Tuesday, January 30, 2007

Analysts Like the Approach eBay is Taking in the UK

Bear Stearns Analyst, Robert Peck, likes what he sees with the fee changes in the UK. Here are a few highlights from his recent notes on eBay.

"Yesterday's price adjustments in the UK were unique for 2 reasons: 1) They included price decreases; 2) They were vertical specific in many cases. Together, these changes are more of a surgical strike to invigorating the market, which we think is very positive for the LT model. Summarizing some changes: 1) Lower FVFs in Technology, 2) Lower insertion fees in Media, 3) Higher FVFs in media, 4) Multiple listing price breaks, 5) Higher fees in eBay Motors."

He goes on to say:

"We applaud these changes as we think they are more incentivising and performance based and think they will contribute vitality. We also think the UK could be a testing bed to spread to other markets."

As I said in my post yesterday, I see these changes as a positive move, mostly in a strategic sense. It is my belief that eBay needs to stop painting their categories with a broad brush and look specifically at each category to determine the correct fee structure.

Wow, this is one of the first times I've ever been in agreement with an analyst. Just kidding Bob.

3 comments:

Anonymous said...

Are they truly invigorating the market, or are they just reacting to counter the 15% VAT tax site changes that simultaneously go into effect March 15? http://www2.ebay.com/aw/uk/200701.shtml#2007-01-29114749

Randy Smythe said...

I wasn't aware of the VAT changes. Can you provide details? From my perspective as a former media seller, this change is perfect for the US market (Probably why we don't have it yet) I could have really benefited from the change in fee for media product.

Anonymous said...

I'm no expert in vat, but according to eBay, Vat Charges in Europe range from 15-25%
http://pages.ebay.co.uk/help/account/vat-foreign-eu.html

eBay created a separate entity and in March will start including 15% VAT tax across the board unless you are an exempt company.

http://www2.ebay.com/aw/uk/200701.shtml#2007-01-29114749

I assume this would/could have a chilling effect on listings. To reduce the chill, eBay is reducing fees on low margin products (IMO) Should eBay provide similar reductions on the USA site? If it improves the buyer experience, absolutely.