eBay Promotion? Or Hidden Price Hike?

On June 16, 2009 eBay will implement a new listing fee structure. They are promoting this new fee schedule as a good deal to sellers in which eBay is allowing each seller to list five auction-style listings per month for free but charges a Final Value Fee of 8.75% on the sale price or a flat fee of $20, whichever is lower. All additional items sold will have the current fee structure applied to them.

eBay has been encouraging high-volume sellers and simultaneously been pushing the fixed-price format, which makes up about half of eBay’s volume. In the first quarter of 2009, Fixed Price grew 12 percent while Auction format items declined 20 percent. With the new promotion, eBay is trying to attract unique items listed in the auction format.

Let’s do the simple math on this new promotion and see if it actually does save sellers money. Assuming the items do not sell, it will save the seller up to $20 a month assuming they list items over $500. Currently, if you sell an item for $50, you pay $1 for the listing fee and $3.07 for the final value fee, totaling $4.07. With the promotion, the $1 is waived but you are now charged $4.38. Let’s take a $400 dollar item; you are charged $3 for listing it and then $15.32 in final value fees with the current fee structure. With the new promotion, you will be charged $20 because 8.75% on $400 is $35. The only way to take advantage of this promotion is to have items sell under $25 or over $485. If your item falls in between those numbers, I would recommend to work around this new fee structure. Users who use an eBay tool or a third-party listing tool will not be eligible for this offer. Maybe it is now time to look into tools? Or maybe just list 5 low value items first every month.

Their fee structure does not compare to any of the eBay alternatives [Wigix/Bonanzle/iOffer] out there as those sites are clearly lower in fees. Does this mean that sellers are willing to pay a premium to get their items sold?

Link to announcement: http://www2.ebay.com/aw/core/200905120954402.html

eBay & Resolution Do Not Go Together.

eBay revealed that they are trying to move dispute resolution from Paypal to eBay by the end of 2009. This is a highly debated move and it contains many aspects, but the one that stands out the most is the new [to eBay/Paypal, not credit card companies] policy about counterfeit items.

What happens if a buyer believes an item is not authentic?
When buyers file a claim alleging that the item is not authentic, we require the buyer to destroy the item. Once a buyer confirms destruction of the item, we will reimburse the buyer or provide an eBay coupon.

Source: http://pages.ebay.com/...

This policy has been around with credit card companies, but this is very new to the online marketplace and this seems to favor the scammer even more. Let’s take a case in which a legitimate seller is listing authentic Gucci purses and unfortunately runs into an illegitimate buyer [this happens all the time]. The transaction takes place on eBay and everything seems fine until the item is received. Then, the seller gets a notice in his inbox that notifies him that his Paypal account has been frozen due to receipt of item ‘Not&a... Now, Paypal asks the seller to fax in documents, etc. which takes days and sometimes weeks to sort out. Meanwhile, the seller cannot withdraw money from his Paypal account to pay bills/suppliers/etc.&a...

With the new procedure, eBay would require the buyer to destroy the handbag. I’d say, in 9 out of 10 cases, the buyer would ... report that the item has bee... actually destroying it as what a normal person in their right mind would do. No... seller would ... of luck as he cannot even prove the handbag is realanymore. I have always sided with the fact that all of these protection policies and dispute resolution outcomes favor the crook and I think that’s what the majority thinks as well. Sites such as Bonanzle and Wigix have played it smart and left dispute resolution to the payment processors.

Will It Work? Told Who? ToldYa

Friendster, Myspace, Facebook and now Twitter. Every day, we are exposed to new widgets and apps that clutter our online profile. Create one that is a necessity, you might become the next Mark Zuckerberg. Earlier this week, we were introduced to the newest Web 2.0 child: ToldYa. They have created a way for items to be sold through the same channel where we communicate in. How? A portable, embeddable online store that allows friends to securely buy and sell on social networks, blogs and sites with ease. ToldYa uses a web-based software platform to create, host and manage Portable Stores which are placed in user’s profiles and blogs. Sites such as Wigix have already taken advantage of the social networking going on everyday by allowing their users to publish their recent activities to their Facebook and Twitter accounts. Is ToldYa going the right direction?

Let’s take a step back and see how this product is actually used. Friend A posts something for sale through ToldYa’s widget and it appears on his Facebook profile. Friend B wakes up and checks his Facebook, work email, personal email and then cell phone, in that order. Friend B sees in his Newsfeed that Friend A is now selling his iPod and is interested in purchasing it. Friend B clicks Buy and goes through the checkout process and schedules a pick up and will pay in cash when he picks up the iPod. The only advantage of this process compared to Wigix’s social publishing is that the actual transaction can take place on Facebook. Other than that, both provide the same functionality. So the bigger picture question is: Is this a widget that Amazon and eBay should be looking into building?

For more information on ToldYa: www.toldya.com.

Aroxo a new feature for eBay?

Aroxo: Cute name, pretty site, but old idea. I ran across this article on Tech Crunch today and was really shocked that another company is building something that has failed before.

Aroxo differs from eBay in which their product pages are static so that buyers and sellers are aware of each other, whereas all pages on eBay are dynamic. We do see eBay going to a SKU system and might easily be able to build a system very similar to this in the future as the current “Want It Now” program is not really successful due to the backwardness of it. This can easily become an add-on for eBay once they move towards a more structured catalog similar to Amazon or Wigix.

Currently, this structured catalog system already exists at Wigix. Wigix is an emerging marketplace that utilizes the NASDAQ model where buyers and sellers can place open buy and sell orders very similar to the bid/ask stock trading platform. Wigix was founded on March 28, 2007 and went to Public Beta on April 29, 2008 and reached 2,000,000 products in their catalog as of January 28, 2009. If I had 3 minutes with the founders of Aroxo, I would suggest that they have a meeting with Wigix before entering the US market to figure out if the model is excelling.

Priceline.com also tried to apply their bidding model to items outside the travel industry and learned firsthand that reverse auctions don’t work well with goods. They closed the doors on WebHouse Club, a privately held licensee of Priceline.com that allowed consumers to name their own price for gasoline and groceries. While Priceline.com’s travel business model has proven that reverse auctions do have merit, just not in all sectors.

At the end of the day I see Aroxo more of a feature that sites such as eBay will adopt, but not as a standalone entity. Best of luck!