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Location: Texas, United States

Thalia Miller is an eBay enthusiast, author, artist, mother, wife, and entrepreneur with strong Christian values. She lives in the middle of nowhere, just north of Dallas, Texas. For more info visit: http://www.bohemiattic.com/album.htm

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Wednesday, January 19, 2005

eBay Rate Hike & Petition

Just thought you might be interested to know that two days after posting record earnings and revenue, eBay sent out emails on Wednesday and Thursday noting that it is substantially raising fees. eBay has chosen to raise selling fees, which in turn will raise costs for buyers.

This isn't the first time that eBay has upset "the community" with changes. Around this time last year, eBay raised fees in what was believed to be a reaction to an announcement Yahoo! had made to introduce it's own fees. It didn't work out for Yahoo! But the changes eBay imposed on it's sellers at that time had little impact on their operation costs and were moderate in comparison to the changes sellers face now. Besides, through thick and thin, eBay users have remained loyal.

"We believe the price changes are the right thing to do to ensure the continued success of the marketplace," eBay spokesman Hani Durzy said. "Ultimately, that's good for the entire community of buyers and sellers." Durzy declined to discuss how the price hikes would affect revenue at eBay, which reported sales of $805.88 million in the first three quarters of 2004. The new financial results for the fourth quarter were just released today and the company reports record Q4 net revenues of $935.8 million. Read eBay's full investor announcement here.

Despite eBay's some $1.7 billion in cash and investments, the company needs the additional fees to help maintain its marketplace and to keep the company on a sound financial footing, eBay spokesman Kevin Pursglove said. He said the lack of any real competition to eBay and the company's goal of hitting $3 billion in revenue by 2005 wasn't a major factor in the decision to increase fees. "This is being done because it's in the best interest of eBay as a company and eBay as a marketplace," Pursglove said.

EBay shares did fall $4.12 to close at $103.13 on the Nasdaq Stock Market. Its shares were at a 52-week high of $118.42 in December. Perhaps this explains why a few Wall Street analysts have reacted positively to the news, saying the increase could raise eBay's revenue by 10 percent or more. I guess they have failed to notice how the folks who are actually selling on the eBay platform have helped to double eBay's revenues year over year. (If you happen to simulatneously work as a Wall Street analyst and an eBay seller, please, by all means, let us hear from you. )

"Although fee increases never sit well with those sellers who bear the brunt of charges, we believe the vibrancy of the eBay marketplace will allow the company to implement this pricing change without a significant decline in its number of auction listings," Prudential Securities analyst Mark Rowen wrote in a research note Thursday. (What is his eBay user ID?)

You decide...

This is the actual email I received from eBay:

