This is the best blog posted on this fee subject.
I am also please you have showed "clarity" as I did to the Market watch issue 8-17-06. And your SCORE BOARD report. Your valuation level is a short term trade. Skpe is a FREE CASH FLOW entity with unlimited upside post marketing to the mass. EBay is careful with is stand alone yet partnership/integration of Skype. The same was said of Pay Pal at the time EBay acquired that unit, the results speaks VOLUMES.
This company has the discipline and formula to deliver results per guidance with transparency.
Thanks for sharing this post.

Thanks for your continued coverage of this topic. I sold on eBay for 5 years, until early this year when I made the decision to jump ship; long before this fee mess happened.

My problem has always been that eBay's % of sales (take rate in their jargon) has always been way too high for low ASP, low margin businesses like mine. eBay sellers routinely have to pay 15% - 17% of sales for eBay fees and when they run their companies on 10% or less that doesn't leave much room for net profit.

In my book when eBay makes more money than I do, on my sales, it's time to cut and run. There is great demand for media on eBay. (Roughly 2.7 Billion annually in Media GMV) but very few sellers are making any real money on the marketplace.

Media sellers are getting hit hard with this price increase and declining core conversion rates and there is no benefit to scale. The more you list the more it costs you as a % of sales. If eBay wants growth they need to do it the old fashioned way by incentives to list in core.

I could go on and on. Thanks for keeping this topic on the forefront.

A comment made on yesterday's article by Mr. Liber:
"EBay is perceived as conniving, uncaring, calculating, unethical, and headed for a fall by the readers who chose to comment. Calculating and sometimes uncaring, yes. Unethical? I'm not convinced."

Here is why Ebay is unethical.
1. The original announcement made about the fee increases was titled "Resetting the Balance of the Marketplace." Not one word in the email subject stating that the announcement involved raising store fees. And why should that matter? Fee changes are always made between Jan-Mar every year. On 8/14, most store owners learned about the fee hike for the first time when they signed onto Ebay and received a message to remind them about the fee hike. This is borderline "unethical," but it gets much worse.

2. New store owners who opened a new store after the announcement, saw absolutely nothing about the upcoming fee increases until 8/14. The current fees were listed, but nothing mentioned about the fee increase until 8/14.

3. Ebay provides a Communist Chinese market that provides 2/3 of the U.S. counterfeit goods with a free Ebay experience. Not only do sellers in China not pay a dime to sell, but check Ebay's history of U.S. sales to China. Chinese Ebay users will flood our market with fake merchandise, but not spend a dime on U.S. goods. This is a completely unethical practice to charge the U.S. more, and subsidize a one sided free trade agreement with China.

4. Ebay offered to allow sellers to transfer their store inventory to auctions for the last two days for just 10 cents, ending on 8/16. That is exactly what the email stated, and no mention whatsoever about the pending credit toward listing future auctions. I opened "Seller Central" as stated in the email, visited the link on the far bottom right corner of the page, and found another link on the third page to full requirements.

Ebay will credit each seller's account for each listing fee at the end of September. This is after August's invoice has been billed with the full amount charged, and sellers are trapped and trying to decide which car to sell so they can salvage their credit from Ebay's credit vultures. This is just another way Ebay plans to eliminate store owners. If they cannot pay the fees, their accounts are suspended and stores closed. Did I mention that this makes a nice little insurance policy to cover the store closings this quarter?

5. Ebay has a longstanding policy of sellers not offering items for sale off-Ebay, because Ebay's Buyer Protection does not exist off-site. Each store seller has to compete with Ebay's shopping.com in the footer of every listing and page in their store, which offers items off Ebay's main site without protection. Ebay receives it's "take rate" from every click on shopping.com, so that makes it acceptable to link from Ebay. If I were to link to all my Ebay items on another engine, such as Froogle, anywhere on Ebay, my membership would be permanently revoked. More simply put, Ebay store owners pay rent to advertise Ebay's other shopping sites. This doesn't even cover Yahoo ads instead of Yahoo smart technology in the search function.

Anyone who cannot see the blatant unethical practices in just the few examples above (there are many more) then they must receive a paycheck directly signed by Meg herself.

