eBay sellers split on changes

February 5, 2008 —

The significant changes that eBay
announced last week have merchants abuzz as they analyze and react to the impact
that the restructured fees, modification of the search and feedback functions,
and other changes will have on their sales and profits.

Of particular interest have been the proposed changes to fees, which involve
lowering the cost of listing items and increasing the commission eBay gets when
products are sold. There has also been much discussion in blogs and discussion
forums of eBay's plan to forbid sellers from leaving negative feedback for buyers.

While merchants are split on the potential benefits and disadvantages of the
changes, there seems to be a general consensus that, whether one supports them
or not, the changes represent a major attempt on eBay's part to alter the way
that the marketplace works.

"It's clear eBay is taking it really seriously that they have to improve
the buyer experience, and they're laying the groundwork for getting aggressive
about doing it," said Jonathan Garriss, executive director of the Professional
eBay Sellers Alliance (PESA), a group of large sellers that has often been highly
critical of eBay.

Garriss, also CEO of Gotham
City Online, an apparel store on eBay that also has its
own site, hopes that the proposed changes will be a first step of others
that eBay will take to fix what PESA considers key problems with the marketplace,
such as making the buyer experience more convenient and streamlined.

To that end, Garriss is encouraged by the proposed incentives to reward merchants
who provide superior customer service by giving all qualifying merchants preferred
placement in search engine results and offering PowerSellers additional fee
discounts based on their customer ratings.

"We don't want to lose sight of the health of the marketplace, and the
changes eBay is making are absolutely in the right direction," Garriss
said in a phone interview.

While he supports the concept of lowering insertion fees and shifting them
to the commission, he recognizes that, as proposed, the fee restructuring will
greatly hurt some merchants, particularly, in his view, those that sell lower-priced
items in high volume via auctions. Garriss hopes that eBay will take this into
consideration and possibly adjust the fee changes before rolling them out in
a few weeks in the U.S.

Lisa Witt, an eBay PowerSeller for eight years, says the fee changes will not
have much of an impact on her bottom line. A seller of fine jewelry, Witt says
the listing fees will remain too high even under the new fee structure.

"They need to dramatically change the fee structure if they expect seller
growth on the site. eBay should have a flat rate listing fee and it should be
the same amount across the board for everyone, and that listing fee should be
low," she wrote in an e-mail interview. "A monthly fee for unlimited
listings on eBay would work well too."

Witt is against the plan to forbid sellers from leaving negative feedback about
buyers. This change may lead to buyers using the threat of negative feedback
as an extortion tactic to get extras, she said. Buyers may also be disinclined
to contact sellers if a disagreement arises, resorting simply to leaving negative
feedback, she added. "Feedback is voluntary and should be able to be left
by either party as they see fit," Witt said.

Meanwhile, John Lawson, another PowerSeller and owner of 3rd Power Outlet,
is generally positive about the proposed changes. "There'll be some bumpy
roads, but they're on a path to make this marketplace more vibrant," Lawson
said in a phone interview.

3rd Power Outlet,
which sells urban wear and accessories and makes about 80 percent of its sales
via eBay, will save about 50 percent in listing fees and, factoring in the increased
commission, will have net savings in eBay costs of about 30 percent, Lawson
said.

"It'll have a nice impact on our eBay costs. It's extra money in our pockets,"
Lawson said. While not a major windfall, the savings will allow him to add more
listings and do more auctions, he said.

Forbidding sellers from leaving negative feedback about buyers is a good move
because, as eBay officials have argued, some sellers have used negative feedback
to retaliate against buyers, he said. "A seller doesn't have to leave any
comment about buyers at all," Lawson said. "The buyer has to be satisfied
and must have the ability to leave a true comment."

Still, he's not crazy about new proposed fee discounts to PowerSellers based
on them attaining certain levels of DSR (Detailed Seller Rating). For example,
he finds that it's off the mark for eBay to have a specific DSR category for
shipping and handling, because, as a rule, no one likes to pay for this portion
of the transaction. Merchants like himself, who sell to buyers overseas, are
in particular disadvantage, because many buyers abroad don't have a clear understanding
of shipping costs from the U.S. to international locations, he said.

For others like Witt, DSR-based fee discounts are welcome. "It's fine
to offer incentives to sellers who strive for excellence. That was a good idea
and they should expand on it. Offering rewards has always worked better than
punishments," she said.

These and other differing viewpoints about the plans reflect the ripple effect
that eBay changes inevitably have, since there is such a wide variety of merchants
on its platform. It remains to be seen whether eBay will want, and be able to
refine further, its planned changes to achieve -- as much as possible -- a happy
medium across its vast community of sellers.

IDG News Service