The New eBay Fixed Price Fees are only Temporary

Posted on September 11, 2008. Filed under: eBay | Tags: , , , , |

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Yesterday, I wrote about what I thought was a typo on the eBay website (see Small Typo Creates Big Problems for eBay) but after I published the post I received a voicemail message from an eBay Top Seller Account rep who informed me that the website was not in error.  I phoned the Rep this morning and had a rather lengthy conversation with her.  From that conversation I have several things to report but I’ll have to do so over time, in between working to pay the bills and making sure the family is taken care of.

Today, I want to make sure to correct what I wrote yesterday.  The eBay website is NOT in error.  The fixed price insertion fee of 35 cents is only good through the end of the year, or more likely good through the end of January 2009 as the Top Seller Account rep said.  From my conversation, I learned several new pieces of information as well as got confirmation for some things I did already know.

1. It is eBay’s intent, with the new fixed price fee structure, to motivate sellers to take their store inventory and move it out to fixed price where the items will receive greater exposure.

2. eBay is not sure how sellers will react to the change in fees and, therefore, eBay will evaluate the results of this “test phase” and could possibly make changes to the fee structure again early 2009.  That means that eBay could lower fixed price insertion fees or raise the final value fees of store items as examples of things that could be done to further motivate sellers to move inventory from stores listings to fixed price listings.

3. eBay could possibly make two different fee structure changes next year, as they did this year, as part of a comprehensive plan to motivate sellers to do what eBay needs or wants sellers to do.  So, whatever we learn at the end of January 2009 may only be one part of the fee structure change for the 2009 year.

As part of the conversation with the Top Seller Account Manager, she pulled up one of my accounts and we discussed the impact of the fee change.  In the beginning, she tried to convince me that the fee change was an improvement for my business.  However, I convinced her otherwise after we talked.  First, I let her know that the product mix and listing strategy I am employing now is not the same one I will be using for the future – that I am liquidating product and am changing my business structure and product mix to support more of a multi-channel approach. 

One of the issues I discussed with the eBay Rep is my current listing strategy and how it minimizes my eBay fees and why the new fee structure is actually a fee increase for me.  I pointed out that I use auctions to drive traffic to my eBay store and I choose items to list in the auction format based on certain criteria.  For example, product that I know is highly desirable or product that I am ready to liquidate will go on auction.  Product that is slow moving I put in my eBay store, especially items that are lower priced slow-moving items.  And items that I believe I can sell in a 7-day period, based on past history or based on the fact that my competitors no longer have that particular item and thus I have little or no competition, go out on fixed price.  The eBay Top Seller Account rep admitted that if I continued with the very same listing strategy that my overall eBay fees would increase.

The Top Seller Rep then asked if I had considered listing multiple quantities in a single fixed price listing and I said that I had.  But then I pointed out to the Top Seller rep that if I employed that strategy, in an effort to lower overall eBay fees, that my sales would suffer.  Some of the items I sell are limited in nature – 1500 units or 5,000 units for example.  So if I list a quantity of one, I often get a sale quickly.  If I were to list a quantity of 48 and the item is limited to only 1,500 units worldwide, then how “rare” would the buyer think the item is and how likely would they be to purchase 1 of the 48 that I have to offer?  That listing strategy might work for someone selling ink toner cartridges because, hey, when you need a toner cartridge you need one and you don’t care whether the seller has 1 or 1,000 units available.  But a buyer who sees a seller offer 48 units of a rare item in one listing, to save on insertion fees, will delay purchasing.  Unfortunately, eBay doesn’t understand the “psychology” of the purchasing decision especially when it comes to certain types of items.  If eBay had any understanding of the buyer psychology aspect in the purchasing decision, they would give up their dream of having every seller offer free shipping because in many cases free shipping, where the price of the shipping is built into the cost of the item, is counterproductive in trying to convince a buyer to purchase multiple items in one order.  But I digress.

