PREDICTION: Store Fee Increase is coming...

Ok, I'm going to put a prediction out there based on what I'm seeing, hearing and know about how eBay thinks.  eBay Stores listing fees are $.05 for < $25.  and $.10 for > $24.99.  They used to be $.02 before the 'great rebalance of 2006'.

I see eBay store listing fees going to:

.10 for < $25
.20 for  $25-$100 and
.50 for > $100

I don't know about the specific amounts, but feel we're going to get a new tier and  the old tiers will be %-wise increased dramatically.

Ok why am I saying this? (and no I don't want it to happen, but I think it's unavoidable).

Evidence 1: Stores growing too fast (still)

I've been watching the listing data from the Wall st. guys closely and stores continue to grow much faster than core. eBay hit the brakes, they slowed down and now they are climbing again. 

Evidence 2: Core not growing fast (still)

eBay desperately needs core listings to grow and views that stores cannibalize core listings.  This is where they get it wrong because they don't understand seller behavior, but they still view that seller's are choosing stores over core.  (the opposite is the case, sellers go to store if core doesn't work).

Evidence 3: Wall St.
In a number of presentations to Wall St., eBay has hinted this is coming this by saying things like the controversial "unproductive listings".

So the only question I have is when is it coming?  They announced the last hike July 20th.  I'm going to say they announce this with the Q1 results in April.  The trick is we have eBay Live in June so they can't do it in June or May (30 day window for fees to start).  If they want to act fast they need to do it a good bit before then for the wind to blow over (so May/June is out).  That leaves either April with the Q1 results or post eBay live like they did last year - July timeframe.

I'm going to vote April because I don't think they can afford to wait till July, they need to slow those stores and grow the core. 

Reader's what do you think?

Comments

[Marty]

I have to say I have sold on the monster we all know as eBay, and I have to say the site's owners are robbing the sellers blind one fee increase at a time. Sellers on eBay must increase their prices to cover the outlandish fees eBay is imposing... I for one have absolutely no desire to feed the monsterous eBay anymore--thus I am no longer going to sell on eBay... Instead, I have chosen to open a store at www.onlineauctionexchange.com where the site owner respects his patrons and is charging nothing in comparsion to eBay....and I do mean NOTHING in comparsion to eBay... The bottom-line is eBay can only continue to be the money sucking monster it is, if we let it. Start taking your shops and your business elsewhere. Customers you have the possibility to save more, because the sellers are not having to jack up prices for eBay fees---and sellers have the opportunity to keep a lot more of their own money... Find a site and help it grow is the only way to end the viceous eBay cycle. If you have not checked out www.onlineauctionexchange.com--I recommend you do it--what have you really got to lose other than eBay fees.

[Paul]

I feel ebay is getting way to expensive myself. That being said I designed my own site to list my items and avoid all the ebay fees altogether ... and everyone is welcome ... check it out at ...

Your complete online auction site.

[Gotta Ride Bikes]

A couple of follow-up comments.

1. EBay responded to Scot's prediction by categorically denying that an increase would take place. In related news, Meg has announced that they have hired Bill Clinton to define the word "increase".
Seriously, what do you expect them to say? Not to mention that I think we all can remember recent instances (eBay Live 2006 recent enough?) where they made the same denial just to do the opposite weeks later.
It does show you that they pay attention to Scot!

2. Why does eBay need to make more money every quarter? Simple - they have shareholders to satisfy, and stock prices to maintain. Investors and analysts look anxiously for any hint of what the numbers will be. Lower profits mean lower stock prices, and no stock options for the execs.
In all fairness, they ARE a business, and the duty of a business is to maximize profits (albeit with a long-term focus, which gets lost in the "gotta have it now" world we now live in).

3. According to the creator of Express, the idea WAS to separate the sites - eBay for auctions, Express for commodity goods. Problem is, they've done a worse job with Express than the military planners have done with Iraq. (I mean, who has any significant EE sales??)
There may be some benefit to splitting the sites, but IMHO reviving auctions just won't happen any more than we'll see the corner malt shop and girls in poodle skirts. The good old days are gone, the market has matured. People want it NOW, and the novelty has worn off. They'll never get it back.

