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EcommerceBytes-NewsFlash, Number 1716 - January 30, 2008 - ISSN 1539-5065    1 of 1

Editorial: Changes Rock eBay World

By Ina Steiner
EcommerceBytes.com
January 30, 2008




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eBay's incoming President and CEO John Donahoe announced major changes on Tuesday that radically change the eBay selling landscape. From fees to feedback policies, some changes favored sellers, while others disadvantaged them. And it seemed sellers of all sizes and specialties were struggling to figure out exactly what the changes would mean to them.

Donahoe hopes the changes will force sellers to improve their performance and make buyers feel more comfortable shopping on the site. He's gambling that happy buyers will lead to higher sales (and higher Average Selling Prices) that will keep sellers listing. (See AuctionBytes' podcast interview with John Donahoe - http://podcast.auctionbytes.com.)

The changes to fees are complex - so much so that it's impossible to call the move a fee increase or a fee decrease. But initial reaction from sellers was not overwhelmingly positive. Even analysts expressed surprise that cuts to listing fees were not greater. Mark Mahaney, Director of Internet Research for Citigroup Investment Research, wrote in a research note issued Tuesday:

Insertion Fee Cut Smaller Than Expected - Including the elimination of Gallery Fees (fees to include a picture), we estimate effective fee changes represent an average insertion fee cut of roughly 34%, vs. the 45% we had expected. While the economics for the average seller have not materially changed, for sellers who previously did not use the Gallery upgrade, the average insertion fee savings of roughly 15% is more than offset by the final value fee increase, and sellers are likely to view these fee changes as a (surprising) increase.

But while reporters and analysts focused on price, we found AuctionBytes readers focused on feedback changes. There were some long overdue changes, such as the new policy that will erase negative feedback left for sellers by suspended or deadbeat buyers. But that did not taper the shock of eBay's decision to take away seller's ability to leave buyers negative or neutral feedback. Sellers expressed fear that they will be at the mercy of bad buyers who extort them with threats of negative feedback, with no leverage to keep the buyers honest. While not a fee increase, this could significantly increase the cost of doing business on the site if eBay cannot monitor bad buyers.

It's best to take a collective deep breath and read through all of the changes to really understand what these changes will mean. (I've had several readers send me spreadsheets that allow sellers to compare fees under the old structure and the new fee structure, so calculators are already getting a workout.)

You can watch a video presentation of John Donahoe's keynote address at the Ecommerce Forum where he announced the changes and a Question & Answer session with eBay executives online:
http://www2.ebay.com/aw/core/200801291635272.html

Leave comments and read what others are saying on the AuctionBytes Blog:
http://blog.auctionbytes.com

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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