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Ruby Lane Fees: Good News and Bad News

Ruby Lane Fees: Good News and Bad News

Ruby Lane has some good news and some bad news about surprise fees that it had announced last month. Ultimately, however: sellers will end up paying more fees.

Ruby Lane had announced in November it would impose a new service fee of 2.95% charged to buyers at the time of purchase. It said the buyer service fee would help it offset some of the cost of collecting, reporting, managing and remitting sales tax in the 37 states where required.

The high-end antiques and vintage shopping site acknowledged the concept of charging buyers a service fee for marketplaces was relatively new but noted it was common practice in the auction world (Buyer Premiums).

The new buyer fee went into effect on November 14, and sellers feared it would scare away shoppers and thereby result in fewer sales. Today, Ruby Lane said it was eliminating the Buyer Service Fee beginning January 1, 2020.

However, sellers will end up absorbing the fees. Ruby Lane will institute a Seller Service Fee of 3.75% on January 1st, as previously announced. However, on February 1st, that new fee will rise to 6.7%.

The company said that was the selected option in a survey it had taken of shop owners following the fee announcement. “The majority (60%) of shop owners selected absorbing the Buyer Service Fee themselves rather than charge a Buyer Service Fee,” Ruby Lane said today. “For the other options, 35% selected no change, and 5% selected a 1% Buyer Service Fee.”

Ruby Lane blamed much of the necessity of instituting new service fees on the burden of collecting, reporting, and remitting sales tax to states, and it said the fees were also necessary to help the site evolve and meet current regulations.

The collection, reporting and remitting of Sales Tax to more than 37 states, and counting, is a very laborious, difficult and expensive process. “Essentially, in order to keep the site operational and thriving, it was necessary to increase fees,” it told sellers.

Ruby Lane spokesperson Palmer Pekarek told EcommerceBytes the cost of compliance was burdensome, and noted that some states were easier to work with than others. The company had to hire more people as well as a third-party aggregator to make changes to its infrastructure in order to implement sales tax collection.

In addition, Pekarek said Ruby Lane needs to fund its robust marketing efforts in order to remain viable, given how much rivals eBay and Etsy spend on marketing.

Ruby Lane sent the following notice to sellers today, December 30, 2019:

Dear Shop Owner,
The entire Ruby Lane Team hopes you are enjoying the magic of the holidays and spending time with family.

As you may know, in an effort to determine the best path forward for all our shops, recently we asked shop owners to take a moment to answer one survey question related to the new Buyer Service Fee and pending Seller Service Fee.

As expected, more shop owners participated in this survey than any other survey in our 22 year history. The majority (60%) of shop owners selected absorbing the Buyer Service Fee themselves rather than charge a Buyer Service Fee. For the other options, 35% selected no change, and 5% selected a 1% Buyer Service Fee.

We have received more than a thousand comments from both buyers and sellers regarding the Buyer Service Fee and Seller Service Fees over the last 45 days. We have taken these comments to heart, reviewed the survey results and site sales, and determined that folding the Buyer Service Fee into the Seller Service Fee allows shop owners to manage their business more effectively.

So, beginning on January 1, 2020 the Buyer Service Fee is going to be eliminated, and as previously announced the Seller Service Fee of 3.75% takes effect.

Then starting February 1, 2020 the 3.75% Seller Service Fee is changing to 6.7%, the option most selected from the survey.

Please remember, Ruby Lane, and all sites similar to us, have been required by law to collect and remit Sales Tax on your behalf in all states where you ship items and we are required by law to handle the Sales Tax. Answers to many questions about this new requirement and the changes that have been made to date can be found in the Extra Extra section of Shop Owner Forums found on your Shop Owners’ Home page.

The collection, reporting and remitting of Sales Tax to more than 37 states, and counting, is a very laborious, difficult and expensive process.

Additionally, the increase is to help the site evolve, meet current regulations for us and our buyers and sellers, and to remain a viable player in the marketplace we have all grown to love. Essentially, in order to keep the site operational and thriving, it was necessary to increase fees.

