should have taught you never to associate your company with an illegal enterprise.

"We’re still cheaper than Amazon".

Oh, really? I need to call Amazon, they made a mistake on my account, they didn't charge me enough it was cheaper than ebay.

"Consumer choice is important to us . . . the vision is to offer multiple means of payment". Look back, you had that once before and did away with it. Personal checks, business checks, postal money orders . . . Remember?

For the board of directors on ebay to allow this doesn't speak well for them.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: My Own Website Not Quite Paying My Bills Yet
       
Thu Jun 3 07:02:36 2010

I can't find a big enough bucket to throw up in.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: How Can You Sleep At Night?
       
Thu Jun 3 07:07:59 2010
"as the large sellers move online they squeeze out the small sellers - just as they did with the mom and pop stores".

This is the same kind of emotionless logic that allows the CEO of Walmart to sleep at night.
eBay CEO on Seller Fees: Still Cheaper than Amazon   eBay CEO on Seller Fees: Still Cheaper than Amazon
by: honeybunch
       
Thu Jun 3 07:52:43 2010
Many of the above posts highlight something that JD has never been able to grasp:  It isn't just the fees, it's WHAT WE GET FOR THOSE FEES.

What Amazon gives us in return for our fees that eBay doesn't:
1.  Sales and traffic
2.  Customer service
3.  A stable selling environment, with fewer policy changes and a glitch-free platform
4.  A more level playing field, so our items can actually be seen
5.  A great shopping experience that keeps buyers coming back (hey eBay, get a bleeping shopping cart already, it's 2010)
6.  An environment that does not encourage fraud, so our risks are more manageable

And, as buyer-focused as Amazon is, they have not forgotten that we, their third-party sellers, are also their customers.

Really, JD, when it comes to the VALUE that sellers receive for their fees?  Amazon wins. No contest.
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