EBay raises store fees

SAN JOSE, Calif. – Citing a trend that has “caused the buyer experience to suffer,” eBay will raise a variety of fees applying to merchants who operate online stores. The company is not changing the listing fees for any other format, including its auctions.

The company hopes to boost its auction business by raising its “Store Inventory listing fees.”  Beginning Aug. 22, eBay will charge five cents for each insertion whose price starts below $25, and 10 cents for any starting above $25. The insertion price for both is currently two cents. EBay will also raise the final-value fees from 5 percent to 7 percent on items with selling prices between $25.01 and $100.01.

In a July 19 conference call with analysts, eBay CEO Meg Whitman expressed confidence that the moves will help the company’s stock, which has been in a slump, to bounce back. “We are refocusing our marketing to drive buyer demand to traditional core (auction) listings,” she said.

Whitman anticipated a possibly negative response from users. “Whenever we do a fee increase, our community doesn’t like it, but I think they will understand the reasons why we are doing this,” Whitman said.

The Professional eBay Sellers Alliance (PESA, www.gopsesa.org) had no reaction on its Web site, preferring to publicize a month-old fundraiser. PESA is the nonprofit trade association comprised of more than 800 high-volume eBay sellers who represent $1 billion in annual eBay sales.

Elsewhere on the Internet, the Web site www.auctionbytes.com provided some eBay sellers with an outlet in which to vent frustration over fee increases. Also, a search on eBay for the term “fee hike” yielded slightly more than 100 auction listings protesting the rate hike, many of them humorous. Items offered tongue in cheek included a fog machine, for “blowing smoke … ,” and even an “eBay Store burial plot.”

The new prices will raise fees to affected merchants by an average of 6 percent, eBay estimated. EBay ended June with 203 million registered users, but the company does not break down the number to indicate how many of them are sellers, active or otherwise.

Store inventory listings represent about 83 percent of the volume on eBay’s site but generate just 9 percent of the gross sales volume, according to the company. The rising store inventory listings have “diluted the magic of eBay,” Whitman said. “We are trying to get back to the essence of eBay … We are confident that these changes will rebalance our marketplace. A balanced, healthy marketplace provides the best buying experience, while maximizing cash flow for our sellers.”

EBay’s stock price – currently hovering around $25 per share – has dropped 55 percent from where it stood at the end of 2004. This represents an evaporation of $40 billion in stockholder wealth over the past 18 months. The company has announced its intention to buy back up to $2 billion worth of stock. It marks the first stock buyback in eBay’s nearly eight-year history as a publicly held company.

The stock downturn reflects concerns about eBay’s slackening growth, international competition, and, more recently, how the company’s online payment service might be hurt by a rival offering from Internet search leader Google Inc. Google is dangling lower processing fees and other incentives to entice merchants.

EBay’s PayPal service fared well in the second quarter, generating $330.7 million, a 39 percent increase from the same time last year. PayPal ended June with 114 million account holders, a 44 percent increase from a year ago.

Associated Press, Internet sources, Mark Moran contributed