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!
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.