EcommerceBytes-Update, Number 256 - February 07, 2010 - ISSN 1528-6703     2 of 7

Survey Results - eBay Sellers Say Fee Changes Will Cost Them More

By Ina & David Steiner

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Three-quarters of eBay sellers surveyed by AuctionBytes said that new fees coming at the end of March would result in increased monthly fees. Close to half (45%) of sellers said eBay's decision to do away with Stores Inventory Format would have a negative impact on their business, and over one-third (34%) said their sell-through rate would decline as a result of the elimination of the Stores Inventory format. Only 7% said the opportunity to list up to 100 auctions a month for free for items with a starting price of under $1 would have a positive impact on their business.

AuctionBytes conducted the survey to determine how eBay sellers viewed upcoming changes to eBay's fee structure and changes to Stores. We also asked respondents what, if any, action they would take as a result of the changes.

Once you have reviewed the survey responses, be sure and leave a comment on the AuctionBytes Blog.

Introduction
On January 26, 2010, eBay announced a series of changes impacting sellers. eBay did not make an across-the-board increase or decrease in fees. The impact on a seller's fees depends on his or her volume, format, category and type of item sold - and that was borne out by the responses to the survey. One respondent's comment indicates the uncertainty sellers felt in determining the impact: "I anticipate moving my store items to core will have a positive impact, but only to a very small degree. Probably not enough to offset the fee increase."

With the new eBay Stores pricing, it's much more expensive to list in fixed-price format for low-volume Stores sellers - sellers pay the same $15.95/month subscription fee, but rather than paying as low as 3 cents to list, they must pay a 20-cent insertion fee. However, all listings will appear in Core search results. Sellers can upgrade their store and pay a higher monthly subscription fee - almost $50 - and get insertion fees of 5 cents, but according to eBay, this works best for sellers who list over 250 items per month.

It will also cost non-Stores sellers more to list in Fixed-Price format: 50 cents instead of 35 cents; Final Value fees vary by category, for most categories the FVF increases from 8% to 12%. (And sure enough, category-based fees resulted in media sellers responding differently to survey questions than sellers in clothing, shoes & accessories, for example.)

While sellers are able to compare their costs of listing on eBay under the current and the new fee structure, they can only estimate the impact that "Stores in Core" will have on their sell-through rates, and therefore, on their bottom line. A respondent commented:

"Question 15 is the key to everything. I have enough information to evaluate the cost side of listing in core but have no data related to the result on sales. I know the investment but not the return on it.

"Fees do decrease when comparing core listings to core listings. However when comparing current expenditures to revised expenditures the fees went down for some but go up for many. Given that fees will increase for a number of sellers (even if the fee buys a better listing) eBay's approach to announce the changes as a fee reduction was a blunder that triggered much of the seller angst and animosity."

Overall Results
Over 1,100 eBay sellers responded to the AuctionBytes survey, which collected email addresses and eBay User IDs to qualify respondents.

We asked in which one category respondents most frequently listed, and collectibles and clothing shoes and accessories were the two biggest categories, followed by books, jewelry and watches, toys and hobbies, and home and garden.

  • 63% had eBay Stores, 37% did not;
  • 51% were Top Rated sellers, 49% were not;
  • Of eBay Store owners, 31.9% typically had listed between 1 and 50 items in their store; 10.7% had between 51 - 100; 31.9% had between 101 - 500; 10.2% had between 501 and 1,000; 12.8% had between 1,001 - 5,000; and 2.7% had over 5,000 items typically listed in their eBay Store.
  • Of all respondents who listed auctions, 79.2% typically had between 1 and 50 auctions listed; 12.7% had between 51 - 100; 6.5% had between 101 - 500; 0.5% had between 501 and 1,000; 0.6% had between 1,001 - 5,000; and 0.4% typically had over 5,000 auctions listed.

