Ebay’s New Fee Structure

Hmph! No sooner do I start making money as an eBay affiliate than eBay’s CEO steps down, and the new CEO immediately starts making changes. These changes may be good for affiliates, or bad for affiliates — the jury’s still out.

The biggest change is the new fee structure for sellers listing products for sale. eBay is lowering the listing fee — the upfront cost to list an item on eBay — and increasing the Final Value Fee (FVF), which is the amount the seller pays to eBay upon sale of the item.

With the listing fee going down, we might see an increase in the quantity and variety of items for sale on eBay, adding value to eBay as a whole. Or we might see a surge in junk listings, where sellers list anything and everything whether or not it has a chance of actually selling, because they only pay the FVF if it sells.

The higher Final Value Fee, on the other hand, is computed as a percentage of the sale price of the item. So a higher FVF will hit big-ticket items harder. Sellers may be less inclined to list high-value items on eBay, because they’ll have to pay a more significant fee to eBay when the item sells.

EBay may have calculated these fee changes so that the aggregate fees would end up being a wash — lower listing fee, higher FVF, same final revenue to eBay — but those calculations may not take into account the unintended consequences. The unintended consequences could result in eBay turning into a giant yard sale, full of low-quality junk from garages and attics that may sell for $1 or $5, but few or no listings of higher value items, such as digital cameras, electronics, valuable antiques and collectibles, or other such merchandise.

The new CEO of eBay also announced that he wants to increase emphasis on fixed-price sales, which means a corresponding decrease in emphasis on auction sales with bidding. Again, I’m not sure, myself, that this will be a good move for eBay. eBay owns the auction marketplace. By moving toward a model like Amazon, eBay will be competing in the marketplace that Amazon owns, instead of focusing on the marketplace that eBay owns.

A couple of months ago, I would have yawned and said, “So what?” But now that I’m deriving a portion of my income from eBay, I have a vested interest in what eBay does and the effect on the eBay marketplace. I hope these moves have positive results for eBay, which will ultimately mean positive results for eBay affiliates. But I’m not at all sure that will be the case.