eBay announced last week a change in its seller fee structure, including increased fees on eBay Stores and certain features and categories to take effect February 18 (http://auctionbytes.com/cab/abn/y05/m01/i12/s00). In the days following the announcement, sellers have reacted strongly against the increase and have circulated an online petition and launched protest auctions. Of most concern to sellers seemed to be the rate of the increase.
Some sellers say they have closed their eBay Stores, although no exact numbers are available. eBay reported it had 224,000 Stores worldwide at the end of the third quarter 2004 (September 30, 2004); and of those, 143,000 were hosted on the U.S. site. eBay also reported it had acquired 20.3 million new Stores listings during the third quarter, versus 4.1 million new Stores listings in the third quarter of 2003.
The announcement of increased fees has angered sellers of all sizes. The Professional eBay Seller's Alliance (PESA) issued a statement on Monday to express their dismay. The group says it is composed of 600 of eBay's largest sellers accounting for over $1 billion in annual eBay sales. The statement read in part:
Overall, our members are reporting that they will pay up to 22% more to eBay than before the increase. That's unprecedented, and will have broad marketplace implications.
The history and spirit of the eBay marketplace is one of partnership between buyers, sellers and eBay. Historically, eBay has benefited only when buyers and sellers have benefited.
Sadly, this price increase flies in the face of that partnership, siphoning more and more value away from sellers and away from buyers (when prices or shipping charges increase to cover the fees), and towards eBay itself. This is at time when large sellers that comprise PESA's membership have only seen a degradation of the quality of the marketplace, rather than any substantive investments in its improvement.
Sadly, this will inhibit, rather than nourish the growth of the eBay marketplace. While this may increase eBay revenue for a quarter or two, it certainly does not bode well for eBay's growth.
Anecdotally, we already see eBay's top sellers beginning to focus their attention on other channels based on this and other problems. We hope to have data on this soon.
PESA's Spring Summit to be held in March will include sessions on multi-channel selling, and PESA founder Joe Cortese said there has been an increase in registrations over the past week.
As sellers try to discuss ways to cope with the impact of fees on their business, including exploring alternative marketplaces, some report they have been sent warnings or suspended from eBay's discussion boards. Accusations of forum censorship by eBay are not new.
One group of users formed a Yahoo Group, in one member's words, "so that us disgruntled sellers may voice our opinion without being censored or banned from ebay discussion boards. A lot of us have been warned, had our posts deleted and have been suspended." The group named itself GreedBay, and had fewer than 300 members as of Monday. Discussions included posts on ways to cope, including having members send postcards to eBay CEO Meg Whitman, and opinions about other auction sites. In this group and on other online auction discussion boards, it seems there is no consensus on which marketplace is a viable alternative to eBay.
There's also no doubt from reading letters and online posts that sellers are taking the fee hike personally.
Carol Green of Houston, Missouri wrote, "This situation is a financial death knell for many cottage industry folks and when America is at war, we didn't need Ebay potentially destabilizing the economy - especially when the "little guy", many of whom the husbands are out fighting in Iraq for us, are hit the worst."
Another seller who wished to remain anonymous wrote, "The fact that eBay took a price increase is surely not an issue. What is an issue is the RATE of increase which, to a business person who has spent several years developing an auction based business predicated on specific cost parameters, is unconscionable. It is the height of arrogance to believe they can pull off such a stunt with no competitive repercussion...which indeed will probably be the case. I for one am ready for some serious competition...I'll be the first one to post."
Some sellers speculate eBay's next bombshell move may be to institute surcharge for 7-day listings. It already charges sellers an extra fee to list a 10-day auction.
An online petition protesting the fees has been circulating since last week (http://www.petitiononline.com/ebayfee/petition.html). One line of the petition letter reads, "We protest that ebay should reconsider the fee increase entirely, but if not possible, please do think about not increasing the fees as much (some fees have double...or even tripled!)."
As of Monday evening, the petition showed 16,284 online "signatures."
eBay will release last quarter's earnings on Wednesday. Bloomberg reported Monday that eBay's fourth quarter net income could be the company's biggest increase in six quarters. If true, it could further fan the flames already burning in some eBay sellers.