The main issue I have at the moment, with the new fixed price fee structure, is that the 35 cent insertion fee is good only for a short time and then we have no idea what price changes will occur again in the next few months.  Now, if you are Buy.com and get free insertion fees, you can develop a strategy that is good year-round.  However, for everyone else, trying to develop a business strategy for selling on eBay has become darn near impossible.  I have to order product from manufacturers, and sometimes directly from China, months in advance.  When a business cannot get a ballpark figure of what the selling costs would be on eBay more than 2 or 3 months out, how in the world can that business develop long-term strategies which would include selling on eBay?  Perhaps eBay is finding that the “fly-by-the-seat-of-our-pants” strategy is working well for them but, personally, I need a little more stability in things in order to plan 4 or 6 or 12 months out.

 

Disclosure: this blog post and the information contained herein would not have been possible had it not been for the initial email I received from Mechelle.  I want to thank everyone who sends me information and I always do my best to get to the bottom of things with the limited time that I have available to devote to the issues.

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28 Responses to “The New eBay Fixed Price Fees are only Temporary”

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[…] 2007 (22)December 2006 (1)November 2006 (1)October 2006 (9) Rather than give my 15% on Brews post I figured I would just link to it. I think it provides eBay sellers with some valuable information […]

$0.35 may get more Store to Core, but its not going to get the desired response. $0.10 is the sweet spot. Make it $0.10 eBay!

I don’t understand. Are you’re saying that come Sept 16th, its .35 FP for a limited time and then it goes back to the regular price? or a new change by then?

Fruity, after the “limited time” offer, nobody knows what eBay is going to do… including eBay. Based on what all sellers do between Sept 16th and Dec 31st (whether they move as a herd in the direction eBay wants) will determine what pricing changes eBay will make.

So its basically an extended promo?

Fruity, I wouldn’t call it an extended promo since it is really a fee increase for most sellers (unless you are a seller who has a large quantity of any one particular sku and especially if that sku is a slow-moving product that takes more than 7 days on average to sell … in that case, the new fee structure is pretty good for you).

For small sellers who currently do a good job of managing their listing strategy to minimize their fees, this fee structure change on Sept 16th is not a promotion or good news, the new fee structure is actually an increase in fees.

The new fee structure will probably have the effect of moving store inventory to core.. but it will be the store inventory that is generally slower-moving (ie less desirable). So, beginning Sept 16th eBay core will be full of less desirable product that was previously in the store listing format. And small sellers’ listings will be further diluted.

Its quite evident to me what ebay is going to do…they’ll do what they feel is profitable for THEM regardless of how it effects sellers….that does not seem to enter into their equasion. Right now, sellers have to support the loss of insertion fees and good sell-thru rate from the likes of buy.com – they are, afterall, taking up quite a bit of bandwidth with little or no return to Ebay. Expect sellers to foot the start up bill for every big new diamond powerseller coming aboard. I wouldn’t doubt that at the end of this trial period ebay does away with stores altogether and forces sellers to put their wares in core at fixed prices. Name of the game is to keep the pig fed! 😉

This does absolutely nothing for me. I still sell “one of a kind” finds from estates and garage sales. Last January’s fee “decrease” has really hit me hard on the fees. FP does nothing for my business model.

Brew, the reason I say Promo is because I’m trying to understand the distinction of how ebay marketed this to us. By all accounts this appears someone would believe it is a fee change that would have some degree of longevity. By it not (or ebay not figuring out when it ends) it ends up having a limited lifespan, so it is much like a promo (hey they’ve had promos on ebay motors where you actually paid MORE). Ebay is free to add or reduce costs wherever they want. But when they announce changes that on the surface look like a fee change, it will cause paying consumers to make decisions based on what they communicate. If this is only temporary, then they sure as heck did not have to create a forum and have the product managers be posting all over the place regarding the new fee change. This seems deceptive in advertising.

Fruity, I agree 100% with your last comment.

They can do all they want and I know ebay wants to drop it all low and I know they gotta test the market and see what they can do, but holy moly who raised these people!! Stress us out! I gotta keep a blood pressure monitor nearby for last 2 years. You grow up kicking animals or biting kids in school? how some of these ebay people made it through life this long without having someone kick their teeth in I dont know!!! Ebay you need to take communication courses at the community college or something

Brews,
Thanks so much for your informational blogs. What a huge stain on Ebay’s record for not keeping their paying users notified of changes and glitches. This has got to take a lot of time and energy, which of course cuts into your profit. It’s very much appreciated though.

