Ebay Fee Increases for July 2011 - Who benefits? (hint: it's not the sellers or the buyers)

About once a year EBay likes to challenge it's sellers to re-vamp their whole selling strategy or they just like to figure out a way to get more money for themselves.  I personally think that it is the later unless they really are masochistic but I suspect that it is more likely they are just greedy.  But I don't know for sure.  I say that only slightly tongue and cheek since I have no idea what their operating expenses are but I just finished doing my taxes for 2010 and here is the deal; from my sales for the year EBay made just under 1/3 of what I made.  If you add in my pay pal fees the total is just over 1/2.  (meaning for every $100.00 of profit I made Ebay + Pay Pal charged $50.00 in fees.)  I don't know about you but that seems like a pretty heavy fees base already.

I understand that things change and I need to adapt.  I guess that I just wish EBay would be a little more accurate? open? honest? about their changes.  They always seems to word things in way that doesn't make it sound like they are raising their selling fees even though they are.  They must have some ex-politicians working for them.  It feels like working with the government when they say your taxes aren't going up but somehow they mysteriously do. 

Their lastest change is being billed as a decrease in final value fees, and then, in smaller sub-text, the lower fee will now be applied to the price of the item plus the shipping fee instead of just the price of the item as it is now.  They say that they are doing this to encourage sellers to offer low cost and free shipping which in turn will attract more buyers.  But lets be real here where do you think the shipping cost goes if you offer Free shipping?  The only way for a seller to be able to actually do that with out increasing the price of the item itself is if they sell higher end items that are small and don't weigh very much.  So I guess EBay will be a good place to buy your fine jewelry and not much else.

I sell mostly second-hand clothing which I try to offer at just above thrift store prices.  I mean EBay is supposed to be the place that offers great deals on things for the buyer right?  But there has to be a seller on the other end who feels like it is worth their time, expense and energy to offer that item for sale in the first place.

I am trying to grow my business and sell more which would automatically benefit EBay.  Right?  To do that I need to be able to offer good deals to potential buyers and still be able to make a profit but how do I do that when every year Ebay chips away at my margins and at the same time tells me that it is a benefit to the buyers.  I am sorry but in my humble opinion it is just a benefit to EBay.  And here is the kicker.  They actually benefit twice because I will have to raise my prices to cover the fee increase which automatically increases my fees even more.  It what you call a win/win for EBay.

Here is a breakdown of the numbers.

My average shipping cost is 6.00 (I am purposely guessing low because this will show the best case scenario for me not EBay.  It only gets better for them.)

For the category that I sell in Ebay currently charges a 12% final value fee on the price of the item only.  They are changing the fee to 10 percent on the price + the shipping.  So that means that they will be charging me on average .60 cents more for every item I sell minus 2% of the price of the item.  Most of the items that I sell are between $8.99 and $19.99.  So my 2% savings on an item that sells for 8.99 is 18 cents minus the additional .60 cent for shipping and I am net -42 cents on that one item alone if my shipping charge is really only $6.00.  Using the same formula on my $19.99 item I am net -20 cents.  At a sale price of $29.99 with shipping of $6.00 is the place where I finally break even.  Of course generally speaking the higher priced items that I sell are heavier and would cost more than 6.00 to ship so.... that price really isn't a break even (meaning paying only as much as I am now) point.

I know of one seller who said that at about a $50.00 sale price was were she would be back to paying an even fee amount based on her shipping costs.  By the way the postage fees went up again a few months ago.  Do you remember that my friends at EBay???

I am trying not to get too frustrated and just run the numbers to figure out how I am not going to just give EBay an additional .20 to .42 cents on evey item I sell.  But you buyers know what that means right?

Here is how EBay is billing their change publicly: 

"2011 Spring Seller Update: Fee Update to Encourage Low-Cost Shipping"

Here is what I think they are saying behind closed doors:

"Tee hee hee, even if you charge low costs for your shipping we are still going to get more money from you.  Aren't we clever all we had to do was change a formula and send out a notice to rake in a bunch more cash.  What?  You still have to do the same amount of work shopping, photographing, listing and shipping your items, managing your inventory and your business all to make less money?  Well I guess you aren't as smart as we are."

Here is a quote from the Fee Update Announcement that I find to be particularly dubious.

"For the vast majority of eBay sellers—especially those already offering free or low-cost shipping, these updates mean overall fees will be reduced or stay about the same."

Ok then here is a call out to the universe.  I would like to hear from this "vast majority."  What praises do you sellers have for the new EBay Fee structure???  Where are you? You silent majority?  Come tell me your tales of how pleased you are with EBay and how they are looking out for your best interest.

Or if you think that last quote above is a load of B.S., like I do, please feel free to comment as well.

Comments

[Cindy Fortin]

I am happy to hear that you have used another sales outlet with some success. I haven't figured that one out yet. It seems to me that there are too many sites trying to compete with Ebay but none of them have enough users. For now I am proceeding with Ebay.

[Jay]

Yes I totally agree, it is the greed of Ebay. The fees are already high and with Paypal fees on top of most of the sales, I am compelled to look for other methods and sites to do my sales. I already use gumtree.com.au (free) and have made many sales without problems, though it caters only to the buyers in the area and nearby suburbs. We need a site in Australia similar to Ebay which dont charge exhorbitant fees!