Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri Mar 3 2017 22:45:44

eBay Blames May 1st Fee Hike on Marketing Costs

By: Ina Steiner

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eBay is raising fees on May 1st, and in a bizarre twist, said it would use the revenue toward its marketing campaigns and to provide incentives to sellers to participate in its advertising program.

Also bizarre is the decision to increase costs for its best sellers - Store subscribers and Top Rated Sellers who offer buyer-friendly policies that qualify them for TRS Plus discounts. There are no fee changes for non-Store or "Above Average" sellers, though there is a hefty fee increase for sellers who fall "Below Average." (See details of the changes in Tuesday's EcommerceBytes Blog post.)

"So I guess the message is-average performance is to be rewarded. Excellence will be punished," wrote one reader. "Typical eBay mentality."

As sellers slammed eBay's decision to raise fees, the company began refining its message about the reason for doing so. The initial messaging was vague and implied the higher fees were at the request of sellers: 

"eBay Top Rated Sellers have told us they want more tools and options to grow their business. The changes we're making reflect our ongoing investment in helping them do just that and to ensure the best marketplace health and competition."

But as sellers (unsurprisingly) protested the higher fees, eBay said it planned to use the revenue to increase velocity and traffic in two ways:

- conducting more marketing to drive buyers to the site;

- and removing PLA ads that take shoppers off of the eBay site to sites like Norstrom, QVC, and Target.

Some sellers said eBay shouldn't need to raise their fees to fund its marketing campaigns, though many felt removing ads from search and listing pages that took sellers off of eBay was a positive development.

One reader, noting that fact that eBay's marketing tends to drive traffic to big brands, wrote "(eBay) is making small (eBay) businesses and hobby sellers pay for virtually all these marketing campaigns when it's the enterprise sellers who will benefit most."

Promoted Listings from eBay sellers will replace the PLA ads, and eBay threw Top Rated Sellers a bone, promising what amounts to a $10/month credit if they choose to advertise on its site. (Only Store subscribers and Top Rated Sellers will be able to buy Promoted Listing ads.)

The Spring Seller Update pages explain what's changing, but you'll have to watch the webcast eBay held the day after the announcement to hear how executives explained the reasons behind the fee changes.

Perhaps because of eBay's nebulous messaging about the impact of the Spring Seller Update on fees, none of the usual tech publications that cover eBay picked up on the fee increases.

But the higher cost of selling on eBay come May 1st is sticking in sellers' craws. As one seller said, "Let's see. They beg us to sign a petition to lower shipping fees..all the while raising their fees."




Comments (56) | Leave Comment | Permalink

Readers Comments

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This user has validated their user name. by: Ric

Fri Mar 3 23:50:53 2017

eBay can try to spin this unreasonable attack on their sellers any way they like.

The problem for them is that after years of dealing with this company, many sellers see through the spin and see it for what it is - a feeble attempt to justify unreasonable corporate decisions.

Sellers have been promised for years that the company was going to work on building traffic. The reality is those efforts have failed.  Sellers have no reason to expect this latest attempt will produce different results based on those past failures.

The reality is that were it not for annual shipping cost increases, and the number of sellers who raise prices because they include shipping in the selling price of their widgets, eBay's GMV growth would be in the low single digits or even zero.

The company hires over paid CEO's that do not have any experience in selling on the platform they dictate policy for.  Those CEO's hire other executives also with zero eBay experience and lavish them with inflated compensation packages in the hopes that one of them will come up with something that works.

To date, nothing has.

eBay's plan should be to significantly reduce the layers and layers of over paid - non productive executives who contribute nothing to improve seller success.

They should run the company like it was a start up.... a handful of experienced and talented executives wearing multiple hats. The resulting compensation savings would eliminate the need for fee increases, buyer incentive claw backs and seller incentive claw backs.

Instead, eBay is doing what it has always done.... shooting itself in the foot with their sellers and generating a new wave of bad will that will hurt the marketplace for years to come.

Let the seller exodus begin.

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This user has validated their user name. by: Marie

Sat Mar 4 02:59:45 2017

I don't see it this way ''(eBay) is making small (eBay) businesses and hobby sellers pay for virtually all these marketing campaigns when it's the enterprise sellers who will benefit most.''

These fee changes aren't going to affect the small and hobby sellers much at all.  The larger the seller the more it will affect them.  But casual and small sellers don't get a big TRS discount in the first place, so it just won't be a big impact for them.

I know some are saying that, but the math shows that is not the case.  But with that said, Ebay's handling of this and telling us we will the increases are so we can self fund what Ebay determines is the best way to market and grow the site.

The decision to make the top sellers pay for this and reduce the incentives to even be a TRS is more than puzzling.  Oh I could go on an on with this, but it gets boring after awhile.  I'm still trying to digest all this.

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by: Frank Abagnale This user has validated their user name.

