A huge host of changes have been announced by eBay, both in the UK and in the US, much of which has caused debate of some form or another. Let’s take a look at each of the announcements in turn.
Fee’s Changes - UK (except Media, Technology and Vehicles categories)
eBay have heavily focused on the reduction of fees, which is outlined in the table below. It is worth noting that it is the Insertion fee that has been reduced, and not the final value fee, which has in fact increased.
| Starting or Reserve Price |
Current |
New from 20th February 2008 |
| £0.01 - £0.99 |
£0.15 |
£0.10 |
| £1.00 - £4.99 |
£0.20 |
£0.15 |
| £5.00 - £14.99 |
£0.35 |
£0.25 |
| £15.00 - £29.99 |
£0.75 |
£0.50 |
| £30.00 - £99.99 |
£1.50 |
£1.00 |
| £100.00 or more |
£2.00 |
£1.30 |
| for multiple item listings in £100.00 or more tier |
£3.00 |
£1.90 |
| Final Selling Price |
Current |
New from 20th February 2008 |
| Item not sold |
No Fee |
No Fee |
| £0.01 - £29.99 |
5.25% of the amount of the high bid (at the listing close for auction-style listings) up to £29.99 |
7.5% of the amount of the high bid (at the listing close for auction-style listings) up to £29.99 |
| £30.00 - £599.99 |
5.25% of the initial £29.99 (£1.57), plus 3.25% of the remaining closing value balance |
7.5% of the initial £29.99 (£2.25), plus 4.5% of the remaining closing value balance |
| Over £600.00 |
5.25%of the initial £29.99 (£1.57), plus 3.25% of the initial £30.00 - £599.99 (£18.53), plus 1.75% of the remaining closing value balance |
7.5%of the initial £29.99 (£2.25), plus 4.5% of the initial £30.00 - £599.99 (£25.65), plus 1.9% of the remaining closing value balance |
So lower insertion fees are hailed by ebay as a great move to sellers, but that is on the assumption the item does not sell, as the increase in the Final Value Fee percentage outstrips this reduction in all but the lowest cost auctions.
This is assuming that there is no postage involved in the transaction, and the standard paypal rate of £0.20 + 3.4% is applied. Despite the publicity surrounding Insertion Fee reductions, it is worth noting that only business sellers are likely to see any decrease in the overall fee levy. The discounts offered to powersellers will, at best, reduce the new Final Value Fee back to the level it is currently set at.
eBay are marketing this new fee structure as a reducing the financial risk of selling, whilst realigning fees with a sellers success. In simple terms, if an item does not sell, then the seller has not lost as much money on the insertion fee. It is recognised that around 55% of all listings end in a successful sale, therefore 45% of all listings will benefit from the reduced insertion fees. It also stand to reason that the more you successfully sell, the more you pay - up to a point, but more on that further on.
Powersellers Business Registration.
In perhaps the most beneficial move to all concerned, ebay have announced that all Powersellers will now have to register as trading for business. In fairness, it is rare for a private individual selling personal items to become a powerseller, and if they do, it is normally a short-lived affair. By registering as a Business, a seller has to adhere to more consumer protection laws such as the Sale of Goods Act 1979, the Distance Selling Regulations, the Unfair Commercial Practices Directives, the Consumer Protection Act 1987, and the e-Commerce Regulations 2002.
All of this may sound intimidating to the small scale seller, but in reality it boils down to some very simple practices. The goods must be as described, satisfactory quality and fit for the purpose, the price must be clearly indicated, sellers are responsible for the safe delivery of goods and should offer a returns policy for faulty or unwanted items. It is this latter point that may be a new issue for eBay sellers to deal with. As a business seller, your buyer is entitled to change their mind on purchases, known as a 7 day cooling-off period.
It would be prudent for sellers to read up on the Distance Selling Regulations if they are to consider registering as a business, as it has a few other requirements that potentially may cause a lot of issues for sellers. You must state a returns policy, and whether it includes the refund of return postage or not. Sellers are not obliged to refund this cost, but if it is not stated, then buyers can rightfully claim a 3 month cooling off period and expect return postage to be refunded. It is also a requirement that buyers have full contact details for your business, including a geographical address, available to all potential buyers.
eBay are currently suggesting that the Business address and contact number are to be displayed on every listing, however there is reasonable argument and legal suggestion to indicate that the details will suffice on a sellers About Me page. A lot of eBay sellers work from home, and understandably do not want their private address to appear on hundreds of highly indexed Internet pages. The potential security and data protection issues are enormous, but as yet the exact methodology has not been finalised.