We are working feverishly with PayPal and other providers to find alternative solutions to stave off future increases for our shop owners. We would like to think, as your partner for more than two decades, you know we would only raise costs if absolutely necessary, and by lowest possible amount.

We recognize that this is a busy time of year, and hope that our partnership with all shops continues to evolve and flourish for many years to come.

We wish you all a happy New Year, and look forward to a healthy and happy 2020!

Thank you,
Your Ruby Lane Team

You can find more information about selling fees on this page.

Ruby Lane also published some fee comparisons with other marketplaces; as of this writing, they include the Seller Service fee of 3.75% and will be updated at a later date to factor in the change to 6.7% as of February 1, 2020.

Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
Ina Steiner
Ina Steiner
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). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.

12 thoughts on “Ruby Lane Fees: Good News and Bad News”

  1. Rubylane has already lost some of its customer base. Marketing statistics show once you lose market share it is difficult to win back. They shot themselves in the foot. The survey should have been sent to shop owners BEFORE they implemented such a controversial policy. The surreptitious manner in which they hid the fee to buyers is appalling. They deserve to loose shops and buyers for their unethical business practices. Huge drop in sales has caused them to do a major back-pedal on this one. It may be too late to win back customer confidence. Plus, many Rubylane shops also sell on other venues. Customers can buy desired item on competitor site from same seller. Etsy and Ebay should see a nice boost in sales thanks to bad management decisions at Rubylane.

    1. Indeed, a survey about what problems the horse was having, done after they had already opened the door and let the horse out, was a bad idea, and it’s not the first time that “hindsight” proved a lot better than what action was taken. The amazing (60 – SIXTY %) reaction by shops had to have really made a huge impact.

      @ Internet Sails, I don’t know what “inside connection” you have to say that a “huge drop in sales” is what caused the major back-pedal (maybe you omitted a word?); I would suggest that rather, it was Shop Owners fearful of and anticipating a potential huge drop in sales, expressing themselves through the survey, that caused the change of plans.

      As a shop owner I surely would prefer to be able to personally manage any adjustments to deal with this increase in operating costs. Sticking customers with a brand new fee is out of my control. I was envisioning canceled sales because a shopper would notice a small “fee” and no matter how small – how INSULTING, and the straw that broke the camel’s back, so they cancel the order and don’t buy.

      I am also amazed at how people who pay $100s for an item will balk at spending an additional $5.00 for proven safer shipping methods.) It isn’t necessarily the amount, it’s apparently the “Thought” that counts.

  2. So let me get this correctly…..The buyer’s PAID 2.95% for a Service Fee – and NOW Seller’s will be paying an increase of the SAME service fee to 3.75% – wow – Tech must have gotten a Fat Raise this year! And then February 1, 2020 the 3.75% Seller Service Fee is Increasing to 6.7% !!!!! WOW……..Thank goodness I opted to rent a store space in an antique mall a couple years back – No Returns, The mall takes care of the customer, no shipping, no shipping supply cost, 6.7% for a Service fee, don’t deal with listings, no photos to take…..and this year was fantastic at the mall – my prices are realistic and reasonable – way cheaper then on-line these days (with and without additional shipping costs) – Guess consumerism be cycling back into the “experience” of buying at brick and mortar shops once again for antique with the “thrill of the hunt” – Ruby Lane RIP in the coming years – antiques will be soooo high priced for any new generation to invest in when their climbing debts keep growing – too bad – it was once a wonderful place to shop too.

  3. It’s a shame Rubylane is having to offset the cost of dealing with sales tax. It’s something we all have to deal with and the current state of affairs is an utter mess.

    I honestly think it was a mistake for them to shut down Ruby Plaza, especially considering they made the decision at a time when things were just starting to pick up. I know Rubylane shop owners had a problem with it because they felt like they were having to compete.

    It was ridiculous if you ask me because we all have to compete online. Being a niche site is not easy and it made sense for them to broaden their horizons. Now they’re having to offset the cost of dealing with sales tax and they have to deal with a bunch of demanding sellers.

