So we’ve seen the fee changes for eBay.com but will they please buyers and who are the winners and losers? I’m hearing words like “we’ve listened to our sellers”, “sharing in seller’s success” and “convenience orientated buyers like immediate purchases” so how does this affect sellers?
Is this the end of auctions on eBay
eBay are touting the changes as good for sales and on the face of it most of the changes do look positive. Casual sellers can now list auctions with a Buy It Now option for free and there are few that can complain about that. What’s more interesting is how eBay are saying that they love the auction format but go on to talk about convenience for buyers removing the need for them to bid on auctions.
Is this the end of the auction on eBay? Almost certainly not – for many unique one off items it’s the only way to achieve the best price the market will stand for that product. However what it does mean is that consumer sellers will now get better visibility in search (as auctions are sorted Time Ending Soonest) but also gain the benefit of offering Buy It Now.
Professional sellers wanting to get visibility in search are reliant on performing well in Best Match for fixed price listings, or using auctions (for which they’ll pay insertion fees) and hoping buyers are prepared to bid and wait for the auction to end before they’re assured the item is theirs.
Casual sellers should be pleased that their items will get great search exposure and in fact better search exposure than if they paid for a fixed price listing. The only disadvantage is that, if their item isn’t purchased on Buy It Now, it might sell for the original auction start price. Setting a realistic start price is now no barrier though as there will still be no insertion fee for their first fifty listings.
The impact of fees on shipping costs
If you already offer free shipping then this change is great news for you. To counter the additional fees garnered from charging on shipping eBay have given a 1% or 2% discount based on the category you trade in. For those offering free shipping that’s lower fees with no downside.
If you do charge for shipping then the additional fees are mitigated somewhat. You won’t be charged fees for shipping overseas or next day shipping costs – so long as you also offer alternatives the first domestic shipping service offered other than next day will be used to calculate Final Value Fees.
The best strategy for sellers who offer next day shipping will actually be to offer a low cost alternative as that’s what you’ll be charged fees on.
The one thing that Final Value Fees charged on shipping will do is to remove any advantage sellers have for overcharging on postage to subsidise the cost of the item. This form of fee avoidance is effectively ended on eBay.com from July.
Lower fees vs charging fees on shipping costs
It’s easy to look at the 1% or 2% reduction in fees and dismiss them as tiny, so what do the discounts actually mean in monetary terms? Firstly the discounts are much bigger than they sound, for instance if you sell clothing and apparel on eBay you previously would have paid 12% Final Value Fees. That’s drops to 10% from July this year but in real terms it’s a 16.67% reduction giving a reasonably generous allowance for shipping costs.
As an example suppose you sell an item of clothing, it can be seen from this table that relatively high priced items with low or free shipping will save sellers money. Sellers of low priced items with relatively high priced shipping in proportion to the item cost will incur slightly higher fees.
Loss of PowerSeller Discounts
Effectively PowerSellers might as well cease to exist on eBay. Whilst it’s still a familiar term and carries some minor benefits there is no PowerSeller Logo, no PowerSeller discounts, no PowerSeller promotion in search. All the real business benefits now apply to Top Rated Sellers only.
The best advice for all sellers is to base your business on the published fee structure and take any discounts as a bonus. In reality a 5% discount on Final Value Fees may be significant but it’s only $50 out of an invoice of $1000. Your actual invoice would be significantly higher than $1000 as you’d also pay Insertion Fees, listing upgrade fees and any subscriptions such as eBay Store fees as well.
Whilst discounts do have a monetary value in reality only Top Rated Sellers are getting discounts worth having so that’s the level all sellers should be aiming to achieve. However if sellers have a complaint about the new fee structure the loss of their PowerSeller discount is probably the most legitimate.