eBay is set to make a risky move this week as it prepares to raise certain fees. Members who sell items through the company’s online stores face a rate hike that will nearly level the difference between auction and store prices. eBay hopes this will raise revenues.
Devina Mehra, a lead analyst at First Global Securities, wrote a note to clients in which she voiced support for the rate hike. “We believe eBay is moving in the right direction towards restoring its growth trajectory,” she said, as reported in a Seattle Times article.
“Under the new fee structure, a $50 item sold through the store will generate $4.46 in fees for eBay, up from $3.27 before the change,” wrote Ben Charny, the author of the article. “Under the old rules, store items cost 27 percent less to list than auction items . . . . As of Tuesday, however, the difference will be just 3 percent.”
A number of sellers have already expressed their displeasure. One group coordinated a boycott of eBay, and also began calling for Google to create an auction site. That plea underscored one point in eBay’s favor – there is no real alternative available. Expect sellers to start exploring their options, though.
One possibility is for them to revert to auctioning items. Indeed, “eBay hopes the extra fees will encourage a certain amount of store operators to switch back to selling items through auctions,” Charny wrote. Chief Executive Meg Whitman believed this would “rebalance the marketplace.” As eBay sellers protest the rate increase (which could cause eBay buyers to see resultant price increases), it remains to be seen if that can be accomplished.
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Doug is a staff writer for Murdok. Visit Murdok for the latest eBusiness news.