4. There IS life outside of eBay. For many, it's BETTER. 3 years ago we read the tea leaves and started moving to our own website. Now, not only are we doing 3x the business there, but it's OUR business (not eBay's). Better yet, one day we can sell the site and get a good price - try that with your eBay business!
Don't be afraid to take the plunge. It's worth the effort. EBay is to selling like AOL is to internet. It's safe, it's easy, but you give up a lot to have your training wheels.

[Red]

Hmmm, I wonder if they are trying to go bust by a certain date because they are bored? This month google ad words has given me £760 in sales for £24 in costs, through my own cost free website.
eBay? £60 for erm £300 sales? With more problems than website sales? I am only small time seller for sure, but I would be a numpty if I didn't let the figures speak for themselves. I think I am more inclined now to try shopping comparison and just keep a few token listings on ebay to keep the ebay traffic. I don't bother with store listings any more as they cost the same as core now on ebay uk (OK you get longer for your money)

Hairfreax Blog

[Somu]

Is there's thick air for ebay purchasing off ebaylab???

[Ebayvet]

I also believe increases are inevitable...not sure it will happen this month, but it will happen. I've been working on reducing my dependence on ebay for a while now. Here are my Q1 numbers for the last 3 years: 2005, 2006 and 2007. My 2006 numbers were 37% higher than 2005, and my 2007 numbers were over 100% (more than double) my 2006 numbers.

In 2005, Ebay was 89.7% of my business. In 2006, Ebay was 55.7% of my business. In 2007, Ebay was 21.5% of my business. My business continues to grow, and each year ebay is a smaller and smaller part of it. Ebay can go ahead and raise their fees. It will have an impact, but not nearly as it would have a year or more ago for me.

[Chairman]

Its already reached a breaking point for alot of sellers , alot of people with eBay stores now sell multi channel

Test them with another fee increase and they will leave enmasse

For my sale in Slavic and collectible rare books , I've been using other channels more and more , I just need an excuse to cut out eBay even more.

[rhogo]

The stores increase will likely come toward the end of summer. July/August. As close as possible Q4. By then, many sellers have secured their seasonal inventories and will have little/no time to develop alternative sales channels.

BTW, I agree, Mr Wingo. eBay does not understand seller behavoir. But I think the lack of understanding begins with buyer behavior.

Outside of quantity purchases, auctions are not traditionally a platform where one purchases tooth whitening, flip flops or Any-Mart store purses. However, mass manufactured items are the bulk of eBay's listings.

Buyers aren't stupid. The "magic" eBay so desperately wants to recapture will not occur with fee increases. Fee increases force sellers to raise their prices. The reaction of buyers is to look for the best price.

Did you know that currently, there are over 800K "rare" items on eBay? An example is DiCaprio's "The Departed". This is a rare item? Buyers aren't stuipd.

If eBay truly wants to recapture the "magic", then I suggest that there needs to be separation. Newly/mass manufactured items should be on Express. Core should be for truly unique, vintage, antique, rare, hand crafte, etc.

And yes, they should require seperate searches. People are seeing a great deal of the same stuff on eBay, day after day, they see at their local Any-Mart. There's no urgency to bid/buy. If they don't get "it" now, there'll be another along in a few minutes.

Raising prices is creating a vortex which is sucking the life out of eBay. Buyers are much more savvy than they were 5 years ago. They have search engines, and they know how to use them. There's no "magic" in mass maufactured goods. The magic was in Granny's attic, Granpda's old steamer trunk, and that color of lipstick that isn't made anymore...you know...the one you both wore home from that first date...

Seperation would be a massive undertaking, and it's not a cure-all. The results, however, would be long lived. I suspect that eBay will continue applying band-aids. It's a pity.

[Ineedapayraiseto!]

