eBay Lowers Seller Fees, Raises Standards For Buyer Protection

The most dramatic change is a drop in listing fees by 25% to 50%. To offset the revenue decrease, eBay will charge sellers more when an item is sold.

Antone Gonsalves, Contributor

January 29, 2008

2 Min Read

EBay on Tuesday said it is lowering the fees it charges sellers and raising standards to protect buyers as part of a number of changes the online auction site is making to boost sales in its core business.

President and chief executive-elect John Donahoe, who was named last week to succeed Meg Whitman, unveiled the changes during his keynote at the eBay eCommerce Forum in Washington, D.C. "Consumers have more choices than ever, and they expect more when they shop online today," Donahoe told the gathering of more than 200 of eBay's top North American sellers.

Those choices include online retailer Amazon.com, which has its own auction services. EBay has seen growth in its core business slow over recent quarters as competition becomes fiercer. As a result, eBay has had to rely more on low-margin business units PayPal and Skype for earnings growth. In releasing its quarterly financials last week, eBay warned analysts that the current quarter and year would fall below Wall Street expectations.

The most dramatic change announced Tuesday is a drop in listing fees by 25% to 50%. To offset the revenue decrease, eBay will charge sellers more when an item is sold. Sellers prefer this arrangement, since it lowers the cost when items don't sell or sell for less than expected.

In addition, eBay will no longer charge sellers for posting pictures of items in the site's gallery option. By eliminating the fee, eBay is hoping sellers will post more pictures, which should benefit buyers.

To improve buyer protection, eBay will decrease the search exposure for listings of sellers with high rates of customer dissatisfaction. In addition, those sellers will be required to offer a safe payment option, such as PayPal or a major credit card.

For the first time, eBay will offer fee discounts to its best sellers, called PowerSellers. They also will be eligible for better payment protection from PayPal, and their items will be displayed more prominently in search results.

"It is our intention to reward great sellers," Donahoe told forum attendees, according to an eBay statement. "Sellers that describe items accurately, ship on time, and ship at a fair price will enjoy preferential pricing and discounts on eBay. We think this will significantly improve the buyer experience overall."

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