With regards HMRC and tax, regardless of the changes, it is up to each member to ensure they have informed their local tax office of any income they make from selling on eBay. If anybody buys or manufactures to resell, they should be registered as self employed and submit tax returns annually. This is not an eBay requirement, but law. It is a huge subject, and in the context of this article should be noted. More information on Self Employment and Tax Registration can be found at the HMRC Website
Final Value Fee Discounts for Volume Sellers.
In line with the business registration, powersellers may be entitled to a reduction in the Final Value Fee that they are charged depending on the average level of the Detailed Seller Ratings remaining above 4.6 (in all four categories) based on a rolling 30 day period. Business Sellers who are not eligible for the powersellers programme (under 98.5% feedback, or recently registered) may still be eligible for a Seller Discount.
The following table illustrates the levels of discounts available to high volume sellers who provide good service.
| Volume of Sales |
PowerSeller Discount |
Seller Discount |
| Titanium |
40% |
20% |
| Platinum |
35% |
20% |
| Gold |
30% |
20% |
| Silver |
25% |
20% |
| Bronze |
20% |
20% |
| Less than Bronze PowerSeller level |
0% |
0% |
PowerSeller thresholds are not changing. To reach the level of Bronze PowerSeller, you need to sell on average a minimum of £750 (or Euro exchange rate equivalent) or 100 items per month, for three consecutive months. All PowerSeller levels are as follows:
| |
Bronze |
Silver |
Gold |
Platinum |
Titanium |
| Gross Merchandise Volume |
£750 |
£1,500 |
£6,000 |
£15,000 |
£95,000 |
| Quantity of Items Sold |
100 |
300 |
1,000 |
2,500 |
5,000 |
(More information on the programme can be found on the Powerseller Homepage.)
This move in particular seems to indicate that eBay are keen to polarise the site between high volume sellers, and occasional sellers. This latter group of hobby, or “clearout” sellers are unlikely to either sell the volume or value required, or are simply selling personal possesions to raise some extra pin money, and therefore will endure the higher overall fee level.
Expanded Use of Detailed Seller Ratings
Not only will detailed seller ratings be used to determine if a business seller is eligible for a discount, but it has been confirmed that more selling categories will be defaulting to the new “Best Match” search criteria - whereby those sellers that are deemed to overcharge on P&P will appear further down the search results.
The calculation of seller performance, and discount eligibility will now only be based on the previous 30 days Detailed Seller Ratings, rather than all historical scores. This is a very positive move for sellers, as rating changes will be more noticeable as selling strategies are tweaked in attempts to improve ratings. If a seller has an average of 4.2 from 2000 sales, any change would entail 1000’s of more scores to move the number, but under the new rules, any changes will filter through within the month. DSR Dashboards will also be introduced for sellers to monitor their own performance on a daily basis, but as yet the final details on this have not been released. Whatever is launched, it will be an improvement on the status quo, where sellers have no tools or analysis on selling strategy and it’s effects on DSR’s.
From February ebay will be looking at other areas of seller service – as determined by Detailed Seller Ratings for communication, dispatch times and accuracy of item description - and increasingly using these to demote sellers who offer poor service, whilst making sure that good sellers rise to the top and get the best visibility in front of buyers. It could be suggested somewhat cynically that sellers are being pushed into using subscription services such as Seller Manager Pro in order to improve communication by utilising the automated emails, or needing to pay more for the eBay picture hosting service to improve description accuracy. As I have previously stated, I believe the Detailed Seller Rating system is fundamentally flawed as an accurate performance measure, as every rating is subjective and not marked to a fixed criteria. I am not convinced that this will do anything to improve overall buyer satisfaction, but will do plenty to the seller rate of attrition.
Paypal, Safe Payment & Buyer Protection.
In a move that initially angered many sellers who considered the move to be a monopolisation between eBay and Paypal, further categories have now been included in the list of “high risk” for buyers. As most of us are both sellers and buyers, we will have mixed feeling on this move. I have to admit that I prefer to use paypal when buying items, as it does offer “some” reassurances, however as a seller I know that it is not the most secure method to receive money. It is fair though that where certain items are more susceptible to fraud, that efforts are made to protect buyers. The most common tale of eBay woe heard in the media normally surrounds somebody who has bought a high value games console/mobile phone/watch etc, only to have their money disappear with the seller. This is bad for ALL eBay users. It’s these stories that deter people from trying eBay for the first time, and it is these stories that tarnish the reputation of all eBay sellers. It stands to reason then that Paypal will be a compulsory payment method in the following circumstances.
