eBay Blows Fee Changes, Should Have Cut Prices

According to many eBay sellers, the company just enacted a stealth price increase. Some sellers will get volume discounts, but, for many, the listing fee cuts are going to be more than offset by the final-value fee increases. A price increase is the last thing eBay needs right now: What the company should have done is offer a large, across the board price cut.

eBay's fee moves suggest that it is still trying to have its cake and eat it, too--and that it doesn't understand how much the competitive landscape has changed in the past five years. eBay used to be the only game in town.  Now, buyers and sellers have many other options, including:

• Amazon
• Google
• Store sites
  
• Craigslist
  

eBay's fee changes appear to be based on Amazon's premium pricing model. In exchange for its high fees, however, Amazon does a lot of heavy lifting on quality control, marketing (product interface), and customer service. eBay is now asking its sellers to pay the same high Amazon prices, but without offering any of these back-end quality control services (instead it is asking its community to do this work).

For sellers that don't mind doing the work, meanwhile, there are Google keywords and free Craigslist listings. Back in the halcyon days, eBay could compete with free listings because free listing sites were filled with garbage listings and buyers couldn't find anything. Now, thanks to eBay's lousy site interface, eBay buyers can't find anything. So why should sellers pay premium prices for eBay, when they can do okay via Craigslist or their own sites, save money, and maintain complete control of their reputations?

What eBay should have done was offer at least a 25% across-the-board price cut--one that would kill margins and revenue in the short-term, but would also improve eBay's value proposition relative to the competition and eventually drive increased volume. The services eBay offers are worth something, and the high volume of buyers will still likely yield higher prices on eBay than anywhere else.  But one of eBay's core problems right now is that its paying customers--sellers--are pissed off and have many alternatives. And the thing they are most pissed off about is price.