EBay Vendors Not Happy About Fee Changes

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Vendors who sell their goods on eBay are scratching their heads after the company unveiled a new fee structure in effort to boost listings and maintain its share of the online auction market it helped start a decade ago.

While eBay Inc. says more than 60 percent of its sellers will save money with the new plan, several sellers have crunched their numbers and consider the rejigging a fee hike.

"We call it eBay math, it's a different math than most other people's math," said Randy Smythe, who used to sell music and movies on eBay from Southern California.

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Under the old rules, for example, selling a purse at auction for $25 would have cost the seller $1.91, including 60 cents for listing the item plus eBay's commission of $1.31. Under the new structure, the seller would pay $2.74, including 55 cents to list the item plus a higher commission of $2.19.

Carol Hearn, who sells antiques on eBay from Washington state, said the fees are modest compared with the cost of selling items in person.

"It looks like what they are trying to do with the fees is make it more difficult and expensive to sell low-end items. The people that are selling low-end items are going to feel this fee increase the most," Hearn said.

EBay's commissions will rise on items auctioned for less than $1,000 or sold at fixed prices lower than $100, while eBay's cut on more expensive auction items will remain 1.5 percent. It will take less off the top of higher-end fixed-price sales — 2 percent or 4 percent, rather than 3 percent or 5 percent.

One of its main rivals in fixed-price sales, Amazon.com Inc., charges no fee at all to list an item, though it charges a commission as high as 15 percent.

EBay said the changes were designed to boost listings, which have stagnated in recent years. The company is accustomed to a "vocal" and "passionate" seller community, company spokesman Usher Lieberman said.

Martin Pyykkonen, an analyst with Global Crown Capital, said eBay's rising fees have in the past caused sellers to look elsewhere for places to practice the online skills they perfected at eBay, whether it's their own Web sites, Amazon, or other shopping sites.

"The more savvy sellers look at a multitude of options," Pyykkonen said. "It's not like Amazon is taking market share from eBay in a big chunk, it's more of a gradual shift.

"This commission going up will be a telling point over the next months to see what kind of reactions it gets," he said.

Lieberman said the company's internal pricing experiments and number-crunching show listings overall will rise in response to the changes, which come as longtime Chief Executive Meg Whitman announced she would retire at the end of March.

EBay most wants to encourage growth in fixed-price sales, the area where it sees the most potential for growth.

"It's too little too late," said Steve Grossberg, one of eBay's top 100 sellers and the founder and president of the Internet Merchants Association.

Grossberg, a Florida-based vendor of video games, spoke by phone from a conference of 200 of North America's top eBay sellers in Washington, D.C., where incoming CEO John Donahoe announced the fee changes Tuesday. EBay makes 80 percent of its revenue from the top 20 percent of its sellers.

"I think you are going to see a listing decrease, you are going to see some sellers leave the site or pull back quite a bit and think of other ways to make revenue, and it's going to backfire," Grossberg said.

Listings on eBay's various sites rose 4 percent in the fourth quarter, reversing two straight quarters of declines, the company reported last week. The number of people actively using the site has stagnated, rising just 2 percent from a year ago, while revenues have risen modestly.

"EBay does sincerely want to compete. They are reacting to the competitive threat of Amazon," said Ina Steiner, editor of AuctionBytes.com, a trade publication for online sellers.

Amazon already has "cherry-picked" a lot of eBay's high-volume sellers, Steiner said.

EBay shares fell 75 cents, or 2.8 percent, to $26.12 Tuesday.