Why does Ebay always need to mkae more money every quarter? As a longtime seller on ebay I keep making less and less every quarter. To the point now were I have been searching for an exit strategy.
I think if Ebay sales have dropped for the sellers, than likewise Ebay should follow suite. They now seem more like thugs stealing your money, than practicing the win/win philosophy.
There is a breaking point for sellers, and I think it has already been reached. And that is not been so much because of Ebay price hikes, as much as dwindling turnover ratio's. Sellers moving to the stores format is only a survival mode, because the core listings do not produce consistently.
Raising anymore of the ebay fees is like killing a dog that is already starving to death. We have no more blood to give, sellers are all dieing the slow death and are just trying to survive.
3 years ago Meg Whitman was quoted in an article something to this effect: "I think to many companies abandon the core model much to quickly" Thanks Meg, you freakin' loser! You are now 100% on plan aren't ya? Squeeze, squeeze, squeeze more!
Sometimes when I'm laying on the grass looking into the the heavens and all of the beautiful stars.....
.....I think, I'd like to see this entire country brought to it's knees. No more big money, no more big politics, no more big laws, just total freakin' equality and anarchy! People killing each other and balancing out the worlds obnoxios inequities.
Maybe people would learn to care about each other again, instead of being morphed into money grubbing pigs, and cash prostitutes. Or the Bush administration bending every law that stands in it's way, with no one to answer to! George Bush is the worst peice of garbage I've ever seen lead a country, and that includes Saddam Hussain.

[Danno]

I agree GR Bikes about the buyers having left. That would explain such low sell-through rates for the last six months or so. I DO think the fraud going on with Ebay is having a bigger affect than the company will lead on. Homeland Security warned about some of these issues about a year ago and things seem to be much worse with the scammers. If users can’t trust using Ebay why shop there?

I have a friend who got a message in his My Messages on Ebay. It was from a seller who said he had noticed that my friend was watching an item and that the seller had another one like it he would sell cheaper. First of all, only the buyer can see what he is watching on Ebay. No one else is privy to that info unless you are on the inside of Ebay. The scammer had to be on the inside to see what my friend was watching to make that offer hoping he could get further info to exploit. I suspect the scammer was using a hijacked account. My friend was cautious about the whole thing and changed his password.

I believe the scammers are having a big impact on Ebay right now and its hurting business. As Firemeg pointed out, we are already dipping into lows on the listing counts that we usually see during the slow summer months. The lows trend lower this time of year until summer is over and then starts to pick up again. If we are already seeing the 11 million listing range, we may end up seeing the lows in the 9 million to 10 million ranges during the summer. The listing sales will help hide the fact that we are trending lower. Sellers are not going to list as much if things are not selling very well. I know that is my case and I believe it is with many others because we are hitting these lows already.

Ebay management has already done their damage with the last few fee hikes and ignoring their issues at home. Especially ignoring the fraud issues until it’s too late. Management has been so obsessed with the large profit margins they have sacrificed the security of its site and its users. Management knew long ago about many of these security issues and just now they come out claiming they’re going to do something about it. They sacrificed security for profit. With all the fraud going on right now on Ebay’s site and how it’s affecting everyone, it should be a criminal matter.

[Boutique]

Your prediction very well could be accurate. I don't see that eBay has learned any of the lessons that they should have learned from the store fee increases of 2006. What they have lost and will continue to lose is a lot of seller loyalty. Some sellers have in the last several months started to gain a foothold and find success off eBay on sites like Wagglepop, eCrater, and other alternative venues. EBay has an increasing percentage of sellers who continue to do a limited amount of business there because they have to, not because they really want to. EBay doesn't 'get it' yet that the 2006 fee increases were very detrimental to the future of their company, so I certainly wouldn't put it past them to do it again. It won't give them the results that they're hoping for. What they need to do is to make selling on eBay fun again, and it isn't fun when sellers have to pay through the nose to list their items there or jump through hoops just to get pictures to load with the new Sell Your Item form.

[Gotta Ride Bikes]

Joey, the buyers HAVE left already.
Page views have been steadily declining. ASP's have been steadily declining. Consumer confidence has been steadily declining, and is now about even with Pres Bush's performance ratings - it couldn't drop any further. Look at auctions - remember when there used to actually be BIDDING WARS? Items used to sell after a fierce battle, whereas now they end with a wimper.

