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eBay changing its fee model

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TEXT OF STORY

Bob Moon: When it comes to online auctions, most of us think "eBay." But there's word this morning the company synonymous with the online auction market is moving away from that model. Today, eBay is announcing a new fee structure that emphasizes fixed-price listings. In a move to attract more sellers, eBay will be slashing its fixed-price listing fee by almost 70 percent starting a month from now. Marketplace's Dan Grech has more.


Dan Grech: eBay hopes lower upfront fees will increase its selection of products. That will help it compete with other online sellers like Amazon. But it moves eBay away from its signature auctions.

Online marketing consultant Kevin Heisler says eBay has no choice. Many people seem to prefer the ease of an immediate sale over the anxiety of an auction.

Kevin Heisler: A lot of buyers have become disillusioned, I think, with the idea that they're really not getting a great value, because they can't count on winning an auction and they're not sure that the auction is always going to be fair.

Mom and pop sellers often like auctions, because people tend to overpay.

Heisler: When people buy at an auction, they have oftentimes that kind of auction fever where they'll pay more than what an item is worth. So there is that dimension that has given sellers much more revenue through the long haul.

The eBay auction isn't going away quite yet. Auctions still account for more than half of eBay's revenue.

I'm Dan Grech for Marketplace.

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Also, Ebay is offering to slash fees for sellers who offer free shipping. Why would they care about shipping, you ask? Because they don't make any money off what you charge for shipping. If you can sell a 2 ounce widget for $1 and manage to get $20 in shipping for it, they only get fees from the $1 sale. So to make sure they get their cut of absolutely everything, they are going to 'incentivize' sellers to offer free shipping. That way, too, sellers will naturally build the cost of shipping into their start price, so Ebay gets a higher fee when it sells.

Fee changes are never for the benefit of the people who make Ebay a living breathing thing - only for the people who sit back and rake in all the fees.

While eBay may be moving away from online auctions, the Biddingforgood.com is getting my business. I often 'win' items that are always under retail value -- and I know that the money is going to a good cause.

What you don't point out is that the little guys with eBay shops are going to be charged almost three times as much per month for their shops and their fees for listing [small amounts like £1] will also be trebled. Only the big shops will survive! I'm sad - it was a great hobby now it has to end, Teresa

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