EBay’s new fee structure causes concern to small traders
eBay has introduced a new fee structure to help sellers offer a wider range of goods, but which threatens the position of small traders. The re-jig effects fixed price goods, which will benefit from a 25-50% cut in listings charges, but will incur higher charges for a successful sale. The system has been designed to attract more entrepreneurs to eBay, and offer greater buyer protection.
However, the moves have been criticised for muscling out small and sole traders, and giving larger retailers greater opportunities. eBay aim to phase out cash and cheque payments, making credit card, PayPal, and ProPay the only acceptable methods of transaction. Changes to search, shipping and seller standards are also expected. Sellers will have to comply with stricter minimum standards to reduce buyer dissatisfaction rates: eBay intend to lower exposure levels of sellers with poor customer feedback ratings. While sellers with better ratings, will be more favourably exposed in listings.
Small traders, and sole proprietorships who were doing well, do not expect their prior success to continue. The new challenge they face against the advantage of bigger retailers is that they are not well-branded. To compete, many small traders feel additional interactive advertising will probably be needed, however, they do not have the resources available to bridge this gap. Attracting traffic is said be the main problem. Critics say small business web presence will be diminished under the shadow of larger companies, and in the current economy, small traders will have to generate sales by developing into a niche, or by cutting prices. This situation is further compounded by 88% of all internet searches comprising of branded keywords (data from Experian).
The new system implementation follows a series of adjustments to eBay’s fee structure, search results, and feedback system. All of which have been introduced to improve the buyers shopping experience with better value from “trusted sellers”. Claire Gilmartin, director of marketplaces for eBay in the UK said: “There’s no doubt this year has seen some very, very bold changes – necessarily so and entirely reflective of what our buyers and sellers want.”
Lorrie Norrington, eBay’s president of marketplace operations, admits the changes may be disconcerting, but maintains that the company have not imposed changes without the backing of solid research that revealed the need for change. According to eBay, sellers favour the structure because it lowers the financial cost of not selling a listed item. This means eBay’s success will now be defined by the success of it’s sellers.
eBay sales are worth over £30bn a year, and hooks the attention of two out of every three internet UK shoppers. Despite these impressive figures, eBay has not achieved notable growth, with previous quarter figures showing a rise of only 1.4%.
The new fee system will be operational on 16th September.
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