Firemeq - expand auction growth? How??
Initial auction popularity was a fad. Most buyers would do most anything to AVOID an auction - they'd rather have the item now. The format may be more viable for collectables, used goods, or Britney's gum, but the majority of sales now are for commodities. Do you want to wait a week to MAYBE win some auction, or would you rather go to Amazon and get it now? The good ol' days are gone and are not coming back. There's a new reality in the marketplace today.
Granted, they could do more to make the format better - for instance, auction extenders. Give sellers the option to add a feature to automatically extend an auction by say 2 min when a bid is placed in the last 2 min. They could put in Turing numbers when placing bids to remove sniping, which every buyer poll shows is universally hated by a large majority (non-snipers, agreed).
However, it's easier and safer to just raise fees and not take risks, so that's what we'll keep getting.

[McMann & Tate Advertising]

Just look for MORE "Bait and Switch" from ebay...just like last time they ran a telephone campaign to get sellers to open stores for the $5.95 a month and then in less than two months ran the monthly cost sky high...Bait and Switch is the name of the ebay game

[Joey]

I have loved Ebay from the moment my mouse clicked on the site for the first time. However, each price increase drives me more and more into the arms of another. I would prefer to sell everything in core, but I have a lot of low volume low dollar listings that would be losers for me on core. I am nearing the braking point where it is not worth the cost to continue. When I reach that point Ebay will lose and average revenue from me of around $50 a month to less than $20 per month. Many of my store listings I run as auctions first. I will cut out the listings that I am not completely sure of in auction format and store listings may not be an option at all.

All that said I have already started moving listings to other sites trying to build a better sales channel for me. I am starting to see some success with those.

Ebay needs to be careful here. If they drive too many of the sellers away the buyers will leave also.

[firemeg]

I'm going to go out on a limb and make a prediction. eBay will increase fees the next time it is in danger of not meeting revenue predictions for a quarter, with little notice. They'll run listing sales to appease the masses and generate huge revenue and listing numbers and re-energize eBay in Wall Street's eyes.

Should eBay make it through the end of September (end of Q3) without need of a major artificial boost, I think eBay will raise fees in October. This would boost revenue to massive amounts in Q4. Although Q4 is perennially an easy quarter for growth and meeting revenue expectations due to holiday shopping. Could be that if eBay does get through Q3 without a major negative growth scare, eBay will wait until next spring.

My guess though is that eBay will need the fee increase this summer to meet expectations and continued revenue growth. They are starting this year out at traffic that is at the same level as 2001 and listing numbers that are on par with 2004 average. If these numbers drop as they do every summer, eBay will need to do some major tweaking to get the revenue needed for growth during the slow summer months.

On the whole stores issue....eBay management needs to be replaced immediately. They are doing literally nothing to expand auction growth. There are many avenues for growth that are not being touched. Stores are a great product (the idea anyway, paying $.10+ for listings is just a bit much). Management seems dead-set that stores and auctions cannot co-exist.

Instead of solidifying their position as the leading online marketplace for the next decade or more, eBay seems content with being the biggest marketplace only for the next quarter. Management needs to get their spoons out of the market kettle and let market forces work. eBay is a monopoly and nobody is challenging them. Their biggest problem is, and will continue to be, themselves.

[Danno]

I don’t know why they are saying items are selling for higher prices. I’m not seeing it and neither are my seller friends. My last sell-through rate was 7%. It’s been running 6% to 15% since August. In previous years I could count on 30% to 50% sell-through selling similar products. I’ve been on Ebay for 10 years with 100% positive feedback and I have never seen it this bad. I loved the stores concept but quit because it was no longer feasible. I tried the auction route and so far it has been very disappointing. I’m about to quit listing for awhile and sell offline. I’ve had much better luck with the offline sales since the holiday season. You hear about how well Ebay is doing but I have my doubts with what I’m reading and hearing.

