The Day eBay Changed

Today is the day eBay changed to a new business model. For years, eBay has had a fee structure based on a few things (for small sellers, anyway):

1. Listing Fees (a cost for posting an item)
2. Listing Upgrade Fees (want your listings to appear in bold? go for 10 days? etc.)
3. Final Value Fees (they take a percentage of the final sale value)

In addition, eBay bought Paypal a number of years ago, so they also take a percentage of each payment processed.

For years in my CIS 152 course at PCCC and more recently my INF 163 class at Bergen, I've discussed how having an item go for 99 cents is not a good thing for eBay, in my opinion. It would be better for them to let people set a starting price and give them a free listing fee, because they would make more money off a final value fee. For example, if I list an item for $1.00 and it sells for $1.00 cents, eBay would get about 19 cents (10 cents to list the item and 9 cents for a final value fee). I might list an item so cheaply to avoid paying a large listing fee, which I am responsible for even if the item doesn't sell. Many sellers avoid risk, so they start items cheap in case the item doesn't sell, minimizing cost for listing fees.

My personal opinion was that if eBay cut out listing fees and simply raised final value fees, they would reap two benefits:

1. Sellers would list items for higher prices, therefore leading to higher final value fees.
2. Sellers would be more likely to sell items that might not sell, due to reduced risk of wasted fees.

eBay has seemingly decided to go with this, and will now allow sellers to sell 50 items a month with no listing fee, regardless of starting value. In addition, these auctions will be eligible for a free "Buy It Now", which allows an anxious buyer to purchase an item for a set price and preempt the auction.

Link to new fee information

Listing upgrade fees still exist, as do final value fees.

Of course, there are always catches. First of all, eBay will no longer just be taking a percentage of the final sale. They are also taking a percentage of the shipping cost. There still seem to be some workarounds, but eBay has done this because a seller could list a $200 item for $0.01 with $199.99 shipping and pay no fees on an item (and sellers did try to exploit this).

It seems like eBay's idea here is to keep small sellers around, while motivating medium sellers to move to eBay stores. The eBay stores are a system which has monthly subscription fees ranging from $15.95 to $299.95.

The loser in all this is the buyer who is looking for bargains, because in my opinion, they are going to be harder to find.

Skype and eBay divorce

In what I can only describe is "it's about time", eBay decided that Skype didn't fit in their business plan and sold it off. Skype is an online phone system, basically allowing people to make free calls to other people on Skype through their Internet connection. It can also be used to call from your PC to a telephone, at lower rates than most standard phone services have. For example, it's 10.3 cents a minute to the Dominican Republic, and 10.6 cents per minute to India. Compare this to Verizon charging 17 cents a minute to DR and 33 cents a minute to India. What's kind of nice is that the other person won't even know you are using a computer to call them. Nice idea!

The question I had when eBay bought it a few years back was "what are they going to do with it? How does this fit in eBay's business model?". I suppose the answer has been found.

The sale (which does allow eBay to keep a share of Skype) allows eBay to focus on what they know (online auctions). I always wonder if it is better to focus on one thing and do that really well, or to spread your business out. In this case, there was very little integration between the two applications, so it was an odd fit from the start. Meg Whitman, a former CEO of eBay, was approving of the purchase, but now that she is gone, the company found itself free to rid itself of an asset that was not helping the bottom line.

Part of me wonders if eBay is being smart, since pending legal issues have led experts to question whether Skype will need to be shut down eventually. The question is this - Skype doesn't sell advertising, and though it has 405 million users, how do you turn that in to real revenue? I don't know how many people use it for anything aside from free calling, so I couldn't tell you.

Web Link:

• Link to sale story

Fat Fingers

Late last year, I got a PS3 for myself, and I was looking to pick up a few games for it. One game I wanted was Guitar Hero, and I wasn't finding very good prices. I went to eBay, and same thing, there weren't a ton of great prices. I decided to try a site that I've used called fat fingers.

When an eBay seller lists an item for sale, they specify the keywords that go in the listing title, etc. People make mistakes, and if they make typographical errors, the end result is sometimes that they just don't get people to see their item. If no one sees it, no one buys it.

Anyway, fat fingers is a free site that will find auctions that are spelled wrong. For example, I was able to find an auction for "Gutar Hero" when I searched, and it was an auction starting at $5. I bid $5, and no one else bid on the item (because they didn't find it due to the spelling error), and I got a brand new copy of Guitar Hero for $5 plus shipping. When I bought this, this was an excellent price for it.

Note that this works well especially with eBay auctions. If it is a "fixed price" auction, you probably aren't getting a deal, but if it is an auction, you have a great chance of putting in a low bid and winning something.

I am still shocked that eBay hasn't found some way to fix this, because when their sellers lose money, they also lose money on commission.

Anyway, here's the site:
www.fatfingers.com

Fat Fingers

When people post to Ebay, there are often times when they make a spelling mistake in the title. This is a way to find yourself some bargains. For example, if you search for Nitendo (instead of Nintendo) on Ebay, you will find a ton of results currently for people who misspelled these item titles. If I were looking for Nintedo DS games, for example, I'd find things at a much better price if there were less bidders, and if there is a typo, there will be less bidders.

There is a Web site called Fat Fingers (typos can sometimes be called "fat finger problems") that will search Ebay for typos and return a set of results with typos in the same. The net result should be a set of bargain auctions. If you're looking for something, it can't hurt to try!

Web Link:

• fatfinger.com

Ebay boycotts

Ebay, the online auction sites, has been making a lot of changes that seem to be angering their longtime sellers.

One of the changes led to higher fees on Ebay, and a second set of changes, going in to effect next month, will take away the ability for Ebay sellers to leave feedback on a transaction. Their goal? They want buyers to rate transactions without fear of sellers leaving negative feedback.

Sellers already went through a boycott last month, and will apparently be doing another one on May 1st. This doesn't really affect buyers as much as it affects the battle between Ebay and sellers.

If there was any alternative to Ebay out there, this would really be that company's chance.

Ebay Boycott story