Is eBay’s New Fee Structure Good for Sellers, or Just Good for eBay?
In an effort to compete more effectively with Amazon, eBay has made major changes to its fee structure, which the company announced recently in a new 2013 Spring Seller Release. Many sellers had complained in recent years that eBay fees had gotten quite complex and difficult to understand. In an effort to simplify the fee structure and reduce the basic upfront costs for most sellers, eBay will eliminate its category-based, tiered commission fee structure for non-store owners in favor of a flat across-the board commission. Starting May 1, sellers without a store subscription will receive up to 50 free listings per month for fixed price or auction items. When an item sells, sellers will now pay a flat 10 percent final value fee for items less than a maximum value of $250.
Companies with eBay Store Subscriptions will now get up to 2,500 free listings a month, with final value fees determined by category. Most fees under the new plan are anticipated to fall within the 4 to 9 percent range. This new fee structure is good news for sellers with items with a value of under $50. Sellers of more expensive items aren’t quite so lucky. Since eBay is abandoning its current tiered commission schedule in favor of a flat rate plan, the new fee structure will actually result in a fee increase for many high-value items.
For example, Shoes and Accessories currently have a Final Value Fee commission of 10% of the total amount of the sale for up to $50, but after that, the fee drops to 8% of the remaining balance up to $1,000, and then drops to 2% of the remaining balance over $1000. Under the new fees, the fee eBay collects will be a straight 10% of the total sale. This is not good news for online merchants selling high-value items like jewelry and watches and could result in these merchants moving more of their selling efforts to Amazon or other venues.
eBay’s Status Among Online Retailers
eBay spokesman Ryan Moore recently told JCK – Jewelry Industry News that “we believe the new pricing structure makes eBay the most competitively priced commerce platform in the U.S. today.” Many observers think the devil is in the details. While commissions will drop to between 7.2% and 9% on watches and jewelry for some storeowners, there is a $250 cap on these new rates. Rates will actually increase for higher priced items.
Some say the new eBay fee structure will drive away high quality sellers and turn the online auction marketplace into a haven for low-priced junk. Others say that the new simplified fees will bring many more sellers to the marketplace and will be good for everyone. Only time will tell who the ultimate winners will be. One thing is certain though. Online retailing will continue to adapt to new realities and changing conditions. With or without eBay, online retailing will continue to grow.
About Gevril Group
Gevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers.
Please subscribe to the Gevril Group newsletter and blog updates. Reader comments are welcome.