Ebay is in the ad selling business, and profits handsomely from selling ads whether or not the sellers lose their shirt on ads for products that sell or not. Because so many dealers are failing miserably in the tightening economy as well as the huge growth of ads on Ebay only creating more competition and falling prices for items, Ebay has recently touted what they claim as lower ad prices. But are they really?
Ebay has lowered most ad prices by a mere nickel, while at the same jacking up what are known as "final value fees" of products sold. For example Ebay has dropped the "insertion fee" for an ad of a product that sells for as little as $1.00 to 35cents from 40cents, but now charges a 8.75% final value fee, up from 5.25% charge they used to levy on a sold good. And that's not the end of it. Ebay owns Paypal, so profits by charging the dealer who sells an item on Ebay by charging more fees there as well for the transaction when paid for using Paypal selling the $1.00 item on Ebay.
Ebay manages to figure enough angles to come in for all but just a few cents of a $1.00 item sold on their site, leaving the poor seller almost nothing. And if the item doesn't sell, then Ebay collects anyway, although they often allow you a second chance to list the product without having to pay a second "insertion fee". Only on the successful ads where an item sells for a higher price is the dealer left with a decent amount of money.
And with problems finding products from wholesalers cheap enough to actually sell on Ebay, generally only high roller dealers who can buy factory refurbished or other bargain in huge lots factory direct lots acquire stock cheap enough to successfully sell on Ebay. Many small dealers get caught up in "dropship" or monthly fee schemes from some wholesalers who sell goods at prices too high to compete on Ebay, causing them financial failure. More and more Ebay is becoming the financial playground for big sellers, while little dealers have little chance but to sell a few garage sale type goods for very low prices. Only a few antiques or collector's items can work as a successful selling angle for many Ebay dealers.
Many dealers on Ebay think that owning a "store" there is a solution to their selling problems. But the final value fees grow even worse for Ebay "store" sellers who pay monthly fees as well up to 12.00% of the final selling price. And for Ebay store dealers, their products don't appear along side of most regular auction listings on Ebay, so tend to only get lost with far less foot traffic of less traveled parts of the Ebay network, however the mothly "store" fees at Ebay just go on.
Ebay posts huge earnings on Wall Street and founder Meg Whitman is one of the high rollers involved in Mitt Romney's presidential ambitions. But just like Romney's penchant for tall tales and issue flip flops, Ebay's claimed ad price decreases are really price increases when the final value fee increases are considered, something very unwelcome to many persons selling goods on Ebay in hopes of earning a little money during the recession because they're already hurting economically.
When you're down and out Ebay really knows how to kick you all the way to bank. Many smaller sellers are probably better off to stick to Craiglist type free ads, and leave most selling to the big boy high roller sellers on Ebay. Few ads will succeed on Ebay outside of automobiles, big items at cheap prices or some antique.
Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!