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EcommerceBytes-NewsFlash, Number 1645 - October 18, 2007 - ISSN 1539-5065    1 of 3

eBay Cuts Insertion Fees to 'See What Happens'

By Ina Steiner
EcommerceBytes.com
October 18, 2007




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eBay is holding a sale on insertion fees for auction and fixed-price listings from October 18 through November 5, 2007. During the promotion on eBay.com, eBay Motors and on eBay Canada, the insertion fee is discounted by 33% for any auction-style or fixed price listing. For items listed with a starting price under $1, the discount is 50% off insertion fees.

During eBay's earnings conference call on Wednesday, there was interest on the part of analysts to learn eBay's motivation in lowering fees. One asked if it was due to concern over whether there was enough inventory on the site or a broad enough representation of product going into the holiday shopping season. Another asked eBay CEO Meg Whitman if the price decrease was due to competitive factors, and referred specifically to Amazon.com.

Whitman said the cost of selling on eBay was extremely competitive versus anyone, including Amazon. She said eBay wanted to make sure it had a great breadth of inventory and high-quality inventory on the site for the holiday season, and also wanted to see what would happen with a "price decrease of this magnitude." She said, "We've not ever really decreased price, and it is possible that by decreasing price, we actually increase the revenues and vibrancy of this market in such a way that this price decrease is self-liquidating," though she said she didn't know if that was going to happen.

Whitman also said category-based pricing may be in eBay's future.

eBay CFO Bob Swan said conversion rates and Average Selling Prices (ASPs) improved in the third quarter, and he expects listings to grow and conversion rates to hold in the fourth quarter. Swan said he expects ASPs to decline in the fourth quarter (presumably year-over-year) because of the absence of high-ASP consumer electronics compared to the fourth quarter of 2006 and due to eBay driving more velocity in the lower tranches, which have a lower ASP.

A chart of fees for the eBay.com pricing promotion follows, see eBay's website for information on eBay Motors and eBay Canada fees. All other fees apply, see website for details and restrictions.

Starting Price,

Opening Value or Reserve Price

Regular

Insertion Fee Price

Sale

Insertion Fee Price

%

Discount

$0.01 - $0.99 $0.20 $0.10 50%
$1.00 - $9.99

$0.40

$0.25 37.5%
$10.00 - $24.99 $0.60 $0.40 33.3%
$25.00 - $49.99 $1.20 $0.80 33.3%
$50.00 - $199.99 $2.40 $1.60 33.3%
$200.00 - $499.99 $3.60 $2.40 33.3%
$500.00 and up $4.80 $3.20 33.3%

http://www2.ebay.com/aw/core/200710171318332.html

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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