Dear bohemiattic,
We are writing to let you know that effective midnight PST, February 18, 2005 eBay.com and eBay Motors will be making changes to the fee structure.
The fee changes are as follows:
GalleryGallery fees will be raised from $0.25 to $0.35 per listing. We will also be increasing the size of the Gallery image on search and listings pages by 56%. This will make it easier for buyers to see details of the item before clicking into the listing.
Buy It Now Buy It Now fees will no longer be charged at a flat rate, and will instead be determined based on the Buy It Now price. Fees will be charged as follows:
Buy It Now Price
Fee
$0.01 - 9.99
$0.05
$10 - 24.99
$0.10
$25 - 49.99
$0.20
$50+
$0.25
10-Day Duration The fee for 10-day duration listings will be raised from $0.20 to $0.40 per listing.
eBay StoresThe fee for the Basic eBay Store subscription will be raised from $9.95 to $15.95 per month. The subscription fee for Featured and Anchor Stores will be unchanged.
eBay Store Inventory format listing insertion fees will remain unchanged. The Final Value Fee for Store Inventory items will change as follows:
Closing Price
Old Price
New Price
$0.01 - $25
5.25% of the closing value
8% of the closing price
$25.01 - $1,000
5.25% of the initial $25, plus 2.75% of the remaining closing value balance.
8% of the initial $25, plus 5% of the remaining closing value balance ($25.01 - $1000)
Over $1,000
5.25% of the initial $25, plus 2.75% of the next $25.01-$1000, plus 1.50% of the remaining closing value balance ($1,000.01 - closing value).
8% of the initial $25, plus 5% of the next $25.01 - $1000, plus 3% of the remaining closing value balance ($1,000.01 - closing value).
Store sellers will continue to be eligible to receive 50% off of the Store Inventory listing final value fees for Store Referral credit. Please click here for details.
Insertion and Final Value FeesThe insertion and Final Value Fees will be changing for items listed in certain Business & Industrial categories. More details about the changes for these categories are provided below. The insertion and Final Value Fees in other categories will not be changing.
Business & Industrial Listings in Certain CategoriesThe Reserve, insertion and Final Value Fees will be changing for select high item price capital equipment categories in Business & Industrial. Please click here to view the capital equipment categories affected by the pricing change.
The fee changes for these capital equipment categories are as follows:
Reserve fee: Lowered to $5, refundable if the item sells
Insertion fee: Raised to $20, regardless of starting price
Final Value Fee: Lowered to a 1% flat fee, with a $250 maximum charge
Additional listing upgrade fees will remain the same as for eBay.com. Pricing for all other Business & Industrial listings outside the specified capital equipment categories will remain the same as for eBay.com.
eBay will also introduce Buyer Protection covering up to $20,000 per item in these capital equipment categories this spring. eBay will offer this Buyer Protection at no cost to the buyer or seller.
The following fee changes will apply to vehicle listings on eBay Motors.
Fee Changes for eBay Motors Vehicles Listings
ReserveReserve will be charged a $5 flat fee for all eBay Motors vehicles categories except Pocket Bikes. This fee will still be refundable if your item sells.
10-Day ListingsThe fee for 10-day listings will be changed to $8 for all eBay Motors vehicles categories except Pocket Bikes.
Pocket Bikes CategoryThe insertion fee and Transaction Services Fee will be lowered from $30 to $3 each. The following fees will remain the same: Reserve ($2 flat fee, refundable if item sells), Gallery (free), Listing Designer ($5) and Highlight ($5). Motors HomePage Featured fee will be lowered to $24.95 and Vehicle Picture Pack fee will be lowered to $1.50. All other fees will be lowered to become the same as those for eBay Motors Parts & Accessories categories.
For more information about these fee changes, please see our Frequently Asked Questions.
Some international eBay sites have also changed their fee structures. To learn more, please check Announcements for the eBay site of interest.
We understand that fees directly impact our members, and take care to ensure that any decisions to change fees are made only after careful consideration of this impact. These changes will help us continue to sustain and develop a thriving global marketplace, while balancing the needs of our buyers and sellers around the world.
Regards, eBay

What can you do about it?

"Protest to the Ebay Fee Structure Increase"

A movement has begun though it's doubtful this petition will do much to change eBay's decision regarding the new fee structuring, it may be helpful in serving to voice the rather large and growing dismay of it's online community of users. I found this petition earlier today. The signatures on the petition have increased from the 18,495 just about four or five hours ago to 18,712 (as of this writing). I believe that more would be signing it if they knew it was being offered. It isn't written in the most eloquent voice, but it says what it needs to say basically and it serves its purpose.

Please,

Pass it around.

http://www.PetitionOnline.com/ebayfee/

Thanks,

bohemiattic

7:55 PM

Comments:

I posted my suggestion to visit the petition link above on a few other blogs/forums which I visit from time to time. On one particular site, auction hints I received mixed response weighing heavy with supporters of the fee hike.
One man specifically, Jim Wilson, whom I hold in above average esteem due mainly to the fact that he is a recognized eBay seller of some seniority, had an interesting take on the situation. I can only hope that he was exaggerating to make a point when he mentioned that he would be willing to pay eBay over 80% of an item's selling price just for the honor of using eBay's highly trafficked service.
I do understand his inference that eBay provides excellent exposure for online merchants, but I fear the need for proactive participation is lost on folks who would rather sit idly by the wayside of decisions, which ultimately affect their bottom line.
eBay probably won't lose much sleep or money over this, but it will lose brand loyalty without a doubt. When a company decides to practically double its fees across the board, it should come as no surprise if its users jump at the first chance to join forces with competitive markets. Incidentally, Overstock Auctions said it had experienced a 50% increase in auction listings since eBay announced its new plan with fees for Stores scheduled to take effect February 18. And they aren't the only ones. LiveDeal, OnlineAuction, and uBid, all experienced sharp increases in registered users since this announcement.
Another blog, eBay Strategies which comes from a very highly regarded eBay aficionado, Scott Wingo, looks at the other side of the spectrum by giving the floor to the voice of the people. He diverts our attention to a great post from yet another blog heresmybyline highlighting an interview with Mr. Durzy, which while interesting, leaves something to be desired.
So, I agree with Mr. Wilson in that this is not the end of the online auction world; neither, can I let sleeping dogs lie. Will I give up on eBay? No. If something better came along, would I dare partake? Uh, yeah, I would.
Clearly, for eBay and for sellers, these are business decisions. No hard feelings, right?

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