How will the fee changes affect your business?

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I’ve been talking to a number of sellers today. Some are pretty pleased with the eBay fee changes, some sanguine, and others who are facing steep rises are upset to say the least.

One seller I spoke to, Alistair of , added up in his head that with 25,000 listings he’ll immediately save £3,000.00 a year on insertion fees (those pennies all add up) and as he sells motor accessories he’ll also be saving around 2% on most sales.

Another motor’s trader I spoke to initially was pretty peeved at the loss of PowerSeller discount and an increase in prices. In reality though he’s confident of hitting Top Rated Seller status before May and hadn’t realised he’d also be saving 1.9% on the majority of his sales, as most of his items are sub £30.00.

Other sellers really are facing steep price increases on Final Value Fees. John Pemberton of GMDC was pretty annoyed at a 50% increase in fees, especially in the current economic climate, with VAT increases, rising fuel costs and suppliers edging up prices.

His comment was interesting as he said the fee increases will simply leave less free cash to reinvest in stock, thus slowing the overall growth of his business. His frustration is that putting prices up takes up more of his operating capital which leaves less for inventory to list on eBay. However he feels he’s in a better position than much of his competition to absorb the increased costs and is still positive for the future.

Some of the comments I had today were unprintable, there’s a fair amount of anger out there at the increased fees which a lot of sellers are facing.

There’s also been some comparison to Amazon seller fees with several sellers mentioning the closing gap between eBay and Paypal costs and the cost of selling on Amazon. Whilst the gap has closed overall eBay is still a lower overall cost.

Trevor Ginn an eBay vereran with his own website Hello Baby told me that, given that there’s not an awful lot of competition and Amazon charge more than eBay, it’s annoying but there’s not a lot he can do about it… other than sell more on his website. Even then 10% fees for selling on eBay compared to using Google Adwords, which is variable and quite hard to control, means that the new eBay fees aren’t too bad, in his opinion.

The one thing that eBay does have is traffic, and it has that in abundance and all the time they’re making money most sellers will ultimately live with the fee changes. In the last quarter of 2010, business sellers grew their sales 20% (compared to the same period in 2009) and that’s not to shabby a growth rate in a recession.

So what is your take on fees? Will you carry on selling the same amount of inventory on eBay? Are you one of the lucky sellers who’s fees have reduced or if you’re one of the sellers facing a 50% hike in fees how will it affect your business?

16 Responses

  1. Who is growing their sales 20%?

    Its profit that needs to grow, not sales…

    Mark 🙂

  2. Todays announcement will cost us £10k+ a year in extra fees based on the last 12 months sales as an above standard seller, we get TRS next evaluation, the first time since TRS was introduced so between the 20th of March and the new fee structure being implemented it will be interesting to see how things go.

    It’s true even with the increase it is still slightly cheaper than Amazon (we left Amazon because of the fees)for our type of product but as David from StuffUSell pointed out earlier today eBay seem to be kicking sellers who sell high value / quality products in the balls and rewarding sellers of mass produced tat with a pat on the back, I don’t really get it to be honest.

    Being totally honest I am fricking outraged at this latest announcement, I will just have to wait until our accountant comes back next week with some figures based on current and future sales and take it from there.

  3. Our fees will increase by about 37% overall and that’s a huge increase for any business including ours. I do agree with Trevor that the fees are favourable when comapred to AdWords but with AdWords I don’t get kicked in the bollocks with feedback extortion and INR claims that are 10x higher than on our own site.

    We’ve doubled our inventory on ebay in the last 6 months from around 700 products to over 1400 and the plan was to keep going but we’ll have to see how this pans out. It may be more worthwhile to invest the £1000’s we spend on ebay fees in AdWords if we only need a conversion rate of around 12% to be ahead on costs…

    It’ll be more expensive (and time consuming) to sell on ebay for us than Amazon when this new fee structure comes in. Amazon fees are 15% in the categories we sell in and ebay are 12% + PayPal fees which is slightly higher than 15% after INR claims and chargebacks for echeques. As David pointed out earlier today and highlighted by whirly above, ebay seem to be encouraging the crap back onto the site with this setup and a Daily Mail spread on the rip-off sellers on ebay is only a breath away… 🙁

    Time will tell…

  4. I sell a relatively low number of high value items on ebay. The new fee structure is going to mean a very large increase in FVF. As an exercise today, I looked at some recent sales and compared the fees, see below.