    So, what do they do? They charge customers instead of sellers in the hopes of avoiding backlash, but Rubylane sellers are going to have a problem with any changes they make whether or not it costs them money. God forbid they try and stay afloat by trying to branch outside of their niche or offset the cost of doing business.

    Now, they’re trying their best not to upset their demanding sellers in the process, but they should have expected that it would upset them no matter what they did. It’s difficult to make any management decisions when your customer base is so demanding and possessive of their site.

    1. Ruby Lane is one of the few sites I have heard that, as one other poster said here, ACTUALLY LISTENS to its subscribing shops. Unfortunately, it is way sad that the impending changes could not have been announced to sellers earlier, and the infamous survey done earlier, before they went ahead and implemented the buyer fee/shop fee that they did, and are now making major changes to.

      But I would not call Shop Owners “demanding.” I think it’s more like a shell shock reaction, expressing disappointment, that decisions about how to confront difficult increased charges weren’t better shared with them. RL in some past situations has come across as not having the best forward-thinking business management expertise but have always polled participants and have been willing to make changes. Being open to shop owners’ ideas is extremely appreciated.

      So they back-pedaled on a buyer fee that as it turned out, seemed poorly thought out (Compare it to an AUCTION buyer premium?? Honestly???) and 6 out of 10 shop owners apparently felt they would have more control over sales by tweaking their prices instead of scaring away shoppers with a FEE.

      I think also part of the problem, and maybe people here don’t realize, RL does not have anything to do with collecting payments. They leave shop owners on their own to run their own businesses. They got caught in the net of “Marketplace Facilitator” because they are a “Matchmaker” service putting customers together with a Shop’s payment option. Both Etsy and eBay (increasingly as it folds in more states) are collecting payments directly, and then “pay” the seller.

      These poor people who don’t understand all this extra tech and attention actually costs … we should all boycott Wayfair …. There is NO such thing as a FREE LUNCH … but then American history is being so sanitized kids today have no clue who Franklin Delano Roosevelt was, either.

  4. I love selling on Ruby Lane, and until now I found the fees they charged competitive. But I find several things that are mentioned in this news article that Ruby Lane has said or done troubling.

    1) They started charging sellers a commission of 3.75% effective 1/1/20. Yet in the price comparisons, although they list it as 3.75%, all the math is done using 3.5%. I also looked up the FAQ on seller fees, and they erroneously list it as 3.5% there, too. I had several sales today, and they ARE charging 3.75%. Making this error on a topic that is already a sore spot for sellers is careless and sloppy.

    2) In the Fee Comparison scenarios, why are they calling the fee they charge a “Service Fee” and calling it a “Commission” on the other venues? Just plain weird. It’s a commission. Call it a commission.

    3) The scenarios they outline are completely skewed because the monthly fee they charge is based on the number of items listed in a shop at the beginning of each month, and the number (50) that they’ve chosen to use is excessively low. Ruby Lane always charged sellers based on a base fee plus a per item fee instead of charging a commission. When they started charging a commission, they reduced the base fee by less than $10 a month, so we’re basically paying just as much as we did in the past, plus commission on top of that. As of a few minutes ago, Ruby Lane had approximately 1,850 shops offering a combined total of 580,000 items. That’s an average of 313 items per shop. (Some offer thousands, some offer less than 50, but for the sake of a comparison, basing the monthly fees used in the comparisons on the average would be more honest.) The monthly fee for having 300 items in a shop would be $114, not $54. Plus, in the fee comparison chart they do not acknowledge that the 3.75% commission will be in effect for one short month, and then will jump to 6.7%. Not using the higher commission rate in their scenarios from the start is disingenuous. Correcting for those things will show RL to be far more expensive than Etsy, and perhaps on par with eBay, who both have exponentially more traffic.

