Are eBay losing fees?

[rocket2retro]

As you can see by looking at this discussion board, the most common/repeating topic is how much sellers sales have slowed down in recent times.

Over the past 3 years my sales have dwindled considerably. Every year, in my previous 10 years of selling, I had an increase in sales.

Despite eBay finding creative ways to add new fees on top of other fees, the fees I now pay per annum are about 60% of what they were at my peak 4 years ago. I imagine I'm not alone.

In other words the fees I now pay, due to lack of sales, are not being counteracted by eBay adding/increasing fees.

The amount less I'm now paying is considerable (in the $1000s per year).

One possibily is that eBay have known about this downturn for some time and the addition of the FVF fee on postage was an attempt to bolster their profits and stop them from declining. This might have been an effective stop-gap but surely with sellers now paying 16%-17% (my estimate based on my own sales) there can't be much room left for additional/increased fees in the future.

As FVFs seem to be the biggest revenue earner for eBay, surely they are feeling the pinch, assuming my scenario is commonplace.

I realise there are probably more sellers every year & the 'big box' companies are getting on board etc (not to mention the Chinese sellers), but I'd still be surprised if this alone would make up for the shortfall.

I'm curious as to what others might think on this matter.

[performance_parts_clearance_centre]

The sheer sales volume of the major retailers may be reaping eBay a windfall - although they can't be on a 9.9% FVF, anyone who's moving literally thousands of items a month would still be forking over reams of cash into eBay's coffers.

They're certainly losing a fortune in small-seller FVF's from the lower sales we're all experiencing, but would surely recoup much of that from simply unthrottling small accounts. The higher our sales are, the more FVF's they get.

[davidc4430]

only a tiny number of disgruntled sellers seem to find the boards to vent on low sales so without a decent numbers of sellers being canvessed it would difficult to say the boards are a true guage on success or failure of selling.

[clarry100]

Certainly in our case the total amount we pay to them in fees is way down as indeed are our sales levels.

I think they must be getting it back from sheer volume of sales by the Chinese sellers tho.

And the big ticket retailers that are on here nowadays.

So I don't think they are huirting too much from the relatively low volume sellers like us.

If the loss of revenue was significant then you would see the share price drop like a stone as shareholders deserted ship.

But that's not happeneing as the share price is staying reasonably stable.

[casbit33]

I agree that ebay must be losing money from fees.

The throttling on sellers and giving no promotion free listings has had a huge affect on sellers such as myself. I have over 3000 items sitting in my unsold sections for most of this month. They are not earning anything from me. It just makes no sense. Ebay are supposed to be in business to make money, but they continually do things to stop that.

All sellers want to do is list their items and have them visible.

[digital*ghost]

It's hard to say without doing some thorough research, and having a bit of inside knowledge I suspect.

The other ecommerce site I use makes the bulk of their profits from seller services, rather than listing and final value fees (however, the fees are much lower than eBay's, but they provide their own payment processing service which accounts for a big chunk of their profits, and eBay is contractually barred from setting up payment processing services after the split from PayPal). The other 'service' which they (and eBay) provide are promoted listings - I don't really like calling that a service, since it's really just paying more for prominence (visibility), I see that as less of a service and more of a bribe 

Other revenue is gained via third party advertising - you don't need to sell items for eBay to get money out of that, you just need to list stuff. Bonus free listings may dry up at times, but ultimately they're a pretty common occurrence for a lot of members.  

I do think they're in a more precarious position than some of the other, similar platforms - a lot of their policies have ultimately worked to actively encourage mistrust between buyers and sellers, which was great for PayPal, but in the long term, as more and more online options became available to buyers (but not sellers), other sites were more attractive by default. The MBG tried to combat some of that, but just IMHO, it was poorly implemented and again that just says "trust eBay" when what they really need to do is work on site function and safety (pre-sale, not post-sale) and support sellers (IMO it's sellers that need to be able to trust eBay, while buyers need to be able to trust their sellers).

[collect247]

That is exactely what I argued with ebay when they suspended my selling account.

I thought that ebay were in business to make money and ebay made a **bleep** load from me when I was selling,

but it seems as they don't care to much about loosing a % on fees as they make it back from other sales.

To me a sale is a sale and every $ earned/made is better than $0.

So who ever runs ebay financially is a moron.

[chameleon54]

The short answer is no ebay are not losing fees.

Revenue for the last financial quater was 2.22 billion $$$ up 5.6 % on the previous quater and beating market anylists expectations of  2.19 billiion $$ expected revenue.

Net income ( profit ) for the past 12 months ( rolling financial quater basis ) is $413,000,000 down from $539,000,000 the previous year, but this does not take into account the spin off of Paypal which was a major earner for the company.

Revenue for the coming christmas quater is expected to be $2.36 billion - $2.41 Billion, again up on the previous quater, but slightly below anylists forecasts.

Having said that, these figures are not brilliant for an internet business like ebay. If you compare ebays profit of $413 million to our Australian based banks earning Billions of $$$$ profit it puts the figures into perspective. Ebay is struggling to make signifigant profits and share price is still trading in the same $25-$30 price range that it has been stuck on for the past 3 years. ( currently just over $28.00 ) Profit per share ranges from around 35 to 50 cents per share, again not big returns to investors who own the company. 

[collect247]

Of course ebay aren't losing on fees but they could be making more money and as a business that should be their number 1 priority.

[chameleon54]

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@didawaywith wrote:

Of course ebay aren't losing on fees but they could be making more money and as a business that should be their number 1 priority.

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I couldn't agree more. Unfortunately ebay seems to have lost its way and identity. The company is not sure if it is a Chinese dollar shop, a garage sale, a mega mall of brand name retailers or a crafts, antiques and collectibles market.  This lack of a clearly defined identity makes it difficult to target a particular market and buyer and results in buyers for specific items looking elsewhere.

Personally I think ebay was in its glory days 4 or 5 years ago when it encouraged millions of private sellers to sell private items and build small businesses, often selling unique items. Since moving away from this business model, ebay has struggled to remain relevant  in the face of increasing specialised online competition.  

Without having access to internal ebay business data it is hard to draw any conclusions about which way the company should go, but what it is doing now is clearly not really working for anyone.