June 24, 2005
New EBay Service Aims to Stem Merchant Exodus
By GARY RIVLIN
SAN FRANCISCO, June 23 - EBay started a service on Thursday that helps merchants create online storefronts separate from the eBay Web site while still contributing to the company's bottom line.
EBay executives have long recognized the need to stanch the defection of their best customers - eBay merchants who pay the company any number of fees so they can sell to the tens of millions who browse eBay's marketplace each month.
Many of those merchants, emboldened by their success at the auction site, are starting to pose a competitive threat to eBay as they open their own Web sites. Many are reducing the volume of merchandise they sell on eBay, if not ending their participation altogether.
To combat that trend, the company has created a service called ProStores that offers ready-made online storefronts with features like shopping cart technologies and secure checkouts. EBay will charge merchants $6.95 to $249.95 a month for a store, depending on the breadth of services a merchant selects. In addition, the company will charge a commission of 0.5 percent to 1.5 percent on all successful transactions.
The move, said Michael Dearing, an eBay senior vice president and general merchandise manager, is an acknowledgment that eBay sellers, large and small, are increasingly looking to sell in many locations
"That's how they found us in the first place," he said, "looking for an alternative channel for selling."
To encourage participation in ProStores, eBay is offering a limited-time 30 percent discount on the monthly service fee, among other incentives, to current eBay sellers who sign up.
The service comes after a decision earlier this year that prompted thousands of eBay store owners to leave the site. In February, the company raised the fee that store owners pay on sales to 8 percent from 5.25 percent. There are several other charges sellers must pay, including listing fees and a fee if a seller wants to show more than one photograph of an item.
"I felt like I was getting nickled and dimed to death," said Chel Ramsey. She sold children's clothing through eBay until she decided that it was eating up too much of her revenue. Ms. Ramsey closed her eBay operation this year and opened her own store on the Internet.
EBay's decision to help entrepreneurs set up storefronts puts the company in direct competition with Yahoo, which is already in the business of helping small merchants sell to consumers through the Internet.
"This is about eBay's desire to retain those customers" it may lose because they set up their own online store or move to rival services like Yahoo, said David Garrity, an analyst with GVA Research, an independent firm based in Brooklyn.
EBay, he said, is forced to cut into its own business because its merchants now have more alternative ways to market their goods.
the comparison was about protesting rates/fees/taxes, etc....the comparison fits.
If i was going into bancruptcy due to witholding my listings from easy, if i was sacrificing something becuz of my reduced listings, than the different cliches thrown at me today might fit, BUT since i am using other venues and my sales are doing fine, My expenses are HUGELY reduced the cliches do not fit. cutting off my nose to spite my face nor penny wise and pound foolish do not fit. Rather ebays decisions to raise fees AGAIN seems to have cost them some domestic revenue...
I don't really see the comparison... that was based on taxation without representation.
Ebay offers a service, it's up to you to decide whether you want to use it or not. And as long as we are throwing out clich�s, one that comes to mind is: Penny wise and pound foolish.
Can you imagine all the power sellers who ebay WAS their primary source of income? can you imagine them getting nickled and dimed to death? ebay has taken a wonderful monopoly and opened the door to competition.
You think my protest is short sighted? had you been around a couple hundred years ago, we might all be drinking tea and answering to the Queen...
Hey diversification is good, so you do what have too. But again your protest seems short sighted. If Ebay was your primary source of income then I am guessing you wouldn't have such a high-ground to stand on.
if ebay was the only place to sell online then your reasoning would be correct but i have a 30% sell thru at overstock, which is just a hair less than ebay and it costs 1/4 the price of ebay....i use ebay to help DRIVE customers to overstock. I also use overstock to drive customers to ebay...the only problem i have with overstock is they will not allow foreign buyers.
About your rule of thumb....my auctions generally start at $9.95....comparing apples to apples, .40 for a 10 auction, .35 for a gallery picture, .35 listing fee...=$1.10 to list. That is without closing fees or paypal. The same auction is .23 at overstock.
That is why i sell at BOTH venues and Bidville whose sell thru is not worth mentioning. I do make sales at bidville but no surprise sales, everything at bidville is driven there by ebay and overstock.
That seems short sighted. You are mad at Ebay, so you are going to hurt yourself by selling less? Kind of like saying, "I hate the fees my dentist charges, so I am going to rip out all of my teeth."
Like it or not Ebay, is the de-facto online auctioneer. There is no other selling venue that I know of where you get the amount of eye-balls on your listings. Not to mention people feel safe and are comfortable buying on Ebay.
The rule of thumb I use when figuring my cost for selling on Ebay is 8-10%, and that includes
PayPal fees. That is incredibly low when compared to other selling channels, including traditional storefront selling.
Bottom line is, Ebay drives traffic to your listings better than any other options I know of.