Great blog! Nice to see comments that aren't simply pastes of ebay PR construction.

As to the ebay/paypal vs. ebay/skype relationship, they are two different models, entirely. PayPal as a payment service directly integrates into the ebay infrastructure. ebay = sales; paypal = method to pay for such sales.

Skype is useful within ebay for a very limited amount of transactions. Even the high-dollar transactions would more likely use land-based, regular phone lines. If you're spending $8000 for an antique vase, wouldn't you rather know & use the seller's regular phone number?

An analogy would be a thoroughbred Horse ranch(ebay) that purchases a Show Horse Saddle company (Paypal). That would add potential sales. If the Horse Ranch also bought a company that makes horse trailers (Skype), it might have sales, but most people would already have trailers. Actually, the analogy would be more fitting if the horse ranch bought a company that makes Wheels for the horse trailers.

Skype is a $2B boondoggle. Money that should have been spent on infrastructure, but the Street was watching. Couldn't spend the money on something that didn't at least appear to be able to produce revenue. God Forbid! that it might be something that would help *future* business.

As for this whole fiasco being about the FEES - no, that isn't the full picture. It is more about deceit and unethical practices. What the sellers know, the Street has no knowledge and, frankly, doesn't care. It is that Blind Eye towards bookkeeping that leads to many a great fall. Fall or not, only time will tell.

Currently, ebay's 10-cent sale on store-to-core- listings is recorded at full price to the seller's account. The "10-cent" sale discount will be applied as a Credit to the accounts on the September bills. Most will not actually get those bills until November. Guess what that means? Yep, Q3 will meet expected earnings.

Now, those credits *should* show as liabilities, moving into Q4...maybe they will, maybe not...depends upon how the books are worked. This isn't an unknown practice - it is quite common in industry - offsetting liabilities until a later Quarter. However, on the US site, this form of list/credit hasn't been done for several years. Wonder why ebay would do it now?

Oh, by the way, for the past few days, PayPal has been double-charging anyone that made a *single* purchase with their PayPal debit card. Some sellers report they have been triple-charged. PayPal claims they will straighten this out within 48 hours or so. Some sellers are requested to mail in (not email) a form that is available on a special URL.

All the while...PayPal is deducting their fees accurately and instantly. No wonder that PayPal looks so good to the Street.

What’s up with all the auction listing sales lately? We’ve had three in the last month. We’re lucky to have three in one year and we’ve had three since the fee hike announcement. What is EBay management trying to do manipulate the auction counts? This is so investors think their new strategy is working? And what’s with the latest listing sale fee credit that will be applied most likely in the next quarter? EBay has plenty of cash, why do they need the loan from their customers? Why can’t they give the credit now? These are some serious questions. What are they trying to hide from investors? Does the SEC need to step in and investigate?

eb & Tony,
Thank you for raising the ethics question again. Perhaps I will reconsider and post something on that subject. I need to distinguish between deceitful and unethical. It may be a distinction without a diference so stay tuned and perhaps I will refocus. Prosperity and good health to all.

RE: "If they are smart they will listen, learn, adapt, change and grow -- that is my message to the sellers as well."

As a seller and longtime retailer, I know how to do all of these things...except on Ebay. How does one adapt to invisible listings? Ebay has been guilty of what some have termed rolling blackouts in which items disappear from search results, sometimes for days at a time. Store items are frequently unavailable to buyers because only some of a store's items are showing up.

How can one adapt and grow with a company who changes the rules at every turn and somehow FORGETS to even tell its sellers that it has done so?

I doubt if the stockholders care about this but maybe they should since it is only one of the many things that Ebay is busy manipulating with bad results for everyone: sellers, buyers, and the stockholders who won't see Ebay's earnings rise if its sellers can't sell because the buyers can't see all that is available.

The powers that be on Ebay are playing games with everyone. They have no clue how to make systematic changes that do not result in turmoil for all. Meg's method of throwing it up against the wall to see what sticks (if it doesn't break first) is not a viable plan. She should be gone, taking Bill Cobb with her.

"Perhaps I will reconsider and post something on that subject. I need to distinguish between deceitful and unethical. It may be a distinction with out a diference so stay tuned and perhaps I will refocus. Prosperity and good health to all."