    4) Sales tax compliance: “Ruby Lane spokesperson Palmer Pekarek told EcommerceBytes the cost of compliance was burdensome, and noted that some states were easier to work with than others. The company had to hire more people as well as a third-party aggregator to make changes to its infrastructure in order to implement sales tax collection.” Ruby Lane hired Avalara to coordinate the sales tax collection and remittance on an ongoing basis. According to Avalara’s website, they charge $54 for each return they file plus a tiny per transaction fee (13 cents for small sellers, so probably lower for a site like Ruby Lane). If they are filing monthly returns for 37 states at $54 per return, that’s $24,000 per year plus the per transaction fee. All of this is highly automated. I’m sure RL had some initial one-time start-up costs to implement, but with a sophisticated 3rd party like Avalara taking care of complex tax changes and keeping ever-changing tax rates up-to-date it’s irrelevant that some states are harder to work with than others, and if Ruby Lane had to hire anyone at all to deal with this change I’d be puzzled. Existing staff deal with these kinds of changes every year. As one issue is dealt with it drops off their workload, and a new issue takes its place. If Ruby Lane hired more staff, sales tax is most likely only a small part of it.

    In closing, all I can say is that for me Ruby Lane has been head and shoulders above Etsy and eBay as a platform to sell vintage and antique items, except it does not have the same traffic. I’ll stick with it for at least a year without changing much about the way I do things. If their fee increases allow them to accomplish what they plan to then the increased traffic should see sales rise across the board which will allow me to absorb the increases. If not, I’ll be searching for another selling venue… or two, or three.

  5. Ruby Lane is the only site which appears in any way to LISTEN to what their sellers want. Sellers have voted to absorb the costs themselves by utilising whatever mechanism they may choose. Some will absorb the increase, some will raise prices, some may move out or increase their exposure on other sites. Complying with the demands of greedy and rapacious tax collectors is not easy. However it is a legitimate cost of doing business, as is advertising. So I have yet to hear a realistic reason why these costs cannot, at least in part, be offset against tax liabilities.

    When I pay more for a service – be it listing fees, Paypal, shipping or whatever – I offset the increased cost of those services against my tax liabilities. Therefore I pay less into the greedy and grubby hands of the tax man.

  6. 6.7% thought all at once…..I cant just raise prices……well, you can and lose sales(ive been dropping them on my older merch and it has been very tough catching up to the current market)…..that is the nature of the business right now. So I am dropping prices get to increase costs yet again. I got on Ruby Lane as an alternative to (fee)eBay since my cost to sales wuch less and they didnt have a commission…..now costs have quintupled(and obviously going up)…..sales have dropped, while they also add a substantial commission fee? RL used to have a pricing advantage. Not anymore. I know less expensive items will move faster elsewhere although I used to sell better items on RL……not as much lately. I think it is time to look at alternatives again since the ground keeps shifting. I also noticed that RL has lost a few more than 100 sellers over the last 6 to 7 weeks….this is not a small number out of nearly 1886 shops(about Nov14th). There was a time when RL had 2500 shops. I count 1754 as of this a.m.? That tells me everything I need to know. Tough all around. The silly perception of buyers that think they arent paying for these costs(and have a fit over a 3% fee when a larger majority want to pay with paypal or credit card)….I always thought the illusion of costs that are true costs that are on the buyer should be shown and born by them. The same people that freak out about the 2.95% service fee are the first ones wanting to pay with a credit card……I would love to say this baffles me, but some folks honestly dont know that using a credit card costs someone money……them ultimately, but it costs those that pay by cash too, this is the sad truth. Im amazed when I explain this to some folks and they either dont know or play possum. Really…..its all smoke and mirrors these days. I like that RL tried….but somehow we would lose the not so real customers that freak out over 2.95%. It was how it was rolled out….if they started charging the tax……..then the service fee….then the shop fee and extra fee……it wouldnt have been such a freak out session. Im miffed…..its going to cost all of us…..now I get to pull some merch off ruby lane and look for another outlet…..bye bye RL exclusive…..for well over a decade too. I loved how they acted like they were being all upfront about this…….when they dropped that bomb back in NOV. They could have at least warned us a few months before that…….but that was intentional as they knew it would cost them shops. Ive watched inventory come down too from over 600K to 580K….hopefully the bleeding is over. Maybe they will bring in more traffic/buyers…….we shall see.