Sat Mar 4 08:52:49 2017

Remember back in the early days when ebay actually had a tier structure in their commission rates on each sale? The first $50 was a certain percentage, then the next $50 was a lower percentage and the next $100 was even a lower percentage. Back then if you sold 1 item for $200, your commission on the sale was about $15. But ebay changed it to a flat rate for the entire amount to make it ''easier to calculate your commission''.

But I still laugh when people say that this is the last straw and they will look elsewhere to sell.

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by: maxmad This user has validated their user name.

Sat Mar 4 09:58:25 2017

way too funny,

really?  to pay for advertising ?

This increase will amount to probably billions in extra easy profit for ebay,

Easy money, with just a few clicks, change a couple of values, listen to some seller rants, make up some silly reason, then sit back and collect all the money, all is good


I can only hope it backfires on ebay, but ''as usual'' all will be back to normal, the desperate sellers will remain, a few will leave, and many new sellers will join.

The ebay circle of life, business as usual,
   

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by: Frank F This user has validated their user name.

Sat Mar 4 10:48:54 2017

Squeezing their customers at both ends... Remember at the first of the year they changed the ebay bucks from 2% to 1%, so that was a 50% reduction.. And the carrot was you could keep below $5 a qtr instead of it expiring LOL! Meanwhile, they killed the volume buyers who looked forward to the rebate and reward.. Typical ebay, ALWAYS shooting itself and ITS CUSTOMERS in the foot!

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This user has validated their user name. by: toolguy

Sat Mar 4 11:25:22 2017

eBay management are sissies!

Why don't they just come out and say they want more money so they are raising fees.

I'm going to raise my prices because I want more money, there!

I said it why can't eBay?

When they try to sugar coat a fee increase it just makes them look stupid because they think sellers are stupid. . .

The only stupid thing would be if I continue to jump thru eBay hoops.

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by: maxmad This user has validated their user name.

Sat Mar 4 12:54:11 2017

@toolguy

That's correct, it's super simple when ebay raises prices, we raise prices, eBay's customers (the buyers ) pay more to shop with ebay,

Want the best deal, up to 40% off, it's simple, buy it from our website, same great products, same great service, same seller, just way cheaper,

ebay fee increase will absolutely be great for our website sales this year, I wish they would raise the fee's today, even double them, I'm like a kid waiting for Christmas, it can't come fast enough.

sellers beware: we noticed some items on ebay on Friday, with no tracking numbers auto uploaded, we had to add them manually, ebay must be tampering with this ''again'' , to insure your TRS tracking percentage drops,  

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by: comments This user has validated their user name.

Sat Mar 4 13:04:09 2017

They can spin the increase anyway they want. But claiming taking 3rd party ads off the site will increase their revenue not cost money. Since they collect FVF and promoted listing fees they will increase revenue over 3rd party sale commission. What makes it worse is they have a nerve to justify a fee increase with a change they are making more money.

"Great news everyone we found a way to make more money from ads, but don't feel left out we are going to charge you more too!"

Absolutely and completely absurd. I hope the person who was responsible for writing that into the update has already received his walking papers.

Raise the fees if you must but stop with the "great news we are screwing you cause you asked us too" type updates. Don't act like you had us in mind.

Guaranteed first full quarterly report with the fee increase included with show flat growth and flat sales.

Clearly the need is not for money but for more sellers, offering more value, to draw more customers. This is the only way legitimate growth will be achieved.

BUYERS HAVE NO BRAND LOYALTY! THEY GO WHERE THE DEALS ARE! THE SECOND EBAY BECOMES THE BEST PLACE FOR DEALS THEY WILL STEAL BACK AMAZONS CUSTOMERS. Until then you will remain yesterdays news. It also wouldn't hurt to fix some glitches.

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This user has validated their user name. by: toolguy

Sat Mar 4 13:17:35 2017

I'm in need of bubble mailers & a new grow tent.

The place I buy bubble mailers on eBay wants $32, on their own website they want $42.

Same goes with the grow tent, I'm having a hard time finding it cheaper then on eBay.

But let's face it, I'll pay more NOT to buy it on eBay that's for sure!

Next stop Jet, Walmart or Sears. . .

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This user has validated their user name. by: bitbybit

Sat Mar 4 13:38:20 2017

@toolguy
Not sure if you have a Sam's Club warehouse but all size bubble envelopes are the best I have found both in price and quality. For a quantity of 25 6x9" for around $5. Other sizes a couple bucks more.

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This user has validated their user name. by: Rexford

Sat Mar 4 13:44:42 2017

I agree with Ric. I've seen promises made over and over in the last 10 years. Nothing ever comes of them except more fee hikes.

I was checking "completed listings" for various sellers' items and it is abysmal. Poor sales seem to be affecting everyone, and what does eBay do?  Increase fees.

