The Real Reason For eBay's New Fee Structure
Much has been made about whether or not eBay's new fee structure is a fee increase, decrease or neither. This ignores the real reason for the changes which is that eBay wants to be able to clearly show that their fees are less than or equal to Amazon's seller fees. With their complicated tiered fee structure it would be next to impossible to prove to the average person. eBay came up with a new fee structure that emphasizes FVF's that are lower than Amazon's. This is an attempt to lure sellers from Amazon back to eBay. However, eBay would never want actual revenues from fees to decrease as they have their share holders to answer to. So they found a sneaky way to be competitive with Amazon while still raising fees on some sellers to make up the difference. As always what we really need to know is how we can adapt to keep our business growing.
What Are The New Fees?
As mentioned earlier eBay has worked hard to eliminate a lot of the complexity of the old fees. The new fee structure is more category based and it doesn't depend on what type of listing it is. Buy it now items are now treated in exactly the same way as auctions are for calculating FVFs. Unlike before where non-store owners got 50 free listings a month and store owners got none, now all store owners will be getting some amount of free listings each month. This is taken directly from eBay I've added the previous amounts to make it more clear what has changed. This is one of my first attempts at Mind Mapping so if you can't figure it out it's probably my fault.
[caption id="attachment_657" align="aligncenter" width="550"] New eBay Fees Side To Side To The Old Structure.[/caption]
eBay's Sneaky Trick
Lost amidst all the talk of lower category Final Value Fees and free listings is a huge adjustment that will hurt a lot of sellers. While it's true that the category FVFs have all been reduced what isn't being talked about is how the three tier system is being completely eliminated (look under category fees in the Mind Map above). By getting rid of the tier system they are drastically raising fees on every item over $50 in value. They probably feel that this okay because they are still in line with what Amazon charges (Amazon has never had a tier structure). What they are forgetting is that Amazon is largely a retail outlet, you will not find many one of kind rare antiques on Amazon as new listings are hard to create. With the restructure eBay will be driving away a lot of what makes them unique as an online platform.
How To Adjust Your eBay Strategy
Now some will complain and rant and rave to anyone who will listen about how unfair eBay is being but in the end it is their platform to manage as they see fit. Sellers then have a choice move on to other venues or try to adjust to the new fees. Here are some tips for those who choose the latter:
- Take advantage of eBay's free listings. With the new free listings there is no reason not to list as many items as you can. Now it's possible to list an item that may take months to sell without worrying about the fees eating away at the profit.
- Raise your prices. Do what the big companies do, pass on the pain to consumers. If you have calculated a certain profit margin for your items then you may have to raise prices to compensate for the new fees.
- Sell more items individually. Selling in bulk to raise the item price and save on fees won't work anymore. Use free listings to sell more individual items directly to the consumer.
For Video Game Sellers
- Open a store to save on fees. By opening a store you get access to the new category fees, including only 4% for video game consoles compared to 10% without a store.
- Bundle leftover games with a console. By bundling your leftover games with a console you can sell them in Video Game Console category at 4% instead of in the Wholesale Lots section for 9%.
- Create buzz by auctioning off higher value games. Every once in while auction off a high value game item. Although this can be risky it can also create a nice buzz for your store and get you some repeat customers.