Thanks, Lisa

Brews,
I looked into this internally here at eBay and the information on that screen is incorrect and is currently being fixed accordingly. The fixed price is not for a limited time and I’ve been told that by multiple people that are “in the know”. However, it does beg the question why you’re getting phone calls stating otherwise. I’ll look into that further but for now, please know that this is not ending at the end of the year.
Cheers,
RBH

RBH, I still have the rather lengthy voicemail message saved on my phone where the Top Seller Account Manager goes INTO DETAIL to explain why the price is only good through the end of the year. And I spoke to that same Top Seller account rep today for more than 1 hour and 20 minutes. I have the Rep’s name and extension number. I can let you listen to the voicemail recording and/or provide you the details of the Rep’s contact information. If you are speaking to people “in the know” who disagree with what the Rep said to me and what I published then those people “in the know” (1) have allowed errors to be included on the eBay website which support the information that the Rep gave me and (2) they are giving misinformation to employees who are then telling sellers incorrect information.

The Top Seller Account rep even put me on hold to get clarification of the information before she confirmed that the price change was only temporary. So, according to you, this Top Seller Rep may have spoken to someone who was NOT “in the know”.

What is the real truth? I don’t think anybody knows for sure.

Who cares what he thinks, BrewsNews! He’s just got his panties waded up at the thought that other people might have information than he does! Everybody in the entire blogosphere is supposed to only go to eBay Stink!

Brews – we too were told in the eBay Certified Provider meetings that the .35 cent listing fee was a new (and ongoing) listing format.

And that’s how the initial announcement read.

But then I found this eBay checklist – which says that it only goes through the end of the year.

http://pages.ebay.com/sell/August2008Update/checklists/

I am waiting to hear back from eBay now. Hard to say what’s really going on.

brews, this would be funny if it were not so sad. Please, can we get your TSAM and Richard Brewer-Hay together to argue out the policy? Does ebay even have an identifiable command structure or is the whole management team in meltdown?

I’ve been thinking about this since I heard about it earlier today. I was shocked, because that was definitely NOT stated in the original announcement. Now, other than feeling like this is yet another LOW BLOW from eBay, I can’t for the life of me figure out why I let this kind of carp shock me.

Essentially, the only thing **permanent** on the new and seriously dysfunctional eBay is ITs state of FAST AND FURIOUS FLUX! Which just proves that eBay really is all “FFF’d” up. (PUN *intended*.)

It is another eBay scam I knew as soon as I saw that checklist that they had intentionally deceived us yet again. Though I am happy to hear it is not a permanent fee structure because it is nothing but a gross fee increase.

I see a lot of people who think it is good for them because they liken the situation to stores in core, however they are failing to consider the reality that they were not fighting with best match and time ending soonest does not have a popularity factor built into it. Anyone, who has a store yet pushes their stuff into this 35 cent fixed is playing into eBay’s wallet. They only want you to bank roll the big box dealers that will be eating up your customers while your listings are jammed in the eBay system waiting for a spot to open up on the floor. eBay refuses to equip this site with the necessary bandwidth it needs because they are to freaking cheap. So if your item isn’t as likely to convert for eBay it won’t be on eBay. How are we going to know we can’t find our listings as it is imagine when a few more million listings hit the site.

Anyone who falls for this crap will be bankrolling the eBay welfare program by paying their welfare recipients listing fees while the bums make the sells to pay the FVFs

Another scam we should be expecting is the payflow gateway- they say the service is free for eBay sellers, but It only says the set up fees there is a monthly subscription fee and transaction fees

they are just crooks

On the basis that if it is not broke then no need to fix it, then the eBid sites work fine just like eBay used to. eBid does not have the same volume of visitor traffic as eBay but if enough sellers move on to the various eBid sites, particularly the US and UK sites, then the snowball effect will kick into play. On eBid sellers do not constantly have to keep changing their listing details or business strategy. Instead they can just get on with listing and earning their livings. The eBid fee structure is much less than on eBay and on eBid there is a very unusual feature which some new sellers might need to take time adjusting to – it has a customer services department that is run by real people, listens to people, does not send out meaningless text recognition responses that have no relevance to the queries being raised, and it will close the accounts of people who behave in an inappropriate way. Doing business on eBay is very risky these days if you are dependent upon your online income to pay your day to day bills and some of that risk can be spread by adopting a mulit-channel approach to selling.