Survey results for all respondents are reported in the following table.

eBay announced on January 26 that it would change its fee structure at the end of March 2010. Please indicate what impact the changes will have on your business.
Under the new eBay.com fee structure, my monthly eBay fees will go down 11.4%
Under the new eBay.com fee structure, my monthly eBay fees will go up 75.8%
Under the new eBay.com fee structure, my monthly eBay fees will stay the same 5.5%
Don't know 7.2%
As part of its changes to its fee structure, eBay will change fees for auction listings; please indicate the effect on your business.
It will be less expensive for me to sell in the auction format 19.3%
It will be more expensive for me to sell with the auction format 53.1%
There will be no change in my costs of selling in the auction format 10.6%
I don't list in the auction format 17.1%
eBay will offer sellers the opportunity to list up to 100 auctions a month for free for auctions with a starting price under $1 (Final Value Fees will apply). How will this impact you?
Positive impact on my business 7.0%
Negative impact on my business 33.9%
Neutral impact on my business 46.2%
I don't know 12.9%
eBay is changing the fee structure for Store subscribers, please indicate the effect these changes will have on your business.
It will be less expensive for me to sell as an eBay Store subscriber 8.8%
It will be more expensive for me to sell as an eBay Store subscriber 54.5%
There will be no change in my costs of selling as an eBay Store subscriber 5.0%
I do not have an eBay Store subscription 31.7%
eBay is doing away with the Store Inventory Format - all fixed-price listings will appear in the core eBay.com search results. Please indicate what kind of impact that will have on your business, regardless of whether you have an eBay Store or not.
Positive impact on my business 25.4%
Negative impact on my business 44.5%
Neutral impact on my business 30.2%
Please indicate the effect you think the elimination of the Stores Inventory format will have on the sell-through rate of your listings, regardless of whether you have an eBay Store or not.
My sell through rate will improve 14.0%
My sell through rate will decline 34.3%
My sell through rate will not change 18.8%
I don't know 32.9%
Do you plan to make any changes to your business due to fee and/or policy changes announced by eBay on January 26, 2010? (Please check all that apply.)
I won't make any changes 14.4%
I will list more items on eBay 12.5%
I will list fewer items on eBay 44.2%
I will open an eBay Store 4.2%
I will close my eBay Store 16.6%
I will upgrade my eBay Store 17.4%
I will downgrade my eBay Store 2.2%
I will stop selling on eBay 15.0%
Is eBay's new pricing structure easier to understand?
Easier to understand 11.3%
Harder to understand 48.7%
About the same 40.0%

What Actions Sellers Will Take
The survey asked sellers, "Do you plan to make any changes to your business due to fee and/or policy changes announced by eBay on January 26, 2010?" The overall results of this question are posted above; we decided to also break down this answer by type of eBay Store they have, if any.

Do you plan to make any changes to your business due to fee and/or policy changes announced by eBay on January 26, 2010?
(Please check all that apply.)

  I have an Anchor eBay Store (0.7%) I have a Premium eBay Store (11.4%) I have a Basic eBay Store (51.3%) I do not currently have an eBay Store (36.6%)
I won't make any changes 20.0% 25.3% 7.9% 21.2%
I will list more items on eBay 40.0% 36.8% 11.3% 6.5%
I will list fewer items on eBay 20.0% 28.7% 43.3% 50.5%
I will open an eBay Store 0.0% 1.1% 0.9% 10.2%
I will close my eBay Store 0.0% 3.4% 30.5% N/A
I will upgrade my eBay Store 0.0% 19.5% 28.7% N/A
I will downgrade my eBay Store 0.0% 2.3% 2.9% N/A
I will stop selling on eBay 20.0% 5.7% 12.0% 22.2%

Note that currently, eBay charges different Insertion fees and Final Value fees for Store Inventory Format, and also charges sellers a monthly subscription fee to have a Store ($299.95/month for an Anchor Store; $49.95/month for a Premium Store; and $15.95/month for a Basic Store), which entitles them to various features, such as email marketing. The Store subscription fees are not changing, but the Insertion and Final Value fees will change, depending on the level of Store subscription.

It's interesting to note that 40% of Anchor Stores (which made up less than 1% of all respondents) said they intended to list more, and 36.8% of Premium Stores said they would list more, but only 11.3% of Basic Stores and 6.5% of non-Store owners said they would list more on eBay as a result of the changes.

Survey Results - Tell Us What You'd Like to See
In tomorrow's issue of AuctionBytes Newsflash, we break down the results by Top Rated Sellers, GMV and category. We know there are lots of ways to slice and dice the data, so let us know on the AuctionBytes Blog what you'd like to see, and we'll post more data there as well.

