EBay to end fees for sellers to take on Amazon
20 Mar 2013
For the first time since 2010 EBay Inc plans to overhaul fees for sellers in a bid to cut costs and simplify costing as it geared up to take on bigger rival Amazon.com Inc for online merchants.
Fees would range from 4 per cent to 10 per cent, according to the size of the seller and the type of products sold. Brian Hsu, eBay's senior director of pricing said. He added, the company would also stop charging sellers for listing most items, he said.
Chief executive officer John Donahoe is looking to keep individuals and small businesses from gravitating towards Amazon.
The new structure seeks to address criticism of the overly complicated pricing structure at the company, and comes after measures introduced last year aimed at making it easier for consumers to shop on the site that led to a boost in the number of items sold by outside sellers by over 40 per cent last quarter.
According to Hsu, who was speaking in an interview, the company wanted create transparency around profitability. He added, some sellers dide not feel they could go with eBay without transparency. He added he wanted sellers to feel comfortable bringing all their inventory to eBay.
eBay's shares were up 2 per cent at $51.10 at the close in New York, even as Amazon declined less than 1 per cent to $256.41.
Meanwhile, even though the general public hardly finds fault with Amazon, according to recent surveys, at least some sellers on Amzaon are not happy with the company which is being taken to court by a couple of third-party sellers in Washington state, for holding on to their money much longer than what their contracts or the law says.
The Seattle Times, which was the first to report on the development, said the would-be class action suit claimed Amazon routinely broke the terms of its own agreements with sellers, which allows the company to hold onto their money for up to 90 days if it believed there was some problem with the seller.
The sellers also say that under Washington state law, Amazon qualified as a ''money transmitter'' and would therefore need to pay out within a legally required 10-day time frame.
Also a number of sellers are far from happy over reported changes to Amazon's fee structure, as the company does not publicise the revenue share it gets when third-party sellers make a sale on Amazon.
However, according to a Reuters report, fee hikes over the past year-and-a-half were leading some sellers to consider abandoning the site, despite the access it gave them to Amazon's 200 million customers.
According to analysts, these problems have cropped up come at a time when Amazon's success appeared to depend increasingly on third-party sales, which now made up 40 per cent of the total items sold through the company's website.
They add this seemed a great deal for Amazon and point out that the company had a massive technology infrastructure and had put up dozens of massive warehouses. They add, the less Amazon had to spend on inventory to keep those shelves filled, the lower its costs and the lower its risk.
