eBay Motors' price changes bad news for small business

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Last night, eBay announced some major changes to pricing for North American Motors’ sites. The restructuring continues eBay’s current trend towards ‘success-based fees’, moving more of the fee burden onto final value fees and away from insertion and other up-front fees. The changes are effective from September 2, 2008.

There’s great news for private sellers who might list just a couple of vehicles a year: on .com Motors, the first four listings in a 12 month period have no insertion fees at all, a saving of $40 per listing. The catch – and you knew there’d be a catch – is that the Successful Listing Fee (Motors’ fixed-price equivalent of FVFs) will increase from $50 to $125 (or $100 for motorcycles). Still, you’ll only have to pay this if you’ve sold your car, so it reduces the risk of listing on eBay Motors to pretty much nil.

Once you’ve sold four vehicles in a year, insertion fees are $20 and SLFs $100 ($15 and $80 respectively for motorcycles): the total fees payable on a sold vehicle thus increase from $90 to $120. I’d suggest that if you’re a business, you’re probably keeping a pretty close eye on your sell-through rate; you won’t want to pay $40 a time to list something that won’t sell, and you’ll list accordingly. So this new “you’re better off when you don’t sell your car” fee structure is going to hurt. Of course, the really huge dealerships like GM’s network have already negotiated their own fee structures with eBay, so the people who are really going to be squeezed are the small dealerships, who’ve just seen their fees jump by something like 33%.

If you think that’s bad, spare a thought for the poor Canadians: they’ve got the same new fee structure, but their old fee structure was much nicer. Insertion fees were only CA$4.25, so even for the four “free” listings, that’s an increase of $70.75 per sold vehicle.

Generally, I support eBay’s trend towards putting more of their fee onto sold items, and less upfront. But I can’t help feeling this hasn’t got the balance right. It seems rather to reward not selling your vehicle, because that’s where the big money savings are – and surely that can’t be what eBay want?

For the sake of clarity, these changes apply only to Motors’ sales on eBay.com and eBay.ca, and no announcement has been made for eBay UK or any other eBay site.

11 Responses

  1. For the sake of clarity, these changes apply only to Motors’ sales on eBay.com and eBay.ca,

    Phew thank goodness for that ,we were wondering how we would combine shipping? 😆

  2. Notice the change in terminology from FVF (Final Value Fee) to SLF (Succesful Listing Fee) !

    This could be a hint at future changes – an overall fee structure based on SLF’s – Insetion Fees and FLV’s are dropped and replaced by a SLF ?

  3. I suspect they will have to remain competitive with Amazon, so would not expect more than 15% combined fees (Ebay and Paypal).

    Ebay are expensive to list on, they need to correct this, but an imbalanced hike in FVF’s will not encourage the sellers.

    But we will see.

    Mark

  4. AuctionThanx

    Perhaps the Successful Listing Fee terminology is used because eBay does not base that fee on the final value selling price. Whether your car sells for $100 or $100,000 you pay the same Successful Listing Fee. In contrast, the Final Value Fee is a percentage based on the final value selling price. Maybe eBay is just trying to make a distinction to avoid confusion or potential problems.

  5. As I have always said in restropect to other anomalies in conjunction to the rarified accounting practices unified through conglomerate gentrification.

    This bites the big one!!

  6. I think eBay’s legal division want to avoid any possibility of involvement in a liability lawsuit arising from the sale of a vehicle. If eBay charges a fee for a successful listing, as opposed to commission on the sale price, it is unlikely that any court would see eBay as ‘participating’ in the sale. eBay avoids responsibility by becoming solely an advertising venue.

  7. It made me wonder: would this kind of practice apply to ebay motors UK/Fr/De?

    what will ebay take into account before applying the SLF model?

    Will they prioritize the classifieds model, less income but more “collection” volume, against the SLF, more income arguably less “collection” volume, since it might be quite harder to collect money on non “powerselers” -vehicle dealers- .

    Are gumtree and kijiji so called “experiments” sheding some light unto this?

    Definitely SLF with the existing classified ads option is out of the question (how will they collect if they publish sellers contact).

  8. Yes, its bad news for the Canadians (again)

    Going to a higher FVF fee on other items is going to be a disaster. We already pay very low insertion fees. with almost constant promo days (.05 since the fee changes early in the year), plus can use all the .com promos. Most sellers can strategically use those and the relist credit to never pay full insertion fee anyway, so there is no savings to be had from lower insertions.

    Add that expected change to Canada post more then doubling some rates next January,and the high $..and the Canadian seller contingent is going to get a lot smaller..

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