Ebay Fallout-New Fees

PowerSeller revolt looms as eBay CEO Donahoe tinkers with business model
Alex Salkever
Jul 27th 2009 at 8:20PMText SizeAAAFiled under: Company News, Technology

More

Online auctioneer eBay's legions of sellers are digesting the likely fallout from a significant raft of policy and fee changes announced by company CEO John Donahoe today. The quick and dirty version -- kiss the old, quirky fun eBay (EBAY) goodbye and say hello to a site that looks a lot more like Amazon.com. I spoke at length to Ina Steiner, editor of AuctionBytes.com, a noted eBay expert who has been critical of the website at times.

Steiner has a decidedly opinionated take on the likely impact of the changes, which she sees as both carrot and stick. "For companies that are selling one-of-a-kind items such as antiques or rare jewelry, these rules could have a really negative impact," says Steiner. That's because the company will now offer a higher 20% discount on fees paid to eBay for its new Top-Rated Sellers category who have the very best customer ratings, while offering a diminished 5% standard PowerSeller fee discount to longstanding vendors whose customer ratings don't qualify them for the higher discount.
The move underscore the dilemma CEO John Donahoe faces as he tries to move the company away from a maxed-out auction model, to a more staid e-commerce platform without causing faithful eBay sellers to bail out in droves.

The fee discount difference can mean thousands of dollars in extra costs or extra savings for many eBay sellers. To access the newly created Top-Rated Sellers category, eBay merchants must have virtually zero negative feedback ratings from customers. This is not a problem for buyers of items such as electronics or office supplies.

But it will hurt eBay resellers moving quirkier or more unique wares, says Steiner. It's much harder for vendors to move specialty items and avoid all negative feedback. That's due to the inevitable disconnect between buyers' expectations and the reality of their purchases, which many times are not always exactly what they imagined or equal to what they saw in an online photo. For vendors of unique wares, making disgruntled customers happy through discounts or refunds may not be an option. "They want sellers to do what it takes to make a buyer happy. On eBay, that's not always a practical approach," says Steiner. "Sellers who are selling valuable antiques or high value item, its not as easy to say, keep it and I'll refund you because you are complaining."

She also noted that new search results pages on the website will look a lot more like Amazon results pages, with a product description, some product information, and a "buy box" with two or three leading eBay merchants. Links to other eBay merchants will be lower down the page. And, Donahoe has announced that eBay is aggressively moving toward more fixed-price item sales, much like Amazon.

Not that Donahoe has a made a secret of his intentions to abandon eBay's core to become a more polished e-tailer. Donahoe is on a mission to make eBay ubquitous with a massive keyword acquisition strategy to goose search engine results for eBay items. He's going to need all the help he can get if traffic to eBay continues to fall and faithful sellers abandon ship for greener pastures at niche auction and e-tail sights like GoAntiques and Etsy.com. And there is cold comfort in locking horns with Amazon, an online retailer that has increasingly sucked up a larger percentage of the e-tail market. But judging from its recent earnings call, eBay's management team sure seems eager to get into that race.

Alex Salkever is a Senior Writer at AOL Daily Finance covering tech, clean tech and green tech.You can follow him on Twitter at alexsalkever.