As the competition has intensified and the competitors have become better and better, eBay has had to confront the possibility of a slowdown in growth. For some time now, the question in particular has been how to blunt the progress made by Amazon.com as an alternative through which individuals and small businesses can sell new and used items in small (or at least, smaller than typical retail) quantities.
One way that eBay has hoped to achieve this is through an increased emphasis on more traditional selling practices, as opposed to its innovative online auction format. This week eBay has announced several far-reaching changes to its pricing and payment structure that tip the balance even further.
Fee Changes, Other Changes for eBay Listings
The first and most important part of the announcement this week is a fundamental change to eBay's price structure and approach to fixed-price selling. Going forward, insertion fees (the fees charged by eBay for the initial posting of the listing, whether the item eventually sells or not) have been drastically reduced and simplified for all fixed-price Buy It Now listings. Instead of charging fixed-price insertion fees based on the value of the item being sold, mirroring auction insertion fees that are based on the minimum bid amount and number of items included in the listing, all fixed-price listings now share a single insertion fee. The maximum duration of fixed-price Buy It Now listings has also been drastically extended. Here is a summary of the changes in the August 20th announcement:- Fixed-price fee now flat rate at $0.35 (35 cents), regardless of the value of the item(s) or the quantity of item(s) being sold, with increases in some final value fees
- Certain media category items such as books or DVDs are even less at only $0.15 (15 cents), with a $0.05 (5 cent) fixed-price listing sale going on until the holidays in certain categories
- Maximum duration for fixed-price Buy It Now items now 30 days, up from seven, with the option for automatic renewal
- Beginning in October, check and money order payments will no longer be allowed; only electronic payments online (most notably via PayPal) will be valid methods available to sellers to collect payments
- Shipping price maximums in certain categories to put an end to habitual shipping price abuse
- A new scheme for removing problem sellers by evaluating the detailed feedback they have received
Buyers and customer service oriented fixed-price or high-volume sellers will see a lot to like here, most notably the limits on shipping charges for problem categories and the arrival of an additional method for removing problem sellers based on the detailed feedback that they have received.
Consequences and Implications
At the same time, these major changes are likely to have a far-reaching influence on the character of the eBay marketplace. For those who already shop or sell using other online selling services like Amazon.com, the results of this scheme may be to make eBay's selling experience feel more familiar. For others, eBay will seem to be losing just a little bit more of its uniquely auction-oriented character. For Crystal Ball gazers, a number of likely consequences of these changes seem immediately apparent:- Fewer auctions, more fixed-price listings. These price changes give a definite incentive to sellers of high-value items or items in large quantities to choose fixed Price listings rather than auction listings. As a result, we can expect more fixed-price listings on eBay than ever before.
- A decreased emphasis on individuals and mom-and-pop sellers. For sellers of a one-off, used, or unique goods who may not have a clear idea of the value of their item, the new changes do little to encourage additional participation. Even more importantly, sellers who aren't involved enough in regular selling to be willing to create online payment system accounts will effectively be locked out.
- Increased competition from eBay in consumer media. Despite the many advantages of eBay’s selling platform, eBay's pricing structure and auction orientation have in the past made eBay somewhat less attractive to sellers of DVDs, books, and other types of consumer media, who found other selling platforms to be more appropriate to their needs. This change goes some of the way toward addressing such concerns, though eBay's search functionality is still not entirely well-suited to consumer media selling.
- An end to certain types of abuses and poor seller performance. The changes to shipping policy and the novel use of detailed seller feedback as a method by which to exclude problem sellers are likely to go a long way towards solving sellers that have abused the shipping process, either by overcharging for shipping as a way to make backdoor gains, or by sitting on products for a long period of time before shipping them once the sale has been completed.
- A more commercial eBay. In the past, eBay's marketplace has been described by critics alternatively as an electronic flea market or an online yard sale. These changes showed that eBay is committed to moving toward a more professional selling format like the one seen at competitors like Amazon.com or Yahoo! Shopping. Whether or not this is a good thing to any given eBayer largely depends on whether they find eBay's informal, community-driven model to be charming or off-putting.
Whatever you think of the changes to eBay's pricing structure and selling policies, they're likely here to stay as eBay attempts to strategically address competition in the marketplace from other upstarts as well as a sliding stock price in an economy in which reduced demand, low-hassle shopping, and price consciousness are increasingly central to consumer buying choices.
What do you think of the changes to eBay's listing and selling policies? Visit the forum and voice your opinion.