Ummm… ok. So if it’s not a typo, then why has the checklist been updated?

Starting on September 16th:

Start listing in Fixed Price for only 35¢
Consolidate multiple items into one multi-quantity listing
Stores sellers: Move your best Store inventory into Fixed Price

Starting on October 1st and through the end of the year:

Offer Free Shipping and get free Subtitle. PowerSellers: double your Final Value Fee discounts!

Jess…. ummm… I don’t know… it’s not my website and I am not an eBay employee giving out the information on the phone. That would be a good question to ask eBay, the people who left me a voice mail message and talked to me for over 1 hour and 20 minutes to explain just why the fixed price fee structure was temporary.

Don’t get me wrong, I completely believe you about the phone call and the information you were given. But, from experience (and I’m sure you know this, too), you can talk to 10 eBay reps and get 10 different answers – whether its a TSAM or Live Help.

From the looks of it, they did make an error with the checklist and have now corrected it. It’s very sad that their own employees have no clue what’s going on half the time, but that does look to be the case here. If the updated checklist is any indication, the person you spoke with was flat out wrong and IMO, you should call her on it.

Oh Jess don’t be naive you should realize that the only mistake was letting the cat out of the bag to soon. Rather, they intended it to read exactly how it was prior to the new manipulation because they count on the eBay community to blow things off after a few blurbs on the discussion boards. However, they no longer have the luxury of a closed system of information because they have p***ed to many people off and most have learned that the new eBay management is devious so when they read the truth written in the checklist we spread the news. They would have been fine if it hadn’t been noticed until everyone loaded the site in a few days after everything was listed and the funds for the welfare program collected eBay probably wouldn’t even have reacted to it.

Actually their looking at this at all tells me it was the truth- it is a con!

The TSAM is probably the only honest person working for eBay or likely was working for eBay.

Jess come back in January and let us know what the truth was

Selling on eBay has become such a labor intensive affair that I find myself moving away from it as a strategic direction in my business. The fees that are being charged are only part of the overhead of selling online. The cost of adjusting to an endlessly changing selling channel must also be considered.

3 years ago eBay was 90% of my income. Now it is less than 30%. All of the my other selling channels require dramatically less time to complete a sale than eBay does. If the current lack of stability continues eBay will be pushed right off of the list of selling channels that I utilize.

I just checked my final vaue fee charge for an item sold @$102.67 under the eBay fee structure prior to today on a “fixed price” listing, it was $4.91. I just checked to see what the fee would be today under the new structure, it’s $9.61. Ok, so I get to list @.35 rather than the $2 under the old system for an item at this price-point, the TOTAL fees would have been $6.91 under the old system vs. the $9.61 now. My final value fee is LESS in a Store listing but they hit me for $49.95 each month for the right to pay in the 10% range in final value fees. Let me make sure all understand this, eBy isn’t searching for anything, what they are trying to do is become another Amazon.com and everything, yes I mean EVERYTHING they’ve done over the past year or so and will continue to do as they move forward in an attempt to make the buying customer think eBay CARES about them to keep all buyers in the fold as they go about JACKING 90% PLUS of they who made eBay what it is today and that my friends are the sellers. You will not recognize eBay by mid-next year if you don’t FIGHT. 12% give or take right off the top, this may work for Mass-Marketers who purchase direct from the manufacturers and it may work for people clearing out their garage but for all sellers who offer new product that never comes close to selling at retail for the most part as they have to consider ship costs, supply costs and now these even further CRIMINALLY INSANE fees, those people will be GONE and it’s just what eBay is attempting to create.

It is absurd (and likely dishonest) that Ebay seller reps do not realize that the new few structure creates considerably higher final value fees, and hence, total Ebay fees, for fixed priced items over $20 in sales price.

If it is Ebay’s desire to be more like Amazon, the simpler approach would be to replace the incompetent leadership that is currently destroying Ebay with rational people with a better understanding of markets, positive business relationships, and integrity.

[…] BEFORE the new pricing went into effect.  In an article I authored more than a month ago (Click HERE to read the full article) I wrote the […]


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