- For all sellers who have a feedback score of less than 100, and
- For all sellers when listing an item in certain higher risk categories. These are:
- Health & Beauty
- Video Games
- Mobile & Home Phones
- Computers
- Consumer Electronics
- Jewellery & Watches
As much as I as a seller object to being railroaded into one preferred payment method, I as a buyer can also accept the rational reasoning behind this move, especially as Paypal is only compulsory but other payment methods can be offered. A number of specific categories are still deemed very high risk, and Paypal is the only payment method permitted. These are
Video Games > Consoles
Consumer Electronics > MP3 Players
Computing > Software
Wholesale or Job Lots > Mobile & Home Phones
Business, Office & Industrial > Industrial Supply
On top of these categories, all one day duration listings must only offer Paypal as the sole payment method. Again, one day auctions & buy It Now listings were a high risk area, as many fraudulent sales were often completed by the time the listing was reported and removed.
Held Paypal Payments.
To ensure transactions are completed to the satisfaction of both buyer and seller, PayPal may make the decision to hold payments related to specific transactions on eBay. This will only occur on a very small percentage of transactions, where research predicts a bad experience is more likely to occur. These restrictions will come into force at the end of March, and full details will be made available in good time before this change. This too is a good move for sellers on Paypal’s part. All too often a seller will dispatch an item promptly after payment, only to find the payment being reversed a day or so later. By this time it is too late as the item is already in the postal system. For obvious reasons, the exact method of detection, or what constitutes a “red flag” transaction is not being disclosed, but this is a long overdue improvement.
Expanding Seller Protection
In a move that will delight many sellers, PayPal will be making some changes to their seller protection as an exclusive offer for PowerSellers. Sellers have asked for more seller protection, especially for international payments and PayPal is committed to providing a safer and easier way to be paid online. These changes will be an important step in improving protection for sellers on eBay. PowerSellers in the United States, United Kingdom, Canada, Australia, France and Hong Kong are eligible to register for expanded PayPal seller protection for transactions on eBay and paid through PayPal. When transactions meet the terms of coverage, PowerSellers are protected against claims, charge-backs, reversals for unauthorized payments, and merchandise not received. This benefit is free to PowerSellers and transactions no longer require confirmed addresses to be covered. PayPal has also eliminated the annual coverage limit and extended protection to more countries around the world. This is another long overdue improvement, but it is with mixed emotions as currently the benefits will only be available to Powersellers, who in the scheme of things should be better positioned and financed to cover a small degree of losses. High Street retailers all have a shrinkage margin allowance for shoplifting, forged notes, credit card & cheque fraud etc, but many of the smaller sellers will not be able to afford, or even consider such luxury.
VAT Inclusive Listing Policy.
In a move that has pleased a large number of buyers and sellers is that all listings will now be displayed inclusive of VAT. Previously eBay have left it to the sellers discretion whether they should list an item with VAT, or add it after the sale. Many buyers have reported buying a cheap item, only for it to jump in price by 17.5% when they got to the checkout. Briefly, VAT is generally added to all retail purchases, however sales offered to a business or for export outside of the EU, do not not have to display the VAT element, as it can either be claimed back by the purchasing business or is exempt for the international purchaser.
Many sellers complained that their own items where appearing further down search results based on price, as those listing exclusive of VAT were attracting more sales. By making VAT inclusive prices compulsory has levelled the playing field for many sellers, as well as making pricing much more transparent for the buyer.
But alas it is not without a few disadvantages. There are a number of sellers on eBay that specialise in business to business transactions, such as IT and office equipment sellers, retail and catering suppliers and packaging sellers. The VAT element of the sale will now be subject to increased Final Value Fees, which I believe will be nigh on impossible to claim back, when annual VAT returns are submitted. It will also impact a number of traders that deal predominantly with the export market - collectables such as stamps and pottery spring to mind. Again, they nor their buyers will be able to take advatage of duty free trade. The situation is being reviewed and options considered for these minority who are disadvantaged by the move.
Feedback
The recently announced changes to feedback are extensive and have far reaching implications for both buyers and sellers. Due to the depth of the subject, this will be covered in a separate blog article to follow soon.
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