EBay simplifies fees, aims more squarely at Amazon

EBay is promising a more simplified fee structure, one that it argues will make it a more effective alternative to Amazon. EBay said Tuesday that it will be "rolling out several seller release updates over the coming months." (Of all the various marketing ways to avoid specifying a timeframe, this is my new favorite: "coming months.")

EBay did offer a slightly more specific timeframe--"this Spring"--for one element of the changes, namely "simplified fees" that EBay said would "virtually eliminate upfront costs for all sellers."

Other elements were "enhanced seller protections and more specific picture requirements."

Of course, whenever a retailer says "simplified pricing," the only thing certain is that they are using some alternative definition for "simplified." The actual new EBay pricing is hardly intuitive. Scot Wingo, CEO of ChannelAdvisor, wrote a wonderful piece on his blog trying to put the specs into context.

"As you can tell this is pretty complicated. What you have to do is first find your category, then take the price that your item sold for, say $85. You pay $3.50 for the first $50 (7 percent) and then 5 percent of the next $35. In the World of eBay, we call these price break tiers 'tranches' and they cause both new and 10-yr experienced sellers to scratch their heads and pull out their calculators to try and figure out what the fees are going to be for their items," Wingo wrote. "In addition to being complex, these fees make eBay more expensive percentage-wise for low ASP items and then the effective take rate declines as a percent as the ASP increases. This also creates an 'optical' challenge for eBay because it makes eBay seem more expensive than it actually is."

Wingo told Internet Retailer that EBay's comparisons with Amazon--note: this is the first time EBay has actively compared its numbers with Amazon publicly--are apples and oranges. "Amazon's 6 percent includes payment processing," Wingo said. "EBay charges 3 percent for PayPal, so that even the sellers who get the eBay discount pay 6.2 percent compared to Amazon's 6 percent. Taking into account the new fee structure, eBay merchants whose average items sells for less than $100 and sell 12,000 items a month or less will likely save a bit, while sellers above those thresholds will pay slightly more."

The fact that EBay is making a more direct play for Amazon is hardly surprising, and the timing is perfect. Amazon is getting pushback in Europe for its contracts that force third-party sellers to always give Amazon the lowest price.

For more:
- check out this ChannelAdvisor piece
- see this Internet Retailer article

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