Friday, August 15, 2008

Can eBay Get Worse For Sellers?

In one word? YES!

Auctionbytes Blog has a post and there is an article and a survey for you to check out.

Lots of rumors flying around. Points to ponder:

High sales season is approaching fast, and in keeping with eBay's customary 'squeeze the seller' policy this is a good time to apply the thumbscrews. If you are still committed to the eBay venue with no viable alternative "Watcha gonna do?"

Bear in mind that this is all speculation and there is no way for a rational person to predict with any certainty which way eBay will go. How could this be better or worse for you as a seller?

I have chosen an item which sold, Fixed Price for $9.99. Shipping on this item, which weighs 14oz packed is $5 and it will ship Priority with delivery confirmation, I will use PayPal and PayPal Shipping. I have not specified cost so there is no profit calculation. Subtract cost from net on sale to get pre-tax profit. Seller is not a PowerSeller.

Note that percentage of 'eBay take' will decrease somewhat for items which sell higher than $25.01 and further decrease for sales over $1000.01

eBay & PayPal 'take' as of today is 19.5% of sale price.















Plan 'A'- no Insertion Fee, 15% FVF on Sale price but not shipping.
eBay & PayPal 'take' is 22.3% of sale price, this is a 2.8% increase, for eBay.














Plan 'B'- no Insertion Fee, 15% FVF on sale price and shipping.
eBay & PayPal 'take' is 29.8% of sale price, this is a 10.3% increase, for eBay.














I have seen many posts today with the writers uttering cries of delight at the prospect of zero insertion fees. Here is one who has completely missed the point; eBay increasing their take on anything that does sell.

As a powerseller with over 20,000 feedback and great DSR. I would list list list and list some more. Everything in my store would be out on auctions. Thats about 15,000 items. Talk about flooding a catagory.

I am not totally convinced that free listing would cause eBay to be flooded. If that was the case why are all the other free to list sites not flooded?

We have to remember that eBay the auction site is a very small part of eBay Inc. Looking at Marketplace (which includes Kijiji, Shopping.com, StubHub, etc) earnings Q1 08, John Donohoe stated that advertising revenues were up 151%. I think advertising is where eBay is going now.

Finally a quote from an interview with Randy Smythe that Ina Steiner did almost two years ago where he asks eBay a speculative question.

What do you want to be? Do you want to be a shopping portal, or a shopping destination? Make up your mind.

They're saying, well we need monetize our null searches, right? We have millions of null searches every single day, we need to monetize that. That's fine. But tell your customers, your sellers, that you're becoming a portal, so they can go and buy keywords ... and move on to their website and not pay you to list product on there.


Points to ponder indeed. I think the evidence is clear, eBay wants to be a shopping portal. If Buy.com is a desirable seller despite a very low sales : listings ratio with free listings, more is better. More space for advertising will do the trick for the next quarter or so. What do you think?



Y'all come back!


4 comments:

Kevin_T said...

G'day Henrietta,
Unlike many of the reply posts on the Auctionbytes blog, you clearly recognise that Ina's article is indeed only speculation (but also excellent food for thought). I have tried to start a conversation on the article at Howcafe (http://tinyurl.com/5gvetn). My own opinions are in the third post below.

I do think that areas of Ebay would be flooded if such policy became reality, after all every day would be "free listing day". The comparison with other sites offering free listings, is not necessarily valid, as in most cases they do not have a track record for ongoing sales. After a while though, if sales slumped (likely in my opinion) the flood would recede as sellers did not want to put time into an unviable operation, and the overall result for Ebay (and the market analysts) would be detrimental, leaving Ebay's core business a shell of it's former self. Unfortunately livelihoods are just collateral damage when the stock market is at play, and nobody appears to be considering the long term health of an entire marketplace that is used by millions of people (and this, in my opinion, applies to the changes that have already happened this year, as well as such speculation as we are talking of now).

As I pointed out in the above link, "success based fees" are a furphy, and are really "clearance based fees" - this is fine for those selling fixed price, but those who foolishly follow Ebay's own advice and list their auction goods at 99 cents, success is determined by COMPETITIVE bidding, and the changes to Ebay search engine (renamed "finding experience" ) mean that not all potential bidders are likely to find the same auction, and competition will often be reduced, removing the success of Ebay's marketplace for many auction only sellers. You can't complain that the listing was not visible to many potential bidders, when you paid nothing for the listing itself, and Ebay is just taking a commission on the actual transaction amount. In actual fact they have already undermined the success of auctions through changes to search, and forthcoming search changes appear to be likely to have more adverse affects.

As someone who exclusively uses auctions as a pricing mechanism for both international and Australian sales, I don't like the course that Ebay is plotting, and the impacts that their changes are having on their marketplace. At the same time, I can not see Ebay being a successful retailer by trying to screw down the prices of their sellers, while taking a steadily increasing portion for themselves and not owning any of the stock that they seem to want to discount - Ebay's "retail" market is controlled by the seller who can sell stock the cheapest, and someone who buys out a liquidation or store close-out for pennies in the dollar can sell "retail" for less than wholesale prices. This all begs where Ebay's core business will actually lie once all of the changes, present and forthcoming, are implemented. I can not see turnover growth on Ebay's site using the current business model, although PayPal is likely to see broader growth in the foreseeable future. I can't imagine that Ebay wants banner advertising as part of their core business, but that would appear to be the only growth area in the speculation that is currently being published. The other question that needs to be asked, is what is the long term health of Ebay as a marketplace, and do the current changes actually look after it's long term viability or just a short term opportunities to sign high volume contracts with large sellers?

Kevin

Chung said...
This comment has been removed by a blog administrator.
Henrietta said...

This is what Chung said minus the spammy link:

Hi,

We are currently looking for sellers to place paid ads on their eBay auction listings, these ads will be small flash images approximately 180px by 60px or smaller.

This will be paid placement and payment will be determined on how many listings you place these images on and the type of products you sell.

These images WILL NOT link to anything. They are simply images for a experimental marketing venture my team is working on to brand a new product.

tula said...

I've been saying for a while that eBay's initiatives make it look like their aim is to be a shopping portal. For me, the Buy.com deal was the biggest clue. Whether or not this is a good thing remains to be seen.

As far as no listing fees goes, this would be beneficial to those who sell slower-moving, lower-priced items that they would now have to relist several times in order to make a sale. I would be more concerned about a flood of crappy sellers flooding the site if eBay doesn't do some kind of seller verification. Without insertion fees, you lower the barrier for purveyors of fakes and other scam sellers... and eBay doesn't need more of that.