Why they would want to raise fees anymore for anything is outrageous. Especially when you already pay a premium for their site and they can’t fix many of the problems they already have like fraud, scams, glitches, bad customer service, etc.

[Gotta Ride Bikes]

The "imbalance" is due to the lack of performance in Core. Lower traffic, fewer serious buyers, and higher costs make Core less viable all the time. THAT is why we don't list more than a handful of items there. They can raise Store prices 100 fold and we STILL won't list more on Core. OTOH, were they to make Core perform better and be a better value, then we'd evaluate it differently.
Jacking up Store fees to those levels will cause seismic changes, and not the ones management wants. Last time, many sellers simply rolled with the blow. They added a bit on to their shipping costs or whatever to offset the increased fees. This time, we'll see MASSIVE store closures and\or disappearing listings. I can't say exactly what we will do until the details are (perhaps) announced, but based on Scot's scenario most of our listings will leave, though we may leave about 50 or so up. NONE would move to Core.
It may not kill off Stores, but it will deal it a serious blow. This would not be a good thing for eBay.
Stores was a brilliant idea! Think about it! They tapped into "long tail" before the concept came out! Even better, they did it at very little cost to eBay. Add massive amounts of goods, do almost no promotion\advertisement, let the SELLERS advertize them (and pay the costs) instead! Stores allowed eBay to be able to seriously say that you can find IT on eBay.
How many unique items will be lost if eBay goes ahead with an ill-advised increase? What percentage of the site listings will disappear?
Even more ominous, where will these items migrate to? The only thing worse than not selling something is having your competitors sell it.

Most of our items are higher dollar goods - $.50 per listing would pretty much end the cost effectiveness of Stores, given the limited exposure that we get for the price.
We would work to find another channel to move to - multiply this by a good number of disenfranchised sellers and not only has eBay lost sales, but other channels will have gained market share at their expense.
Not a pretty picture.
Even scarier is the idea that upper management might seriously think that this will help Core listings.
(I wonder if they'll bump the max # of identical listings to say 25 if this increase does happen? That will allow them to say that the price hike has worked, since Core listings increased!)

[Zu]

Scot, I agree an increase is coming although I do agree with the poster who said it would happen after ebay live. A rise in store prices will not make me list more to core. It will make me list more OFF ebay. With declining sell-through rates and an increase in buyer fraud (mostly due to paypal refusing to absorb any of the risks of selling on ebay even though they promise to) ebay is in fact a sinking ship.

As to whether they care about these complaints... I think they do not. I believe they would rather replace the savvy sellers with newer ones who buy listing upgrades and sell without knowing if they make a profit.

[Kati]

You were pretty close to being right on predicting last year's store fee increases - so I won't be surprised if you're right again this year.

I'll be sick to my stomach about it - but not surprised.

I cut my eBay business in half to survive last years increases - this one would probably take out the other half.

[Larry Phillips]

Scot,

You are abosloutely correct about ebay getting it wrong. I move items to store AFTER I try them on core, and the profitiability is insufficient to support maintaining a core listing. I initially list EVERY single item as core. One year ago, I had 3,471 ebay listings, of which 1,630 were core and 1,841 were store, or roughly a 47%/53% split. Today, I have 4,174 listings, so I've increased my total listings by over 20%. However, I now have 1,240 core, and 2,934 store, or about a 30%/70% split. And I'm waaaay behind on analysis. If I was dilligent in the analysis, I believe I would be more in the range of 20%/80%.

A store increase will make me focus more attention on moving items from store to my off-ebay store. I just had my store redesigned, I'm getting professional SEO assistance, and am beginning to budget additional expenditures for keyword buys. Again, a store increase will accelerate my plans of becoming less dependent on ebay.

So ebay absolutely has it wrong. They need to decrease core listing fees, and hopefully they will make up for it with higher volumes of FVFs.

Larry Phillips

[MEMORIESINC]

Hello Scot - If the scenario of fee increases that you predict comes true, what are your expectations in terms of future seller behavior, and eBay's bottom line. Above and beyond another round of seller revolt, will eBay be in a better position overall?

