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EcommerceBytes-NewsFlash, Number 2501 - March 17, 2011 - ISSN 1539-5065    1 of 5

eBay Tells Sellers to Raise Prices to Cope with Higher Fees

By Ina Steiner
EcommerceBytes.com
March 17, 2011




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Emotions ran high at eBay's Town Hall Meeting on Wednesday evening as sellers told eBay they could not afford the higher fees the company had announced on Tuesday as part of its Spring Seller Update. eBay will begin charging sellers commission fees (FVFs) on the total transaction - including the shipping and handling portion - to "incent" sellers to offer free shipping. One participant asked if it was even legal for eBay to charge a commission fee on shipping and handling.

A seller from Pennsylvania who said he has been selling for 28 years and sells items on eBay for $11 - $15, said it cost him $5.65 to ship the items. He told the panel of eBay managers he could not tack on $6 to his selling price, and became audibly upset when he was repeatedly asked whether he had tried it. "No one will buy it! There's room for you telling me something that insults my intelligence,...you somehow know something more about my business than I do."

For sellers who already offer free shipping, the change in fee structure will save them money, since eBay is lowering the FVF (which vary by category). But in many cases, sellers who charge S&H will see a fee increase if they do not switch to eBay's recommended strategy of raising prices and offering free shipping.

Many of the sellers impacted have razor-thin margins on eBay. A number of sellers who have posted comments in the AuctionBytes Blog and on eBay's discussion boards said the changes put eBay on par with Amazon.com's 15% commission fees (Amazon.com handles payment-processing and customer service on merchants' behalf).

An eBay executive told a caller there was plenty of precedence for charging fees on shipping and handling - "there are other marketplaces that do the same thing, Paypal, Half.com, Amazon, they all do this. It has become industry standard. We're slow to adopt it."

However, he failed to say those fees on other marketplaces included the cost of payment processing. eBay's FVF does not include payment processing - its PayPal unit charges sellers additional fees for payment processing on the total transaction.

Many media outside of the industry reported eBay's announcement as a reduction in fees that would benefit all sellers, including the Wall Street Journal, which received 69 comments as of this morning, many criticizing the paper for the way it reported eBay's announcement.

You can read AuctionBytes' coverage of the Town Hall meeting on the AuctionBytes Blog and see our coverage of the fee changes in this news report.

Comment on the AuctionBytes Blog

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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