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EcommerceBytes-NewsFlash, Number 1708 - January 18, 2008 - ISSN 1539-5065    1 of 4

eBay Expected to Announce Fee Changes Soon

By Ina Steiner
January 18, 2008

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Expectations are high that eBay will announce fee changes before next week's fourth-quarter earnings release, and may include category-based pricing and volume-discount pricing. Most industry observers are basing predictions about the timing of eBay's annual announcement on the fact that eBay's analyst conference call is scheduled for January 23, and that eBay's annual meeting of high-volume sellers is scheduled for January 29.

ChannelAdvisor's Scot Wingo wrote on his blog that sellers have gotten calls from eBay outlining fee changes, including category-based pricing that would lower listing fees and raise FVFs (already in effect in some countries), and bulk discounts (http://ebaystrategies.blogs.com/ebay_strategies/2008/01/ebay-fee-change.html).

Bear Stearns analyst Bob Peck said in a research note on Thursday that a fee announcement could be coming in the next few days and said, "Positive seller reaction should be expected as changes in fee structure would lower a seller's risk." (Peck also upgraded eBay stock to Outperform http://online.barrons.com/article/SB120052254122995563.html?mod=googlenews_barrons.)

However, volume discount pricing would likely cause an uproar among many sellers who were promised by CEO Meg Whitman that such pricing would go against the company's commitment to the "Level Playing Field" philosophy established by founder and Chairman Pierre Omidyar. But many believe Whitman is on her way out, and President of eBay Marketplaces North America Bill Cobb opened the door to a volume-discount pricing structure last October during a Town Hall Meeting. He said that in a conversation with Omidyar, the founder had said he never intended for the term level playing field to indicate the site would never offer volume discounts (http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2007/10/1193426655.html).

eBay ran extensive tests on fees in 2007 with various promotions tied to Final Value Fees; Insertion Fees; Gallery Photos; Bundling (insertion fee plus gallery photo fee, for example); and category-specific fees. The company said it ran the tests to learn about the elasticity of supply and demand - the impact on the quality of inventory; the abundance and velocity of trade; longer term impact on buyers and sellers; and the impact of fee structure on sellers.

Amazon.com has become a growing competitive force, and some believe lower up-front fees would help combat the threat. Experts have also been pressuring eBay to make its Gallery photo feature free for sellers. Whether the company believes loss of revenue from Gallery fees would be made up by a better buying experience may soon be seen.

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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