[kathykld123]

I can't accept that ebaY raises fees to try and control store inventory RATHER than controlling the number of items allowed in stores.

[Randy T]

RE:Scot,
If what you say is true (not that you are lying) why would eBay be promoting stores so heavily now, with the free trial and the Best of Stores contest?

Mike Mills

Mike,

Think about it-ebay is still happy to keep a constant flow of newbie store operators opening up, so they make a constant amount of revenue from just the subscriptions fees. They aren't encouraging new stores to open up with the intention of retaining their business. If a new store opens and closes after just a couple months, then they got that sellers fees for just that long (multiply this times thousands and thousands and thousands of newbies, innocent to the fraught marketplace....)Plus, they aren't really spending any serious money (serious, in their corporate world) on promoting stores right now, relative to their spending on other promotional areas, so its really cost effective for them to just "encourage" business on stores. Good for their image perception too, "look, we are still supporting our ebay stores".
Randy T

[Fruity]

oh Scot, I just remembered something....

Sellers, even if this doesn't go down, you should start thinking about what will give you the most profit. If you are in a particular niche, don't be afraid to shift it all together. Even if that means you have to start up a new ID to sell crap you don't even like, as long as there is a demand for it. There is no reason why you should still carry the very best on ebay anymore. If the fees are not affordable for you, think again. It might be they are not affordable for your merchandise. Cheap throwaway junk is. No reason to lose your shirt in the process. Ebay is a circus & there are always freaky crazy stuff being sold like dollar store finds, ebooks and don't forget Colorado Snow! If the ridiculous change in the product selection doesn't embarass them, you will be laughing all the way to the bank!

and you can bring back the good stuff when the site is worth it. If not, more better you put it elsewhere. You own the product, any buyer who wants it knows that. If buyers start asking why is this place full of junk, that'll cause them to rethink their strategy. Don't let ebay make you feel like you are doing something wrong. Empower yourself, give them junk and profit from it.

Go with light stuff because the USPS fee increase is coming down in May!

[rainbowseeker]

Scott the reason "the Core" is not growing on eBay has little to do with the stores and rising fees. The stores actually may be growing due to sellers that hold auctions no longer feeling that the auction venue on eBay is safe or feasible any longer.

The problems for sellers on eBay right now are overwhelming. It began with SECOND CHANCE OFFERS that could have been applied to the big box stores if they wanted, but should never have been applied to single auctions. It drove sellers away from high end items because of all the fraudulent second chance offers that scared off serious buyers. Instead of rethinking the problem when it was brought to their attention eBay continued to do as they pleased and even after they saw what happened at $1000 they figured they could make it viable at $200 and created an even bigger problem hidding id's which has increasing shilling. Now they have driven the fraud down into the everyday levels of eBay and it has exploded driving out more and more buyers. Meanwhile no one can determine any longer who is shilling what so eBay is being buried by suspect reports. Sellers in response have had to list items with buy it now....a store is cheaper now perhaps and looks more attractive separating your sales from the fraud riddled auction venue. So auction sellers are moving to stores to protect themselves. Meanwhile eBay is totally breaking down. Nothing works and one bad move punishing sellers follows another....hidden feedback-new syi form-back button issues-required pay pal account-new feedback 2.0, etc. And you wonder why the CORE is not growing????

If you want proof go read the discussion boards. Try the bidder boards and check out the thread on "Hate Hidden Bidder ID's"....there is a link to it on my about me page. Or try the T&S Board or Technical Board if you really want to know what is happening on eBay.

I've been here selling on eBay for 9 years and using your CA site since it was Auction Rover.....if there was anything even remotely possible out there to replace eBay I would be gone like the wind. As it is....I am exploring other new sites and other options to replace eBay as soon as possible plus building my own website. Anyway....put your head up and test the winds Scott.....the store fees are only a very small part of the problems on eBay driving users away in droves and destroying what you call the CORE. Really what eBay has done is destroy it's COMMUNITY! If you have any stock....SELL IT AT THE FIRST SOLID OPPORTUNITY!