Ebay to Lower Listing Fees, but Increase Commissions

The rumored changes have begun.  eBay has announced changes to their pricing structure.  They are both reducing the listing fees and raising the commision on items that have sold.

The Associated Press reports:

EBay Inc. said Tuesday it will cut by up to 50 percent the fees it charges sellers to list their goods online, in an effort to boost listings and keep pace with other burgeoning e-commerce sites.

To balance the fee cut, the company plans to increase its commission on items that do sell — a method eBay says sellers prefer because it lowers their risk if items do not sell.

EBay will also increase fees on some items, including auctioned goods selling for less than $25. EBay’s fee for those transactions will rise 67 percent, to 8.75 percent of the final sale price.

Apparently the new fee structure will take effect on February 20, 2008.

• What effect it it have on Scout Patch Collecting?

Of course, the main concern to you and I is what effect it will have on our collecting niche.  As a longtime eBay member going back to 1998; I remember a time where virtually any OA flap put up on eBay would sell for a minimum of $5.00.  Sell-through rates of 95-100% were not uncommon.  Most times there would be a mini-bidding war on at least one of the items I put up for auction.  Even what would be charitably referred to as common flaps would sell at $4.00 on the first listing. 

Fast forward to 2007-2008, many OA flaps (and other collectibles) go unsold at $4.00 and $5.00.  Sell-through rates are sometimes only 20% of items listed (or less).  This has led to a reduction in the number of listings in the Boy Scout area.  Most weeks, there are about 10 – 11,000 items for sale at any given time.  A couple of years ago, average listings were probably about 20-30% higher on the typical week.  Now this only seems to happen on free or reduced-price listing days.

• In the short term, I would expect listings to go up.

Once the reduced listing fees are in place, I would expect the average number of listings to go up.  If a seller’s listing costs are cut in half, they will likely to list more items.  It also means that the overall break even point for a seller will a lower even with a small sell-through rate.   

• Longer term – Where are the buyers?

In the longer term, eBay will need to drive enough buyers to their site so that sellers are willing to list.  While a lower cost will help sellers, they can not and will not continue to list if the sell-through rates are too low.