Possible EBAY Fee Change Scares Wall Street, Analysts

eBay is reportedly evaluating new fee changes that could meaningfully affect the company’s financial performance and user experience.

At eBay Strategies, Scot Wingo relays recent comments made by eBay CFO Bob Swan and President of Marketplaces John Donahoe suggesting that eBay may radically lower listing fees (presumably in an attempt to entice sellers to stick around instead of absconding for Amazon, et al). That eBay is focused on competition, financial performance, and the “buyer experience” is good news. The bad news, as Wingo suggests, is that the possible fee change may not help any of the above.

Reducing listing fees, Wingo intelligently points out, will increase listings. Unless the site’s “Finding” experience is radically improved, however, this will result in more clutter and fewer clickthroughs, as buyers struggle to find the listings that merit paying attention to…

Donahoe notes that the changes make sense in some categories and not others, which suggests that eBay is being careful here.  But Donahoe’s comments also reveal that eBay has not yet tuned into the real problem with the buying experience–the one that has allowed Amazon to become the gold standard “start-page” for anyone trying to figure out what to buy (more on this here).

Wingo walks through several scenarios, noting that the key issue for eBay-the-company is whether the listing change causes Gross Merchandise Sales (the dollar value of stuff sold through eBay) rises or falls. Wingo doesn’t know the answer, and neither do we.

On Wall Street, an increase in uncertainty is expressed through an increase in the discount rate (and a corresponding drop in the value of the stock). So that’s one reason EBAY continues to get pounded even though Citi and other firms continue to bang the drum.

See Also:
eBay’s Real Problem: A World of “Auctions” and “Stores”
eBay: Time for CEO Meg Whitman to Go?

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