EBay moves further from auction roots with pricing, payment changes

Users irked by moves to cut cost of fixed-price listings and end check, money-order payments

Ebay Inc. today announced that it is cutting the cost to list an item in its fixed-price format by more than 70%, a move the online auctioneer said provides sellers its most competitive price list yet.

Despite the reduced fee, some sellers quickly and angrily protested this change, along with other eBay moves, such as the company's decision to no longer accept checks and money orders from buyers.

The new price list provides sellers a 30-day listing period for 35 cents. Previously, sellers paid the same amount for a seven-day listing. Under the new schedule, sellers can list multiple quantities of the same item for a single 35-cent listing fee. Previously, multiple quantities of goods carried separate fees, eBay said.

The changes take effect Sept. 16.

"We aim to be the most competitive marketplace online, and this new, incredibly low pricing helps us achieve that goal," said Lorrie Norrington, president of eBay Marketplaces, in a statement. "A 35-cent listing fee virtually eliminates the upfront cost for sellers to put more of their great inventory on eBay and creates more opportunity than ever for sellers to build successful businesses."

In addition to the pricing changes, eBay also announced that as part of its move this fall to an electronic checkout process, the company plans to stop accepting checks and money orders as payment.

"Today, items paid with check or money order are 80% more likely to result in an item not received than those paid with credit card or PayPal," Norrington noted in a blog post. "Also, buyers who pay with check or money order are 50% more likely to leave negative feedback than those who pay with electronic methods. So starting in late October 2008, we are moving to 100% electronic payments -- credit cards, ProPay or PayPal."

Erick Schonfeld, a blogger at TechCrunch, noted that "the Web has moved on, and eBay is stuck in still waters."

"This is not about fixed price versus auctions," Schonfeld added. "The main challenge eBay faces is that it is becoming easier and easier to find things to buy on the Web simply by searching for what you want on Google. During the early days of the Web, people needed a few big e-commerce sites [that] they could trust and that could organize everything that was for sale online. That need was filled by Amazon and eBay."

However, now that people are comfortable crawling the Web for the best bargains, eBay is not longer the first place they look, he added. "Partly that is because eBay has done such a good job creating a semi-professional class of online sellers that it is harder and harder to actually find bargains there," Schonfeld said. "So online shoppers are going elsewhere."

Soon after the changes were announced, sellers began posting notes about their irritation in various eBay forums. One seller, posting under the name "Aunt Matilda's Attic," said that the move seems to be eBay's way of trying to compete more effectively with Amazon.com Inc.

"Now eBay is going to try to take the competition to Amazon," the seller wrote. "I think it's a big mistake. They claim their reason for changing the focus to fixed-price sales is that that sector of their site has grown more than the auction sales growth in the last quarter. Auction sales growth has slowed, but is still growing. It's all about how much money they can make."

The seller, who noted that he or she sells on both Amazon.com and eBay, went on to note that the firm should focus more on eBay stores as opposed to fixed-price listings.

"Amazon doesn't favor its buyers over its sellers by a margin of 2,000-1 the way eBay does," the seller wrote. "Amazon sellers are not going to start selling on eBay. It's too expensive, and eBay favors the buyers over sellers, and so eBay can forget about luring Amazon sellers away from Amazon."

Another seller, "egulch3," said that he or she had sold $3,000 worth of items on eBay in the past several weeks and only accepts checks or money orders as payment.

"I have not had one nonpaying bidder, nor have I had any checks bounce," the seller noted. "EBay is lying when they say they are doing this for the good of the buyers. They are doing it to increase their bottom line. Pure and simple."

Another seller on the same forum as "egulch3" and posting as "Foxboxlots" said that for most small and midsize sellers, the new payment policy will mean that they will be forced to use PayPal Inc., which is owned by eBay.

"I find this an outrage. I have mostly cut my eBay sales, and this will probably be the nail in the coffin," the seller added. "Goodbye to small sellers who seek out interesting merchandise -- margins are just to small to justify the time. [It] was fun while it lasted, but this is pretty much the end for me."

Copyright © 2008 IDG Communications, Inc.

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