My Take On The New eBay Fixed Price Fees Announcement

If you are an eBay affiliate or an eBay seller, you have no doubt seen the announcement from eBay about the new pricing structure for fixed price listings and begun hearing the debate regarding how this will affect affiliates.

In a nutshell, give it a little time and this could be a very good thing. Here is my take on it.

After implementing some drastic changes and higher fees after the first of the year, eBay lost hundreds, if not thousands of sellers. This change may well lure many of them back. Yes, the seller will pay a higher final value fee if the item sells, but if it does not sell - the seller has spent a lot less money on the front end.

eBay affiliates earn their money on the revenues eBay generates from a sale. Period. So if you've been following along with posts in the ePN forum, blogs from other affiliates, as well as a number of forums, you're seeing affiliates cry out that their earnings are going to suffer horrible losses, the sky is falling, I'm done with eBay, etc. type of posts.

PAY NO ATTENTION to these posts and rants!!! <---Yes, I'm shouting.

Here is the part of this announcement that most affiliates are ignoring:

Accordingly, we are shifting the majority of our costs for most categories to the back end (final value fees), which you only pay if you're successful in selling an item. In extremely competitive e-commerce categories such as Consumer Electronics, Cameras and Computers, we're decreasing final value fees. This means we're giving you an even bigger incentive to list these types of items on eBay.

Now go back and read that again. Yes, eBay is lowering the listing fee (for fixed price listings), but what they are saying is they are shifting the usual amount to final value fees. This only applies to items that sell, so now the sellers have their costs reduced when listing, but will likely pay the same as they normally would if the item sells. When you look at it from that perspective, what has really changed? It makes no difference to you if the seller pays less up front and more in the back end if the item sells. It's essentially the same amount. You are not losing any money.

The only way your bottom line will decrease is if your site revolves around Consumer Electronics, Cameras and Computers as they have decreased final value fees on these. But even then, if this attracts more sellers, there will be more items offered for sale than what are currently there. This can actually be a good thing for those of you in these niches. Think more product selection and accessories. (More pages for your sites)

Now remember, this only applies to fixed price listings. Not auction format listings. Auction format listings will remain the same. Yes, this gives more incentive to list a fixed price item, but there will always be sellers who will continue to sell in auction format. It does not necessarily mean that every seller is going to jump on this bandwagon. Only time will tell.

As well, there are many items that you can only find in a place like eBay. Especially hard to find or near impossible to find items. Most sellers are going to list in auction format simply because they want to see how high it will go.

Another argument floating around the web is that eBay is swinging away from its original business model and catering more toward e-commerce. In my book, they are just adding it as more of an option to the buyer experience. Some buyers want to purchase something instantly and others are willing to wait to get the best deal in an auction. This way, you can come to eBay as a buyer and have the best of both worlds.

EDIT: As soon as I made this post, I went to visit some other blogs I follow. Ross over at epntips.com had a great post about eBay and how the changes at eBay could affect affiliates. He also had posted a link to an article in the Chicago Tribune from August 20 about eBay that will give you a more definitive answer as to the direction they are taking.

Only time will tell as we see how this all plays out, but I would not throw in the towel just yet folks. To those of you who do, well that's less competition for the rest of us. However I think you would be making a BIG mistake.

I will revisit this in a month or two and give another evaluation at that time.

On a more serious note, I want to send well wishes out to a few people I know who have been hit pretty hard with flooding by Tropical Storm Fay. Glad to know you all are safe and I hope the cleanup doesn't take too long for you. Take care.