consumer surplus

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eBay Increases Fees and Sends eBay Sellers and Investors into a Panic

On January 13, eBay sellers received an unwelcome announcement from eBay. Fees were going up.

Partly due to our tendency to "skim" messages and partly due to the way in which the announcement was worded, the result was widespread panic and threats of mutiny.

Many sellers started to "boycott" eBay, and began taking their business to places like Yahoo auctions, and Overstock.com.
After issuing another email "clarifying" the price increases, eBay finally sent everyone a "Message from Bill Cobb" on February 6.

Bill Cobb, who became President of eBay North America in December of 1004, stated that he'd been "taking it all in" and "thinking hard about how we can make sure eBay remains a fun, safe place to trade, and a prosperous home for our many dedicated sellers."

Cobb addressed the issue of fee increases, and concerns about customer support, trust and safety, and frequency of changes to the site.

Cobb also promised a number of improvements to customer service, a credit for store sellers and a reduction in the minimum insertion fees for auction style and fixed price listings. He even gave readers his email address and invited comments, promising to read every one of them!

The Bottom line here is that the most significant changes made will affect eBay Store owners. But Store items are offered at a price determined by the seller, so increased costs can be passed along to the buyer. This is what "real world" businesses do all the time. The cost of doing business rarely goes down and Business people learn to expect increases in overhead.

The reason for raising the "But it Now" listing fee is that eBay wants sellers to think harder about how they set prices in this category. Too many have been unrealistically high, which means merchandise doesn't turn over. It becomes "stale". eBay wants to see a fluid market, with quick turnover and fresh merchandise appearing all the time.

The Gallery image feature has gone up in price by about 30%, but the size of the image is being increased by 56%. Pictures sell products, and larger pictures mean that shoppers can see more details. I really don't see this as a bad thing.

If you haven't invested in eBay stock, now might be a good time (eBay intends to split shares on Feb.18). Investors are panicking over eBay's announcements, and their less than stellar 4th quarter 2004 performance in part due to major investments in China.

The dooms-dayers say the "bloom is off the eBay rose". I beg to differ. eBay is still the largest online auction venue, accounting for more volume than all of their competitors combined. There's no way eBay is going away, and it won't be long before sellers realize that business will go on as usual.

You can still make a great living on eBay, whether full or part time.

About the Author

Carolyn Schweitzer is a retired dentist, eBay Powerseller, and ownner/editor of several websites. You can read the full article plus view eBay's price announcements and the letter from Bill Cobb at http://www.netbrainer.com/site/500041/page/473364

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