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Saturday, December 16, 2017
Article written by James Newton

Did eBay Open the Door for Google?

We recently received an e-mail notifying us that eBay feels they need to level the playing field of their auctions vs. store listings. EBay feels that store listings are too cheap, and they need to increase the price to encourage more auctions, or core listings.

Bill Cobb, President of eBay North America claims that while 83% of the listings are store inventory listings, 91% of sales closed were of the core listings (i'm sorry, I fail to see the advantage store listings had?). He claims that the increase will mean that store listings will be paying an additional 6% on average. He also says that the current listing prices for store listings do not cover their hosting fees. Bill says that the store listing cost them 50% more than core listings.

I am surprised to see this move on the heels of Google anouncing their own Google Checkout. An answer to Pay Pal. Of course, eBay was quick to ban Google Checkout. That means Google may have to launch an auction site, so will we have a place to use Google checkout? Froogle was not exactly a raging success. Then again, no one had any reason to leave eBay. They may, now.

Let's take a look at an eBay store. This seller sells clothing. This seller has 1,777 listings. Please keep in mind, that is listings, not items. You see eBay does not allow a seller to offer choice of color or size in a listing, so if you have an item with 3 sizes, and two colors, you have to create 6 listings to sell 1 item. This seller is selling at the basic store. That's $15.00 per month. Each listing cost this seller (at current rate) .02 per month. That is $35.54 per month, plus the basic store price, equals $50.54 per month just to list his items. Now you can't do without a gallery picture, that another .01cents per listing, so now we are up to $68.31 per month before we even make a sale. Ahh... the sale has a final value fee. The final value fee is based on the amount of the sale. But wait! That's not all, we have more! Pay Pal is the payment of choice for eBayers. They get their fees too! In short, to sell $792.99 worth of merchandise he payed $157.47 to eBay, and another 30.00 for pay pal fees, and $20.00 in key words search listings means this sellers cost for selling on eBay is $207.47. This seller drop ships, that means he purchases the item after it sells. His mark up is 100% or 2 times the cost of the merchandise. This gives the merchant $396.50 minus his cost of doing business, $207.47, leaves this merchant with a profit of $189.03. Yep, eBay made more on his sales than he did.

Now, dear Bill claims that the increases to store listings will average only 6%. That's an additional $9.45 for this seller. But, is Bill right? Lets look at the increases. This chart is straight out of Bill's email:

These Store Inventory format insertion fees take effect Aug. 22, 2006:

Starting Price-- New insertion fee-- Current Fee

$0.01 -- 24.99-- 5 2

$25.00 and higher 10 2

Some Store Inventory format final value fees also will also increase, effective Aug. 22, 2006:

Selling Price New Final Value Fee Current Fee

$0.01 -- 25.00 10% 8%

$25.01 -- 100.00 7% 5%

$100.01 -- 1,000.00 5% (no change) 5%

$1,000.01 and higher 3% (no change) 3%

Excuse me Bill, but my calculator must be malfunctioning. I believe the top of the chart show a 60% and 80% increase for insertion fees.

Let's assume the store we are talking about has half his listings at under 25.00, and half over. His new insertion fees will be $106.62 that's a 47% increase. This does not include the final value fee increase. Or the fact that this sellers has 2/3 of his items over $25.00

Now granted the seller could try and increase his prices to cover the extra insertion fees. Problem is, this is a highly competitive market and he might price himself out of sales.

The math is done, does this seller have any chance to earn money on eBay? I think Bill has forgotten that buyers come to eBay because of the sellers, so they can buy ...it. If it aint there, they won't be coming. Bill, it's not a good idea to chase sellers away. 83% of your listings... hmmm.

Ok Google (or anyone with an auction site), looks like eBay wants to hand over the keys to.. it.
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