Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sun Aug 22 2021 10:05:35

eBay and Amazon Raise Seller Fees through Advertising

By: Ina Steiner

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The following news headline caught my eye this weekend: "For Amazon and eBay, Advertising Is Another Way to Raise Fees on Sellers."

The author left out Etsy, which is being more brazen about it, since it doesn't give many sellers a choice about paying ad fees. We suspect eBay may join it in charging sellers mandatory advertising fees, given the launch of eBay Offsite Ads.

The column appeared Saturday in the Motley Fool, whose focus is on investors. So obviously its readers aren't so concerned about how sellers pay marketplaces, as long as the companies grow revenue.

But the author had a warning - "Shopify may become more attractive" to sellers given rising fees on online marketplaces. 

The competitive advantage of sites like eBay and Etsy is the low barrier of entry, while platforms like Shopify requires more commitment and investment on the part of sellers - and they don't necessarily bring traffic to an individual seller's listings the way online marketplaces do, leaving it up to the seller to drive sales.

Small sellers who don't have the skills or desire to set up shop on ecommerce platforms like Shopify or BigCommerce do have some options, however - Mercari, Poshmark, Facebook Marketplace, and niche sites.

While it's not an apples-to-apples comparison, marketplaces may want to look at Google Shopping. It went from free listings to pay-to-play, and now it's back to free, giving merchants the choice of whether to advertise or not.

The lesson Google may have learned: shoppers care about relevancy. It's something eBay learned in 2010, but in its hunger for fees as growth slowed, may have forgotten.

In 2010, eBay eliminated its Featured First advertising program that had allowed Top Rated sellers to pay for top placement in search results. The reason eBay provided at the time: "so that the listings most relevant to a buyer's search from sellers who provide great value and service are surfaced consistently at the top of search results-the underlying goal of Best Match."

In other words, shoppers weren't always finding what they were looking for because ads crowded out the relevant listings.

A few months later, eBay also discontinued its AdCommerce pay-per-click advertising program.

The bottom line as far as sellers are concerned: online marketplaces should provide exposure to listings of sellers who pay listing and commission fees; paying advertising fees should be optional; and ads should not negatively impact relevancy of search results.

So how much of a burden is advertising costs on eBay, Amazon, and Etsy? If you don't pay up, is there a loss in exposure of your listings that leads to fewer sales? And what are the alternatives?

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