eBay May Announce Fee Change Next Week, Experts Worried

In an attempt to pacify angry sellers and stem share losses to Amazon and other sites, eBay will likely announce some long-rumored fee changes on its earnings call next week, says eBay Strategies' Scot Wingo. Wingo is concerned that the change will likely flood eBay with listings, making the user experience worse and putting even more pressure on sellers. Wingo believes eBay needs to cut fees, but only after fixing its two other big problems: fraud and "finding" (i.e., how do you find what you really want amid all the crap?)

According to some sellers who have reportedly been briefed on the fee changes, eBay is planning to:

• Reduce listing fees and increase final-sale fees on high-ticket items.
• Offer bulk-listing discounts.
  

Such changes would obviously boost listings in the short term. If listings increase without a commensurate increase in buyers, however--and especially if they increase without an improvement in eBay's search interface--the percentage of listings converted into sales will decrease. This will make eBay's user experience worse. (See, for example, Craigslist. But Craigslist is free).

The good news is that eBay appears to be focused on its core business again. We outlined our four-step plan for fixing the company here. We recommend reducing fees, but just reducing them--not adjusting them to reduce front-end listing fees but increasing back-end sales commissions (yes, this would hurt the company's performance in the short term). We also think eBay should retire Meg Whitman.

See Also:
Fixing eBay: Our Four-Step Plan
eBay Users Vent Rage to New York Times
eBay's Real Problem: A World of "Auctions" and "Stores"
eBay: Time For CEO Meg Whitman to Go?
Why Craigslist Sucks