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EcommerceBytes-NewsFlash, Number 2981 - January 17, 2013 - ISSN 1539-5065    3 of 4

Ruby Lane Raises Fees to Help with Advertising

By Ina Steiner
January 17, 2013

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Ruby Lane sellers got unpleasant news this week when the marketplace announced it was raising fees beginning March 1st. Ruby Lane is raising the minimum Maintenance Fee from $15 (or 50 items at 30 cents) to $24 (or 80 items at 30 cents). The company explained, "If you have 80 or more items in your shop, this change has no affect on you since you're already paying at least $24/month in Maintenance Fees."

Ruby Lane founder and CEO Tom Johnson explained in a letter to shop owners that the fee increase was designed to encourage shops to list more, explaining that shops with just 10 or 20 items will not experience success on Ruby Lane. "I'm sure many of you agree while shopping Ruby Lane, it's not much fun to pop into a store with just a handful of items," he said. "So in the long run, we want all of our shops to be successful."

Johnson said that while Ruby Lane makes money from item listings, it makes more money indirectly when shops are selling and develop a long term business relationship with the marketplace.

The company's Director of Communications and Product Development Palmer Pekarek said Ruby Lane tries to help low-volume shops, including offering mentoring programs.

Ruby Lane is also increasing the Advertising Fee from $20/month to $30/month. Pekarek said the fee had not changed since April 2006 and said Ruby Lane was unusual in earmarking 100% of the funds to advertise the Ruby Lane brand, its shops and products. Ruby Lane is transparent with sellers, sharing a summary of the ad spend each year, according to Pekarek.

Johnson revealed that Ruby Lane's sales in the fourth quarter were 25% higher than in 2011. In comparison, comScore reported 14 percent growth for overall ecommerce (November 1 through December 31, 2012), and eBay just announced U.S. gross merchandise volume was up 19% year-over-year in the fourth quarter.

Did Google's decision to go from the free Product Search offering to the paid Google Shopping program impact the decision to raise ad rates? Pekarek said that played only a small part in the decision. "A lot of thought and number crunching went into this decision," he said. The company uses Google Shopping, Amazon pay per click, print and online media

"We've done everything we can to stave off fee increases for a number of years," Pekerek said.

While there are shop owners who are concerned and unsure of what they are going to do, the company is also getting a lot of great comments, he said.

Both fees will take effect March 1st, 2013.

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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