In response to my last blog post, here’s my two cents on the 2% reduction in active listings on eBay.com during the first quarter of 07.
It is not eBay fees in general that causes this decline, but more specifically, eBay insertion fees.
So you might be asking, why now? eBay insertion fees have only gone up slightly in recent history, so why would there suddenly be a decline after all this time?
I think that some eBay sellers are doing one of two things to make this happen:
1) Sellers are so afraid of losing money when their items don’t sell quickly enough that they are too timid with their listing strategies, and put almost everything in their eBay Store as a Store Inventory Format listing instead of putting it up for sale as an auction or fixed price listing, which will move a lot quicker. The result is fewer sales for the seller and fewer listing on eBay, but by playing it safe they minimize the risk of paying more eBay fees than they have to.
2) Other sellers do the opposite. They list like crazy in auction and fixed price, sometimes listing way more than they should. Have you ever looked up an item and noticed that 1 particular seller has 20 of them listed, even though in the last 2 weeks there were only a few sales of the item? This is what I’m talking about. These sellers list a ton, and even though they increase their sales, their overall profitability goes down because they have too many unsuccessful listings in proportion to the ones that do sell, and they pay way more in eBay fees. Eventually, even though their sales are continuing to increase, these sellers realize they are not making the kind of money they thought they were (or they’re even losing money overall), and they become frustrated and stop selling on eBay all together.
Part of it is seller behavior and it is within their control, and part of it is the fee structure on eBay. The overall fees are fine, but the insertion fees (especially with more expensive items) are high enough to cause real problems for any item that sells less frequently than 30-40% of the time.
Part of me wants to recommend that eBay think about lowering some of their insertion fees, especially the ones above $25.00, but its so difficult to judge how the market will respond to any shift in fees, so its not an easy call.
That’s my two cents.
Corey Kossack is one of eBay’s “Top Sellers” through his eBay store, Koss DVD He is also author of eBay Millionaire or Bust and creator of ProfitBuilderSoftware.com, an online software tool designed to reduce eBay fees and maximize profits for eBay sellers.