eBay Switches Fee Model

Online retailer eBay wants to stock its virtual shelves with more fixed-price items and reduce its dependency on auction sales.

The company announced today some drastic changes to its listings fees and commissions that are intended to encourage buyers to list more, and duplicate, items at fixed prices to sell via eBay's "Buy It Now" program. Starting in mid-September, sellers will be charged just 35 cents to place an item on eBay for 30 days, which is a drastic reduction from its current fee of $4 to list an item for seven days. In return for the reduced fees, eBay will take a larger commission for completed sales but has so far declined to say what that commission will be. The company will also limit methods of payment to credit cards and PayPal, cutting cash, check, and money orders out of its business entirely.

The new approach is designed to counter eBay's slowing sales growth. The New York Times says auction sales account for only 57 percent of eBay's revenue, with the rest coming from advertising, PayPal and global classifieds. The new business model is eBay's attempt to boost retail sales by favoring bulk sellers who make their living selling items on eBay. However, collectors and others who are trying to sell rarer items that could fetch a respectable price at auction may find it tougher to do business in the new eBay. Members of the Professional eBay Sellers Alliance told the Associated Press that they are seeing fewer of their listed items on eBay sell and those that do move are being sold at lower prices.

eBay has been doing a lot of tinkering with its business platform recently. The auction company had already cut its commissions and listing fees for fixed price sales earlier in the year, and today's announcement drops them even further. It has partnered with Buy.com and is apparently allowing Buy to list items on eBay at no cost. EBay also adjusted its popular feedback program so that sellers can no longer rate buyers, but buyers can still rate sellers. But the feedback changes may not really matter, since a switch to electronic methods of payment is only likely to cut down on buying scams on the site. If you are one of the millions who love the auction platform, don't despair. As eBay's Lorrie Norrington told the New York Times, "We love the auction model. It's still a great model for certain types of sales."