New eBay CEO John Donahoe isn’t wasting any time sweeping the Meg Whitman era out the door. The “announcing bold changes” press release reads like a fireworks show designed to dazzle observers into forgetting all about the past.
The bottom line is that the changes will likely:
- Reduce eBay’s “take rate” (the percentage of revenue the company makes per dollar of Gross Merchandise Sales
- Drive some sellers away, reducing revenue in the short term
- Improve the buying and selling experience (for good sellers), improving the company’s competitiveness over the long-term.
We think eBay should consider reducing final-value fees, too, thus making itself the low-cost leader (and perhaps the company will consider this if the current round of changes don’t have the desired effect).
eBay is cutting listing fees by 25%-50% and jacking up final value fees. This will:
- allow the company to compete more effectively with Amazon, which has a similar fee structure.encourage sellers to flood the site with listings, which will improve choice but will also create a lot of clutter–making the “buying” experience worse. eBay thus needs to immediately improve its product search capabilities, or the fee change will actually be a net negative for the site.
- allow the company to compete more effectively with Amazon, which has a similar fee structure.
- encourage sellers to flood the site with listings, which will improve choice but will also create a lot of clutter–making the “buying” experience worse. eBay thus needs to immediately improve its product search capabilities, or the fee change will actually be a net negative for the site.
eBay is limiting “Gallery” fees (upcharges for photos).
- This is an unambiguous positive for buyers and sellers alike, but it will obviously nick revenue.
eBay is changing its “search” system to reward “good” sellers and punish “bad” ones.
- A smart but controversial change that should improve the buying experience (good) but will infuriate sellers who don’t have excellent feedback reputations–because no one will be able to find their stuff.
Details of this change:
To start, the company is making its minimum standards more stringent for anyone who sells on the site, primarily to discourage behaviour that causes buyer dissatisfaction, such as charging excessive shipping fees or not describing items accurately.To this end, eBay will begin decreasing search exposure for the listings of sellers who have high rates of customer dissatisfaction. Also, the company will begin requiring a safe payment option, such as PayPal or a major credit card, for sellers who have lower rates of customer satisfaction or who sell in categories that have a high number of buyer complaints.
eBay is also setting the bar higher for sellers who aspire to its PowerSeller program. Qualified PowerSellers will receive valuable fee discounts and better payment protection from PayPal. eBay will also begin increasing search exposure for the listings of sellers with the best buyer satisfaction ratings.
“It is our intention to reward great sellers,” Donahoe said to the audience. “Sellers that describe items accurately, ship on time, and ship at a fair price will enjoy preferential pricing and discounts on eBay. We think this will significantly improve the buyer experience overall.
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