eBay, struggling to compete with the likes of Amazon.com recently announced a new fee structure in hopes to attract new sellers. Many sellers who have previously left eBay have complained that the fees were too high and when something doesn't sell, it costs more to list on eBay than the money it brings in.
According to a newsletter sent by eBay to its members, eBay will allow sellers to list their first five items each month without having to pay a listing fee. In the past, eBay has offered large discounts to bulk sellers on eBay leaving the burden of cost on the shoulders of those who list only a few items at a time. Former users have said, "because of this, what used to feel like an online garage sale where some treasures can be found has turned into just another online store."
With the new fee structure, eBay hopes to turn around sales on the site. The change allows sellers to list items without paying a listing fee for the first five items listed a month. This is aimed at bringing in new sellers and bringing back many of the sellers who have left eBay because of rate increases. In lieu of the listing fees for the first five items, eBay charges a flat 8.75% commission known on eBay as the final value fee. Those familiar with selling on eBay are probably aware of the final value fee as it is charged on all sales. Because of the flat rate final value fee offered with the first five items sold each month, sellers could end up paying more in fees by using the "first five items listed are free deal" than the traditional fee structure. When a seller surpasses the first five items listed per month, they will be subject to the insertion fees, but will benefit from the tiered final value fee system.
The reaction of the eBay community is mixed with many sellers stating that the final value fee system that goes along with the free insertion fees is "a hidden way to get more money" and "more punishment for the little guy." Following the announcement on June 16th, eBay's stock fell 1% closing at $17.23 per share. eBay stock hit its lowest point since 2001 earlier this year, closing at $10.43 per share on March 6th. The fee change has left many to wonder, will the free listings bring eBay out of its slump or will the change in the final value fee structure drive the auction giant further into the ground?
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