    Sale – £150 – Current FVF – £7.75 – New FVF £15
    Sale – £275 – Current FVF – £13.45 – New FVF £27.50
    Sale – £600 – Current FVF – £32.51 – New FVF – £60

    None of this means I will necessarily leave ebay, I can probably still make a good profit on a number of items. It will mean I will put more effort into other areas though such as my own website and (which isn’t up to scratch at the moment) Gumtree. Amazon isn’t really an option for myself due to the products that I sell.

  5. I will be raising BIN prices on eBay to cover the increased fees which for me only really impact on the higher value items. And probably focus more on BINs than auctions only using auctions either for gear that I know will attract buyers or for gear that I want to clear out.

    A lot of my competition comes from the auction with BIN sellers and it will be interesting to see how this type of seller responds to the 40% BIN margin requirement.

    In addition there may be fewer auctions of high end products as the fee increases combined with the increase in the risk/reward ratio may make BIN sales more attractive for this type of seller.

    So I am anticipating a less competitive market on eBay but I may be right or wrong.

    The website marketing will expand.

  6. we have a number of deals negotiated with various B&M companies based on price and cost,

    though were obviously not big enough
    for to negotiate our own terms with ebay ,
    we cant even get a sensible answer from support concerning normal everyday ebay trading,
    we will suck it up and see

  7. The announcement of FVF increase to 10% within Business Office Industrial. We are Number 1 ranked in UK within this category and the fees mean approx £5000 per month extra fees being paid to Ebay. Within low margin, high value categories such as tools, this means selling on Ebay and remaining competitive versus other websites is nigh on impossible. In many instances Ebay earns more gross profit on the sales we make than we do ourselves. Our planned website launch within the next few weeks will mean I will be trying my utmost to migrate Ebay buyers to our own website. Large volume/value sellers on Ebay should stick together and pressure Ebay UK to provide a rebate type rebate back to sellers.

  8. Wow so much negativity which I do sympathise with. I’m guessing most are selling in the Clothing and Antiques categories.

    Surely there must be some sellers listing in the Tech category who are very happy about the new fee structure. As a seller listing low value tech accessories were going to save 2 grand a month.

    All in all I have been very happy with the May update. Product bundles are long overdue and the reduction of emails sent out via SMP were one of my big gripes which only added to buyer confusion.

    Am a bit concerned about the global DSR’s but oh well what can you do.

    Overall I am quite happy.

  9. One of the selling points about ebay has been the prices. It seems from the various postings that the effect of the changes to charges will be a general increase in prices. The ebay buyer does not know that the prices have gone up because of ebay much higher charges. They just see the prices rise. So it is likely that sales will fall. After all the country is in the brown and smelly and people have less disposable income. Also as ebay prices rise there will be less differance to the prices charged in discount stores and even possibly on the High Street. Could it be that the increase in charges in the long run will bec seen as the beginning of the end of ebays dominance? I know I have mentioned it before but it also opens up a significant gap below ebay for a good site with significantly lower charges to slot in and take a large proportion of ebays trade away.

  10. I think that the fees are fairly reasonable if you are making sales. I think that the problem for many is that sales on eBay have slowed down and costs are rising in all directions. The squeeze is on. Hopefully we will be one of the bussinesses that come out the other side.

    I think many sellers are trying to make a living on unsustainable low margins.

  11. 10% final value fees means you either have to have massive margins or you have to sell shed loads of product.

    On the face of it I am guessing margins on Ebay are generally quite tight, there are also only so many buyers.

    Although I am very unhappy about the extortionate fees for high priced goods I can cope and continue to trade on Ebay however my margins have always been good.

    Trouble ahead for many I reckon.

  12. How are these fees going up going to effect sellers who sell via companies like Channeladvisor who take a percentage of the sale?
    Will marketplace management software still be affordable now?
    Will this make sellers go for their own indepentant websites?
    Will eBay shift from small sellers to larger high street brands?
    Will another marketplace fill the void for smaller sellers?
    Who cares?

  13. My fees are up a straight 2%, which will lead to a final bill increase of 20%.

    This last year I have done surprisingly well, but as many point out Ebayers have to work hard for it, and we effectively have a ‘higher insurance tab’ for so called non receipt,etc.

    Even so, it just means a 14 pence increase on most sales and I’l just nudge up prices where I can, and as a cross border seller I’ll look for other sites to sell on with lower fees if poss.

    Big thumbs down from me.


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