eBay usually has 2 reasons to change pricing on the site.
1) To make more money
2) To guide seller behavior
According to John Donohoe, eBay's recent fee changes will result in a lower take rate for eBay - a graph he slapped up while he was presenting showed eBay taking a smigde lower rate after this change.
As everyone has seen by now, the fee changes really clobber low ASP sellers and tend to favor higher ASP sellers. In effect, it's a take from the poor and give to the rich plan, and poor eBay doesn't get their nut either.
Or do they?
Here's where the "influence seller behavior" part comes in.
eBay also announced a slew of new benefits central to the new Power Seller program, which raises the bar so high to be a Power Seller that 40% of all Power Sellers will no longer be one in a few months. A Power Seller will now be someone who achieves a 4.5 or better on all four Detailed Seller Rankings. Most current Power Sellers are above that level in 2 or 3 out of the 4 rankings. The DSR that gives the most people trouble is the Shipping Cost DSR. The Shipping DSR is the most ridiculous DSR for many reasons, but I'll save that analysis for another post. So the perception for most sellers is that in order to raise up that DSR, they must lower shipping fees or even offer Free Shipping (for a large seller, free shipping gets you a 4.8 DSR - no, I'm not kidding).
So, Mr. Large Seller goes from 5.99 shipping to Free and raises his price. 2 things will happen.
1) Their sellthru rate will fall, meaning they pay ebay more fees vs. what sold, and
2) they are now paying 8.75% on the shipping fee that they transferred to the price.
So if they used to sell an .01 auction for $22.00 with $5.99 shipping, under the old plan, they would pay .20 insertion fee and 5.25% of 22.00, or $1.16, for a total of $1.36, plus a paypal fee of 27.99 * 2.2% + .30 cents, or $1.77 - over 6%. ebays total take is $3.13, or 11%
So, with the new behavior ebay is promoting - free shipping, this same auction would be .15 insertion (a 25% decrease) and 8.75% of $27.99, or $2.45 - a 60%+ increase (yes, I know the fee slips slightly at $25.00 - I'm trying to keep it simple here people this is hard enough!) The Paypal fee would remain the same at 6%, or $1.77. Total cost is now $4.37, or 15.5%
This all assumes a 100% sellthru rate - anything less than that will increase fees further. The average sellthru rate in my media categories is probably around 25%.
So don't cry for eBay come next quarters reports - their take rate is going up, or I'll be a monkeys uncle.
-K
