Tuesday, January 29, 2008

Follow Up to Media Sellers Take it in the Shorts!

Okay, I've had a few hours to calm down and I do have to say that these moves that eBay has made will be beneficial to the vast majority of eBay sellers. Free Gallery for those sellers that already use it is a great thing.

My previous post was specifically about Media Sellers and low ASP commodity product sellers whose margins are already as low as they can go. I was a little amped up in my previous post so now that I've calmed down let me give you a more sensible read on the situation.

The changes eBay is making will cause some short-term pain for Media Sellers but they will adjust and either stop selling on eBay or use it strictly as a cost recovery vehicle. In the short-term I see these actions from Media Sellers:
  • Fewer media listings in CORE and an increase in store listings. If the reduction in CORE listings opens up store items to buyers (more visibility) this will be a good thing. The reduction in Store listing fees tells me that eBay wants media items to be listed in stores. If I list 100K listings in store today it costs me $5000 on March 1st it will only cost me $3,000. That's a nice savings and in exchange I will pay eBay 20 cents more on every $10 in GMV (10% FVF moving to 12%)
  • The problem with that idea. The increase in FVF for stores is now only 3% less than Amazon's 15% FVF but I can list 100K listings on Amazon for free. On eBay I still have to pay $3,000 to list the same number of items. Does this make sense?
  • IMO, eBay should adopt category specific pricing for Media and other like categories that ends listing fees and raises FVF to 15%. After all their new Finding 2.0 and Best Match are supposed to be able to handle the increase in listings.

My biggest takeaway and probably why I got so upset when I heard the news. The amount of effort to do business on eBay is 10 times what it takes to sell on Amazon and with the changes that have been made over the last 2 years I certainly wouldn't find it worth it.

First it was re-balancing CORE with the Store fee increase - That didn't work, so now we have a new plan. What is it going to be next year? I'm hoping that the changes are beneficial for other categories on eBay but if I am a Media Seller, I have to ask the toughest of all questions. Is this worth all the pain and aggravation?

Just my 5 cents!

2 comments:

Tony P. said...

Randy, any ebay fee structure comparison with Amazon must take into account the paypal fees, right? Depends upon which Amazon account the seller has, but their payment fees can be part of that overall 15%. Right?

I'm not up on Amazon that much, but I do know about my ebay market. It isn't media, so I figure you might like to hear from a seller of collectibles and antiques.

The mixture varies (naturally!), but most of my items fall into a $25 to $200 range. With ebay's new pricing plan, it really doesn't matter whether they are auction, FP or store items - it's Reamin' time!

That's why my other comment stated that this is nothing but a fee hike, with some Thumbscrew-tightening on various aspects of the sellers' businesses.

Sure, in ebay's misguided way they may have the best of intentions, but that's not how it will go down. Sorry, but the Facts state otherwise.

Take the shipping&handling DSR as one, simple example. Buyers grade that DSR on their perception of what USPS/UPS/FedEx should be charging, much more than they grade it upon what it is supposedly intended to represent.

Many, many people have tried to point out to ebay that even the sellers that offer free shipping end up taking a hit on that DSR. In my feeble-minded way of looking at things, that is all that needs to be realized and the word STOP is then issued.

If something is meant to be a Standard by which an important metric is judged, then that Standard must not be open to influences that have nothing to do with that particular Standard. Period. End of discussion. Back to the drawing board.

This one misguided purpose/path of ebay holds the same flawed logic that all of their decisions hold. But maybe I'm wrong; maybe they don't hold a PHD in Disconnect.

Randy Smythe said...

Tony,

"Many, many people have tried to point out to ebay that even the sellers that offer free shipping end up taking a hit on that DSR. In my feeble-minded way of looking at things, that is all that needs to be realized and the word STOP is then issued."

You said it all with that comment.