eBay.....what a crock!

[bkrodgers]

Tell your boss to lower his profit margin to 2% and see how that goes.

Ebay fee percentages do not represent or equal their profit margin.

Clearly they're related, but their profit margin from the ebay service is the total that they get from those fees minus the costs of developing, hosting, marketing, and providing support for their service.

Someone needs to start a new eBay of sorts. I don't mind them making a profit....but it should be clean and simple. A flat 2% fee of sale price is fair. Everybody wins.

My understanding from a quick google search is that about $60 billion a year in goods flow through ebay. 2% flat fee would give them about $1.2 in revenue. Turning to their income statement, their annual revenue over the last 4 quarters is reported at $11.6 B. Their net income is $3.2 B, so (simplistically speaking...some of this is accounting) annual expenses of various kinds are $8.4B. The income statement numbers include all sources of revenue at the corporate level (including PayPal), but clearly $1.2 B in revenue from their main business line would not be anywhere near enough of a contribution to cover their expenses.

Now, this is a simplistic look. They have other sources of revenue and other lines of business beyond eBay (most notably PayPal). And the question of whether their expenses are anywhere near in line what it should cost to run an auction site is totally different topic. But what is clear is that a flat 2% fee would not work for them the way they operate now. Could they be more efficient? Probably. Could someone start up an auction site that runs more efficiently and can be profitable on 2% fees? I don't know. If it were that simple, I'm sure someone would have done it and destroyed ebay by now.

Don't get me wrong though...I really do think eBay's fees are pretty high. But the flip side can be seen in this thread. Craigslist operates with a vastly different and leaner model, and is free to use. But it has its own issues. Some of what you get through eBay, most notably the protection that is offered to both buyers and sellers, is worth something. Whether there's a middle ground option that would provide some of that for a lower fee, I don't know. I wish there was!

 

[luke]

I don't like eBay, in fact I closed my account years ago over a dispute I had with them. I used Craigslist and did ok, but it took forever to sell stuff and I found I was getting 15~20% less than eBay closed auctions. Some items never sold.

Assuming the eBay and Paypal fees add up to 10%, not only would I be ahead with them, but my items sell, quickly.

As a result, I recently opened a new account and sold eight items on eBay that had been CL dogs that garnered no interest.

90% of something is more than 100% of nothing, even though I had to wait 21 days to get paid.

 

[Rick]

Rick I have great feedback on EBay, when I sell stuff I am happy to get it out of the house and end up with some cash, otherwise it sits around doing nothing. A pity that the fees have got higher but it still is a way to get rid of stuff.

You just have to factor it in. For heavy stuff (ATA cased 4x12 cabinets, for instance) I just use Craigslist. The shipping cost (don't want to jack the thread by getting on a UPS spiel) makes it nearly impossible to price competitively, and you end up making more on a local sale. But with guitar and effects, etc, Ebay still reigns because they offer such a wide audience of buyers. So, it is like most any business. Demand for their product goes up, and their prices go up. More in their pocket, less in yours. It's the way of things in business. I don't begrudge them that.

But charging fees on shipping cost was a ridiculously money grabbing move. Did it stop the (probably) 1% of people from cheating? Yes, I am sure it did. Did it SCREW every Ebayer who has done honest business and charged prices fairly for items and real shipping since the start? Yes it did, and that's what makes it wrong.

Will me (or anyone) being mad about it have any real effect on Ebay? Nope.

All in all, it's just another brick in the wall.

 

[stratamania]

You just have to factor it in. For heavy stuff (ATA cased 4x12 cabinets, for instance) I just use Craigslist. The shipping cost (don't want to jack the thread by getting on a UPS spiel) makes it nearly impossible to price competitively, and you end up making more on a local sale. But with guitar and effects, etc, Ebay still reigns because they offer such a wide audience of buyers. So, it is like most any business. Demand for their product goes up, and their prices go up. More in their pocket, less in yours. It's the way of things in business. I don't begrudge them that.

But charging fees on shipping cost was a ridiculously money grabbing move. Did it stop the (probably) 1% of people from cheating? Yes, I am sure it did. Did it SCREW every Ebayer who has done honest business and charged prices fairly for items and real shipping since the start? Yes it did, and that's what makes it wrong.

Will me (or anyone) being mad about it have any real effect on Ebay? Nope.

All in all, it's just another brick in the wall.

Virtually my thoughts on it too.
The other side of the coin is as a buyer I have been able to find and acquire things that would be next to impossible otherwise.

 

[Rick]

And that's the kicker, really. You can buy from more people, and sell to more people, on Ebay than you can with a local paper or Craiglist (especially after they shut down the Jaxed compiled version). You have to crunch the numbers and see if what they charge for that privilege works for you.

Overall I like Ebay. But (to the OP) that FV on shipping is them using a miniscule minority to rob the majority, just using this an excuse to fleece everyone. It was a bad move, and an obvious money grab. It did move them into the faceless "screw-you conglomerate" category for me, no longer a community based partnership. I hope FAS never takes that road.

 

[Tremonti]

MY POINT IS THEY DO NEED TO STREAMLINE AND SIMPLIFY! Or even more to the point is start a craigslist with eBay hybrid type of company.

If you start from scratch and keep things simply then 2% is PLENTY! It's win win. Ebay doesn't protect the seller...nor does Paypal. So have a craigslist type environment with some of the eBay stuff to make it better.....

Ebay fee percentages do not represent or equal their profit margin.

Clearly they're related, but their profit margin from the ebay service is the total that they get from those fees minus the costs of developing, hosting, marketing, and providing support for their service.



My understanding from a quick google search is that about $60 billion a year in goods flow through ebay. 2% flat fee would give them about $1.2 in revenue. Turning to their income statement, their annual revenue over the last 4 quarters is reported at $11.6 B. Their net income is $3.2 B, so (simplistically speaking...some of this is accounting) annual expenses of various kinds are $8.4B. The income statement numbers include all sources of revenue at the corporate level (including PayPal), but clearly $1.2 B in revenue from their main business line would not be anywhere near enough of a contribution to cover their expenses.

Now, this is a simplistic look. They have other sources of revenue and other lines of business beyond eBay (most notably PayPal). And the question of whether their expenses are anywhere near in line what it should cost to run an auction site is totally different topic. But what is clear is that a flat 2% fee would not work for them the way they operate now. Could they be more efficient? Probably. Could someone start up an auction site that runs more efficiently and can be profitable on 2% fees? I don't know. If it were that simple, I'm sure someone would have done it and destroyed ebay by now.

Don't get me wrong though...I really do think eBay's fees are pretty high. But the flip side can be seen in this thread. Craigslist operates with a vastly different and leaner model, and is free to use. But it has its own issues. Some of what you get through eBay, most notably the protection that is offered to both buyers and sellers, is worth something. Whether there's a middle ground option that would provide some of that for a lower fee, I don't know. I wish there was!