Comments: What Sellers Had to Say about Changes to their Business
We allowed respondents to leave a comment for the question, "Do you plan to make any changes to your business due to fee and/or policy changes announced by eBay on January 26, 2010." Here is a sampling of the comments left:

As a REDOL/consignment seller, we may have to adjust our fee structure for our sellers.

Parts compatibility will be a huge boost to my business.

I Don't Know What To Do Yet-Very depressed over it all.

I will keep my basic store and stop using all the fixed price listings I do to draw in business. This is where I will save a lot of money.

I will start work on opening an independent e-store.

I will decrease my sales and find other ways and places to sell than on eBay.

I will increase my "Handling Charge" to pass increase on to buyers.

Not sure. Want to see the changes in effect before a decision is made.

I will take advantage of the 100 free auctions to use as a marketing tool to drive business to my private website.

I just upgraded my eBay store from Basic to Premium.I will give it a couple month if I my sales don't pick up I will close my store and quit eBay. I am a 11 year seller on eBay.

I'll be changing my product line.

Don't understand the changes yet.

I will charge more.

Will continue to grow my off ebay business. I don't trust ebay to invest in growing there.

I will only list low end items after March, nothing over $50.00.

I will open a second account to take advantage of the non store seller cap on auciton FVF as many of the items I sell are north of $2k, this will save me significantly and more than offset the increase to a premium store.

Explore other options for ecommerce including other selling on other sites and opening my own ecommerce store and website.

I may have to increase the dollar amounts of my opening bids to cover the increase in Final Value Fees.

I will probably list fewer auction style listings and more fixed price listings due to the fixed price insertion fee being lower than auction insertion fees, and fixed price listings will be searchable in the core search. I may also list more items starting at 99 cents.

Comments: What Sellers Had to Say Overall
We also offered sellers the opportunity to leave a general comment at the end of the survey. A sampling follows.

My biggest concern is for all the free auctions under a dollar. I am afraid it will bring in a lot of junk and flood the market over those of us who sell quality items.

The more or less expensive question is deceptive since I will pay slightly more - but get core exposure. I pay extra for core exposure now - and everything else goes into store inventory. On 3/30 everything will be in core - which means it's a value proposition. I pay a little more, but get a lot more for my money. Which is more expensive - $50 with almost everything hidden in stores, or $60 with everything in core? I can buy a hamburger for $3, or a sirloin steak for $4 - which is the better deal?

I think they did a fairly decent job of communicating the changes to the sellers - it just wasn't what a lot of sellers wanted to hear...so this resulted in a huge backlash from the sellers negatively affected by this fee change. Right now, I'm a low-volume seller and I still like Ebay - that's not to say I agree with everything they've done, BUT no other site has traffic and exposure that it does. One of the first things I learned as a seller on Ebay was...you either learn to adjust or you die. You learn to take the changes and adjust your business to them...or you quit and move on. It will never be the same as it was in the "good old days". Those days are long past and sellers need to focus on the here and now and plan accordingly. Sure, Ebay's fee structure benefits them...just like a seller is going to model (hopefully) their business around what brings them in the most revenue. After all, what seller ISN'T in it to make money? It's not personal, it's just business. Good luck to everyone! :)

If sales increase with items in core, I don't mind paying more basic fees.

Fees may go up a little but should be offset to the positive with everything being in core

I anticipate moving my store items to core will have a positive impact, but only to a very small degree. Probably not enough to offset the fee increase.

ebay is definitely looking to get rid of hobby & small sellers. ebay is walking away from it's roots. It's not the ebay I have enjoyed for 10 yrs, even with some of the past changes. ebay isn't ebay anymore.

I like the changes as they will lower my costs somewhat and increase visibility of many of my 2,700+ store listings. However, as usual, eBay did a terrible job in announcing the changes with misleading headlines and a definite lack of candor.

Outraged that ebay try to spin this as a fee decrease, when in fact this will be a major increase for 90% of sellers.

Comment on the AuctionBytes Blog


About the author:

Ina and David Steiner are publishers of EcommerceBytes.com and have been writing about ecommerce since 1999.


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