You & Yours hosted by Peter White is the BBC4 Consumer Affairs Radio Show and today saw eBay’s Patrick Munden discussing eBay fees, along with John Alexander, an eBay seller and Andrew Cave from the Federation of Small Businesses (FSB).
John Alexander of Planet Watch kicked the discussion, explaining that he has been selling 2nd hand high end watches on eBay for 9 years. The watches and jewellery he sells generally range in price from £500 to £5000 but profit margins are very low at around 5% to 10%. He explained that on a £4000 watch he’s seen his fees jump from £120 to £480 and his complaint is that there’s no profit margin left unless he increases his selling price to the consumer.
This is a pretty strong argument to support his case that the recent fee changes by eBay have been detrimental to his business, but sadly from there things went downhill. When asked about alternative marketplaces he only mentioned eBid as a non-entity where there simply aren’t any sales. However he missed mentioning Amazon where sales are booming but fees for watches and jewellery are around 25% compared to just 10% on eBay.
Andrew Cave from the FSB then said he’s hearing from a lot of sellers who’s businesses are just not viable any more. However he said that the a short notice period of fee changes was just four weeks (it wasn’t, it was eight weeks) didn’t give sellers time to adjust their businesses. Andrew Cave went on to say that he was particularly disappointed as he would have hoped eBay would foster a new generation of new online business startups.
Patrick Munden of eBay acquitted himself fairly well acknowledging that there were real price increases for some sellers. He pointed out 45,000 new businesses have started on eBay since the recession started, so the FSB view that eBay are preventing new businesses starting is a myth. He explained that whilst some eBay fees have increased in other categories such as technology they have reduced to 3%. eBay looked at other marketplaces and wanted to make sure that eBay is really competitive against those, that’s why technology where there are traditionally very low margins have seen fee decreases and others such as clothes shoes and accessories where there is quite a lot of margin for sellers have seen fees increased.
Andrew Cave then weakened the argument against eBay, he said the problem wasn’t just about the fee increase but that eBay already have a fiendishly complicated fee structure and that ebay.com sellers boycotted eBay for a week as a consequence of fee changes. Firstly the new fees are about as simple as you can get – a straight flat percentage. Secondly the supposed boycott might have attracted some publicity but that’s about the most you can say for it – it’s had no impact, didn’t affect buyers and most sellers were unaware it happened.
It’s a shame that the argument against eBay fee increases for some sellers was so weak. Sellers of high ticket items in some categories have a justifiable complaint that eBay is gouging them for higher fees and the point just wasn’t articulated well. It’s also true to say that a business operating on just 5% to 10% on second hand watches could probably increase profits – after all selling at traditional auction houses generally attracts fees of 15% and upwards.
My takeaway from the program was that John Alexander has a justifiable gripe regarding how the fee increase has affected his business and will need to adjust his business model in the future. Patrick Munden from eBay was well prepared with many facts, figures, and examples of sellers prospering under the new fee structure. Sadly the FSB were not familiar with the new eBay fee structure and should have done their homework better.
You can “listen again” to today’s You & Yours program on the BBC website, the eBay section is chapter 2. Let us know what your views on the program are and who had the best arguments to support their point.