Sheldon, what is to distinguish? I think that would be splitting hairs. Since when is deceit ethical? Simple but true.

Lyn,
Appreciate the comment. Here is the difference. A business is deceitful when they allude to something that they may not intend to do just to gain some advantage. A company is unethical (and unlawful) when they back date options, fail to present material information in their SEC filings,and use the company Jet for personal business. As the options scandal unfolds it would not surprise me if eBay options were called into question. They gave them away in a free-for-all fashion and protested severely when the government and people like Warren Buffett pushed to get them expensed. This story has legs. Having said all that, you may be right after all. I'm always learning, Peace.

What an excellent article, and what intelligent follow-ups. Speaking to the topic of unethical and deceitful, Ebay has made it next to impossible for sellers to get information about the number of stores, number of items, etc. There was a link to all stores on Ebay, not just Featured. When I checked it early the other day, the number of Stores was down from 250,000 to 130,000. Later I posted the link to the discussion board and now you can't access it.

My question: does leaving the door open to the Eastern sellers while closing it to US sellers constitute unfair foreign competition? Not to mention other countries also having their items in General Search. To correct one misconception, our stores were put in General Search in February and sales skyrocketed. Then in March they were yanked. Ebay said this was because the shopping experience had become "confusing for the buyers." Huh? If they want our merchandise to move, why not put us back in Search? Is this something the International Trade Commission should look into?

Here's some more unethical behavior for you: I had 8 unsold items that were eligible for a Final Value Fee refund. Due to a "technical error" they were not applied to my account (a check of the eBay community boards will tell you this is a recurrinig, long-lived bug). I wrote to inform them of the problem and request a manual correction of my account. Here are my 3 replies from eBay:

1.Thank you for writing eBay in regard to Final Value Fee credits for
items 290001456184, 290001464757, 290001465594, 290001466586,
290001470481, 290001472465, 290001474857 and 290001626910.

Please be assured that I have forwarded the information that you
provided to our engineers for further investigation.

Thanks for taking the time to let us know and I apologize for any
inconvenience that you have experienced as a result of the problem.

2.Thank you for writing eBay in regard to receiving a credit due to a
technical problem.

Please be advised that we will not be able to issue any of the Final
Value Fee credits until the current problem is fixed. This is because
the system may issue the credits automatically when the problem is fixed
and, if we were to issue the credits manually right now, this may result
is a double credit situation.

3.Thank you for writing eBay in regard to the credits you are waiting for
due to a technical problem on our end.

I understand you would like to be credited right away but unfortunately
we are not able to issue the credits you have requested until this
technical problem has been resolved. I assure you that it is a top
priority and hopefully it will be corrected soon.


The amount in question is small, but the idea that a company would acknowledge fault for the error yet refuse to correct it is mind-boggling. I've sent a complaint to the San Jose BBB. Before August end I will send eBay payment for what I owe them (subtracting those final value fees myself) and that will be that. I've been on eBay since 1997 and refuse to be treated with the condescending attitude they seem to be so fond of lately. I am (make that WAS) a paying customer who has found other outlets, and yes, I get sales there despite less traffic. Buyers are looking at other options too.

Are they possibly holding on to any and all funds they can think of to look more attractive to stockholders? In light of the recent "10 cent special" which appears to be a "lend us your money for a month or two" special for eBay and the increased number of listing specials despite dismal sell-through rates, I'd say yes.

This is in response to the comment by Elisa about ebay stores being in general search for a couple of months and then being pulled.
I am a very small store owner of collectibles and vintage toys that I get at estate auctions. I opened a store during the time ebay was offering the first month free. It was great and fun and profitable. I made Power Seller status in a few months "Jan, Feb, Mar" and then I lost it because nothing was selling.
I know why now, and even though I do love working my store on ebay, met some really nice people and have had hours of fun, I am truly hoping Google or someone big will come and bring the ethical behavior, honest information and fun back to online auctions/stores.
Their stock has gone up but how much did it drop first and how much stock can they buy back with $2B? It does seem coincidental that so much information was released at about the same time. And, this is the beginning of the best selling season which makes it hard to not stay with ebay.
I believe eBay has been unethical and dishonest for quite awhile now. Time will tell, but it will be too late for me unless Time happens soon.
Thanks for listening to my comments.

