eBay made a number of announcements on Tuesday affecting sellers, including a new, controversial fee structure that makes it more expensive for some sellers and less expensive for others. And while eBay's fee changes and new shopping cart generated most of the attention, there are additional changes that will affect sellers, including an escrow-style policy for sellers who dip to a "Below Standard" performance rating that could result in major cash-flow issues for those affected.
eBay's New Fee Structure
The two biggest changes to fees are the 50 free auction listings (non-Store subscribers only), and the new policy to charge "Final Value Fees" (FVFs) for the total amount of the transaction, including shipping, along with the lowering Final Value Fees. Currently the FVF applies only to the selling price.
eBay had made a promise to sellers it would give them at least 60 days notice of major changes; however, it gave auction sellers only 5 weeks before new fees take effect (4 weeks from Tuesday). Other fee changes for fixed-price and Store sellers take effect on July 6.
eBay is also eliminating the current 5% discount for PowerSellers who are not Top-rated as of June 1st, which is, in effect, a fee increase for those affected by the change.
The Fine Print: eBay will charge FVF on the selling price, the first domestic shipping service, and handling. So, for example, if you charge $3 for domestic First Class Mail and your buyer wants you to ship the item expedited overseas, eBay will charge you FVF on the $3 domestic shipping, even if the buyer pays more than that - see this clarification from eBay.
What it means for sellers: Sellers who currently offer free shipping will save money on eBay fees. Sellers who currently charge shipping & handling will in many cases pay more in eBay fees.
eBay wants sellers to build S&H into the price of their items and offer free shipping: sellers would be paying the same Final Value Fees whether they charge $15 with free shipping or $11 plus $4 S&H. However, eBay is telling sellers that offering free shipping in the fixed-price format will give them a boost in Best Match search results and will help their DSR scores.
However, Auction sellers who start the bidding at a low price will be hard pressed to offer free shipping, since they risk losing money if the bidding doesn't rise above the value of their shipping costs; they are likely to pay more in eBay fees. Also see this companion article for more information on the impact of fee changes to auction sellers, "eBay Fee Changes Hit Auction Sellers Hard."
Link to eBay fee announcement
Escrow Payment-Holds (Beware Cash-Flow Issues)
eBay will begin holding payments from buyers for sellers with a limited selling history or for those with a Below Standard performance rating until eBay receives confirmation of delivery.
Funds will be available 3 days after eBay receives confirmation of delivery when the seller uploads tracking information, or 7 days after the seller's latest estimated delivery date if they don't upload tracking but mark the item as shipped. If no shipping information is provided to eBay, funds will be available 21 days after the buyer pays.
Those affected by the new Payment Holds policy will see buyer payments as pending in their PayPal account. Sellers who print shipping labels on eBay or PayPal will have funds made available for the cost of shipping. The update will start to be applied to all affected sellers between June and July.
What it means for sellers: If there's any chance your seller standards performance rating could slip into the "Below Standard" level, check your finances. This could cause major cash-flow problems, since you will have to wait up to 3 weeks for payment, and could dig you into a hole that would be difficult to escape if you don't have funds to pay your suppliers.
Link to eBay payment-holds announcement
eBay is introducing a new shopping cart that will initially support PayPal only. Fixed Price items added to a buyer's cart but not paid for remain available for other buyers to purchase, and listings stays active until payment is sent.
The Fine Print: Some sellers are concerned that once a buyer places a fixed-price item in their shopping cart, the item will no longer be available for sale to other buyers, leading to an increase in unpaid items. However, eBay's FAQ states, "Buyers will no longer be able to commit to purchase your Fixed Price listings without paying for them first. Fixed Price items added to a buyer's cart but not paid for remain available for other buyers to purchase - your listing stays active until payment is sent." You can try the shopping cart yourself, learn more on this page.
What it means for sellers: Sellers should specify combined shipping rules in My eBay and not just in the item description text. eBay says properly specified combined shipping discounts will be prominently displayed in the eBay Shopping Cart.
Link to eBay Shopping Cart announcement
International Shipping and New Global Standards
Starting in June, sellers will have the option to specify more international shipping carriers and costs in their listings. In August, sellers will be required to specify international shipping details on items offered to buyers in Australia, Canada and the UK.
Note: Sellers must continue to add the International Site Visibility option to get their listings surfaced in the main search results in the UK. (See the FAQ, "I make my items available to Australia, Canada, and the UK now. How will my visibility change?" to learn more.)
Link to International Shipping announcement and FAQs
Today, U.S. sellers are required to meet minimum seller standards when selling in the U.S., UK and Germany. Starting May 20, sellers will be required to meet new minimum Global Standards to sell into other countries besides these three, otherwise their listings will be demoted in search on those sites.
Later this year, U.S. sellers will be able to reach eBay Top-rated seller status based on their Global performance rating in four new countries: Canada, Australia, France and Italy. Note that U.S. sellers' performance rating and rewards will continue to be based on transactions with U.S. buyers only; DSRs from international customers will not impact U.S. seller status.
Link to new Global Standards announcement
New Requirements in Clothing, Electronics and Motors P&A Categories
Starting May 9, 2011, all new and revised listings in Clothing, Shoes & Accessories categories must include the following item specifics: Brand, Style, Color, Size Type and Size. When searching for items, buyers will see color swatches and not just text describing the color of an item.
What it means for sellers: Sellers will have to specify "Color" (the primary color bucket) and "Exact Color" (within the "Color" bucket, "Exact Color" offers expanded gradients of colors and allows sellers to provide their own specific color or designer color). In addition, a Size Chart and Handbag Measurement Guide will be available in the listing flow in April.
Link to eBay Clothing Shoes and Accessories category announcement
eBay is also making changes to the Electronics category, including requirements around Item Specifics and Catalog, and to the eBay Motors Parts & Accessories category.
Link to eBay Electronics category announcement
Link to eBay Motors Parts & Accessories category announcement
Link to updates that impact eBay Motors
Link to Category & Item Specifics updates announcement
End of Third-Party Checkout
eBay will end end support for third-party checkout on June 30th. If you use third-party inventory management services (Auctiva, ChannelAdvisor, Infopia, Kyozou, ProStores or Vendio), make sure they migrate your listings to eBay Checkout on your behalf.
Link to Third Party Checkout announcement
eBay Changes in UK and Australia
eBay UK also announced changes last week impacting sellers, including flat final value fees.
This means sellers will get hit with a flat rate of 12% in the CS&A category, up from a tiered pricing schedule that began at 8.75% and decreased to 1.5% as the selling price increased. See, eBay UK Hikes Fees for Clothing Sellers in Spring Seller Release.
And see eBay Australia's Spring Update on this page.
eBay Spring Seller Update overview page
eBay Seller Checklist
Doing the Math on eBay 2011 Fee Changes
eBay Fee Changes Hit Auction Sellers Hard
Seller reaction on the AuctionBytes Blog (close to 300 comments already).
AuctionBytes coverage of Town Hall Meeting
AuctionBytes Interview with eBay Vice President of Selling Experiences Todd Lutwak - Article: Executive Says New eBay Fees Help Align Seller Incentives
And Podcast interview: eBays Todd Lutwak Addresses Fees Changes in Spring Update (click "listen" and wait for podcast to load)
"An eBay Seller's Call for Change in Strategy" - Link to letter to the Editor
What do you think? Let us know!
Let us know what you think of eBay's Spring 2011 Seller Update announcement, please comment on the AuctionBytes Blog.