Anyway, this whole discussion got me thinking about the new 15% discount on fees and I thought I would do a little exercise on what that discount would have meant to my business had it been in effect, when I was selling.
Stats for the comparison: 200,000 (under $25) store listings generate $300,000 in GMV (I'm using an avg. monthly GMV number and avg store listings from Glacier Bay's good years). When I sold on eBay the FVF for stores was 8%, but I will use the most recent FVF of 10% to calculate my base numbers. The new fees, that went into effect on 2-20, have a 12% FVF for Store sales. (Have I confused you yet.)
Listing Fee Calculation: (200,000 under $25)
- 200,000 items under $25 cost me $10,000 to list with the old fee structure.
- 200,000 items under $25 costs me $6,000 to list under the new structure.
Savings on Listing fees: $4,000 a monthFVF Calculation: ($300,000 a month in GMV)
- Under the old FVF structure of 10% my cost was $30,000 a month in FVF fees.
- Under the new rate of 12% my cost would be $36,000 a month in FVF.
Savings, oops! I mean increase: $6,000
So, if all things are equal and I don't qualify for any FVF discounts I would pay $2,000 more per month to eBay on the same GMV. Let's see what that discounts will get me.
- If I was able to qualify for the 15% discount it would save me $5,400 on my FVF. (It is not likely a media seller will ever qualify for the 15%)
- If I qualified for the 5% discount it would save me $1,800
So let's see how I did before and after the fee changes on $300,000 in GMV and 200,000 listings.
- Prior to the new fees I paid $40,000 in fees to eBay ($30,000 in FVF and $10,000 in listing fees)
- Qualifying for the 15% discount under the new rates, I would pay $36,600 in fees to eBay ($36,000 in FVF, $6000 in listings fees, minus $5400 in discount (15% of $300,000) A savings of $3,400 a month.
- Qualifying for 5% discount under new rates, I would pay $40,200. ($36,000 in FVF, $6,000 in Listing fees, minus $1,800 in FVF discount (5% of $300,000) An increase of $200 a month.
So as it stands, if I want to get my DSRs to 4.8, I can work my butt off in customer service (spend additional money on reps) reduce my S&H rates (give up revenue from shipping) to earn a $3,400 a month savings. I can tell you from experience that I would have to spend close to $3,400 a month to even get close to a 4.8 DSR and if I spent that money and did not qualify for the discount I would be pissed.
The point of this exercise, is that eBay is just playing with the numbers. I can change nothing in my operation and pay $200 more a month in fees, or I can spend at least $3,400 to save $3,400.
Does that make sense?
Update: Before you ask. No, 200,000 store listings did not genreate $300,000 in GMV. The GMV number came from a mixture of CORE and Stores. The numbers just made for an easier calculation.
Perspective: Just in case you were curious - When I shutdown GB in January of 06 the store fees were $0.2 cents per listing and 8% FVF or a total cost (using the numbers above) of: $28,000. How's that for a discount? And eBay management wonders why S&H increased and you can't find a deal on eBay anymore.
Just my 12%