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This user has validated their user name. by: Rexford

Sat Mar 4 13:46:07 2017

Oh, and I am guessing that eBay top management will continue to get their big fat bonuses every year.

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This user has validated their user name. by: eXtinctBay

Sat Mar 4 15:30:03 2017

Basically, the part that really stings about this big increase in fees is that eBay expects sellers to ''buy in'' to help their bottom line.

We will find out soon if the money is spent in the correct manner (for marketing), or just to fatten the wallets of upper & midlevel management.

If there are no results from this (a gain in sales that will replace the loss in income and then some), the gamble will not pay off. And this once successful company will become extinct.

Griff cried last year that a structured data catalog was ''make or break'' for eBay. This large infusion of revenue financed by TRS+ sellers must improve sales, and is the TRUE test to see if the site continues to exist.

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This user has validated their user name. by: iheartjacksparrow

Sat Mar 4 16:12:56 2017

maxmad writes: "This increase will amount to probably billions in extra easy profit for eBay."

Anyone who thinks those billions are only going to be spent on advertising is crazy.

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by: pace306 This user has validated their user name.

Sat Mar 4 16:33:47 2017

If sellers are supposed to fund these new ads, pray tell what does ebay do with all the money we give them?

They own no warehouses, no planes, no manufacturing plants, nothing besides dumb uncle griff and the idiot Hal Lawton - they don't even pay US cs workers!

EVERY single seller should be up in arms about the lie(s). Every seller update is just another RAPE of their seller base.

It seems that eBay brass has been watching too many episodes of the Sopranos... as they seem to copy every move the on tv criminals make.

All this does is help me move MORE inventory to Amazon. If I can be free of eBay by 2018 - it would be a real blessing.  

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This user has validated their user name. by: Marie

Sat Mar 4 17:17:53 2017

I find it very interesting that many of the same posters that for years have posted comments against TRS status are really upset by Ebay decreasing the discount.  Some have called it ''carrot jumping''.  Others have said thing intended to make those sellers that are TRS feel like they are doing something wrong to adhere to the rules for the discount.

Now some of those same posters are all up in arms about the reduction in the TRS discount.  Certainly it has a HUGE negative impact on many sellers.  The larger the seller the larger the problem.

I'm not pointing fingers at any particular poster.  It is just merely my observation.

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This user has validated their user name. by: Ming the Merciless

Sat Mar 4 18:12:43 2017

@Marie

I am a small TRS Plus seller. These changes will have an enormous impact on my bottom line so I believe your thesis is incorrect or overreaching.

The ONLY explanation that makes sense for ebafia's latest corporate excess is that they are actively trying to eliminate the Top Rated Seller Program period in order to improve their bottom line.

Of course, one of the effects ebafia won't like is that more sellers will eliminate 30 day returns and same day/one day 'free' shipping thereby decreasing the level of customer service and driving more buyers elsewhere (Amafia).

Perhaps ebafia also eants to equalize our customer service level with theirs.

Like I've said many times before, whenever a decision needs to be made, we can always count on ebafia to make the wrong one. I've also said for years like Ric stated today that ebafia MUST streamline its executive ranks and eliminate the incompetent bloat and use that saving to pay for ad campaigns!

Gawd, I loathe this corporation!!!!

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This user has validated their user name. by: Marie

Sat Mar 4 18:42:29 2017

@ming
Maybe yes, maybe no.  I suppose it rather boils down to your definition as to what constitutes a small seller.

BTW Nothing I've said here or elsewhere is in support of what they did.  And it remains true the larger the seller the bigger impact this has on that seller.

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This user has validated their user name. by: bitbybit

Sat Mar 4 19:35:58 2017

This all stems back to the Bain drain. These MBAs are schooled to have a cut and dice mentality. Maximize profits by taking as much as they can out of the business and give little to nothing back. It is even much worse today since none of these top execs are looking long term except when it comes to lining their own pockets.

You can tell the end is near by eBay stepping up their razzle dazzle ruse and becoming even more blatant and insulting.

Good News suckers, we mean, sellers! Not only are we reducing your 20% FVF discount to 10%, we are giving you Promoted Listings which, of course, you will have to pay for...if you want your items to have even a slight chance of being shown. Disclaimer: Even though you pay out the yhing yhang for your store AND pay for Promoted Listings, your items still may not be visible in search and/or promoted. Of course, we provide NO guarantee whatsoever your items will sell.  

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This user has validated their user name. by: toolguy

Sat Mar 4 22:51:27 2017

I'll still be selling on eBay I just need to make adjustments in the way I do business.

I once did all auctions and only accepted checks & money orders.

Right now I offer 1 day handling and free shipping.

That is changing with each new listing I write.

I now offer 2 day handling and no more free shipping, also went back to 14 day returns (like that matters).

I also adjusted my prices for the loss of the 20% discount on FVF fees.

I'm still hearing that "chi ching" even without the TRS badge. . .

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