Thank you for this thought provoking and insightful blog. I would just like to reiterate what one poster said in response to the notion thatIf they are smart they will listen, learn, adapt, change and grow -- that is my message to the sellers as well." for many of us it is not just the fee increase but the fee increase combined with lack of visibility. The ''rolling blackouts'' if they could be proven to occurr and I certainly believe they can most certainly would be unethical and would even the hope of a buisiness plan unfeasable. If the number of potential buyers to your store is being changed at the whim of a branch of a company there is no way to find out patterns, trends or flaws in the shopping experience you are providing to your buyers. If the market is being tampered with and your sales fluxuate perpetually there is no way to maintain a buisiness plan that works accordingly. In other words someone else is in control of your profit and no change you make,no listening or adapting you do will help. Growth suddenly becomes something someone else is in control of. The FTC has been about this issue, and I am aware that they are noticing a pattern of complaints in this regard.
I have seen my own merchandise ''dissappear'' and have searched for things that appeared no where on e-Bay through any means of searching but were indeed there as they could be only be found with some searching through Google as being active listings on e-Bay. If that isn't ''hiding listings'' I don't know what is.

Phone companies, Light companies, and all other big companies all wait 14-30 days to give refunds to their customers. How many times have you heard," It will appear on next months statement"! ( They credit you back the refund from when due) What is the big deal here? A few people on this blog are saying that eBay keeps refunds to make their books look better? lol. Hog Wash! It's company policy the same as most other companies and to think otherwise is plain nuts!

Tracy,

The 64K question is why does Ebay need to issue the credit later? The two previous listing sales in the weeks prior they gave the discounts right on the spot. Ebay is supposedly not hurting for cash flow. Why the sudden need to do this? Also, why the need to run so many listing sales since the fee hike announcement when they rarely run them during the year? These are reasonable questions.

In response to #14, the "big deal here" is that with my billing error there is no "you'll see it on the next months statement", just an ambiguous "we've sent it to engineering and they're working on it". THAT is the hogwash. When I've called other companies with billing errors, it was corrected on the spot over the phone, and yes, it did show up in next month's statement - but they acknowledged the error and fixed it promptly. Big difference.

With eBay I get condescending lip service and no action at all. It's shoddy customer service, pure and simple, and I'm not alone in being being treated that way. They clearly state they fear accidentally double-crediting me a less-than $5 amount (horrors, they could go bankrupt!!) No, much better to stick your customer with the bill for your error than to take responsibiity and fix it promptly. That's unethical.

Reading all the Ebay conspiracy comments, I am amazed at those out there that believe Google is the greatest most ethical company ever. Google tracks eveything we do on the internet and converts that information into a huge cash maschine. The company hides information from their users and investors and Google is anything but transparent corporation.
America is a free market place. If you choose not to sell on Ebay, so be it. I have bought and sold on Ebay since 2001 and I have found the experience to be satisfying. In 2004 I bought a Rolex on Ebay for $ 5,150.00. The watch was a fake. I contacted Ebay and Paypal the minute I received the fake and the account of the seller was frozen. It took six months of investigations, but I received all of my money back from Paypal.
If you think Froogle is a better marketplace for your items as a seller, sell on Froogle. I wish you all the best. But I will stick with Ebay. I will send in my comments to Ebay and work within the system to make the Ebay experience better rather the 'cut my nose off to spite my face' approach some seem to be taking.

I feel that XM and Sirius are great products and can both do well. After all, 2 satelite TV companies exist. Everyone I know that has subscribed to satelite radio says they would never give it up. Most people who have not subscribed just have never tried it out. I do not believe that cost is prohibiting many people from subscribing. It costs less than $10/month with a 3 year subscription. This is less than the weekly costs for cofee or cigarettes for most people. If the masses can afford $40-80/month for cable/satelite TV, then XM or Sirius is cheap. It is just a matter of time (1-3) years before satelite radio (both XM and Sirius) become mainstream and hence very profitable.