  7. Well, RL has lost about 90 sellers in 6 weeks…..out of 1845 or so as of Nov 14th. I think that speaks volumes. They could have at least given a heads up, say a few months before they did this? Would have created a better impression. Also, if I lose customers over a 2.95% fee…..those are not my customers. The folks who have a fit over this, are the first ones to use paypal or a credit card…..sorry. RL could have slow rolled these fees too…..instead of the bomb. I cant just raise prices 7%….and get them……not in this market. That is 7% coming off my bottom line. I used to have a very low cost to sales ratio…..its quintupled and that is without another 6.7% fee. So….now we collect sales tax and our costs go up at least 6.7%…..not quite as enticing. I will do as others probably will…..look at other avenues after over a decade as a ruby lane exclusive seller.

  8. I’m old enough to remember when the auction houses started charging buyers an additional fee (oh, excuse me, it’s a “Premium” – isn’t that more elegant?). The excuse was that this allowed them to reduce commissions charged sellers and lead to more merchandise coming to market. So what excuse did RL offer to customers?

    Sales of antiques are so fickle that it is hard to say what the cause is for going up or down from the seller end, but surely RL knows how many purchase orders were backed out when someone saw the fee. My guess is that is what scared them off of this. RL does not offer any robust communication channel (such as a public user forum), and like to keep themselves out of the fray. I have my doubts as to the truth of any survey result – I suspect they saw actual sales take a dive.

    Unless you have a good marketing niche or merchandise specialty, it is not as easy as most think to “just have your own web site”. Like it or not, these big sites do drive traffic, and I am willing to pay for it, but will now have to pay closer attention to the expenses and see how much longer RL remains viable.

  9. @51st state-actually Ruby Lane themselves admitted in that email “we have reviewed the survey results and site sales” (and we now believe gouging the buyers is not the best course of action in other words). ergo sales tanked after buyers started getting caught with a 3% “buyers premium”. I very much resent RL telling us that taking 6.75% of the GROSS revenue of the site is somehow the bare minimum they need to cover this sales tax collection. If they are paying what a poster indicated above to the firm Altavara-$54 per filing per state that only amounts to $2000 every quarter. In the Red Tag sale alone according to Ruby lane $1,200,000 worth of merchandise sold. JUST at the 3% they charged the buyers that’s a net gain of $36,000 for Ruby lane over the course of the 3 day sale. Ruby Lane has been dying for an excuse to gouge us for a commission and they found it. It’s just a shame we can actually do math. Lets also not forget that the minimum shop fee is $54 for 50 items. The total listing cost for those items is $16.20. The OTHER $37.80 PER SHOP is for “maintenance” AND “advertising”. They already rake in $70,000 a MONTH (1850 shops times $37.80) for “advertising” so again-I don’t appreciate them trying to blow smoke up our skirts by saying that this 6.75% fee gouge is needed for “advertising”. The few lousy sponsored facebook ads and listings can’t be adding up anywhere NEAR $70,000 a month. Let’s call this what it is-an egregious and bald faced cash grab. My response? I’ve reduced the inventory in my Ruby Lane shop by 50% and opened an Etsy store. I’ve also moved things from my store over to Ebay-at least Ebay has a bigger customer base. I’ve sold over $6500 on those two venues in stuff that has been sitting around NOT selling on Ruby lane. My plan is to remove at least 50% of what I have left by Feb 1st. I haven’t decided whether to close my Ruby lane shop completely come Feb, the jury is still out on that. I DO know I will have reduced my inventory there from over 750 items to somewhere hopefully around 100. I shall more than likely only list doll related items there after Feb as RL does seem to have a good customer base for those things at least.

  10. Ruby Lane’s owner has sent a rant to all shop owners stating the fact that shop owners who make a practice of selling off site may be thrown off. Well excuse me but apart from exclusive sellers – who make an agreement not to sell elsewhere – other sellers have no contract to sell on Ruby Lane exclusively. Many of us sell on other marketplaces, our own websites, on social media and privately. Some of us are also based outside the USA and are well below the financial limit set by tax authorities for collecting tax. The fact that sellers who are on a marketplace (even if based outside the USA) get ripped off in this way just shows how greedy and corrupt these tax authorities are in finding new ways to fleece their citizens.

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