Major changes to eBay fees and feedback

eBay have announced sweeping changes to their self-styled global marketplace in a bid to combat signs of slowing growth.

Speaking at the annual eBay Forum in Washington, D.C. last week, John Donahoe, who replaces Meg Whitman as chief executive at the end of March, unveiled controversial plans that include new listing fees and a fundamental redesign of the ailing Feedback system.

Under the new rules, it will be cheaper to list items, but the charges for successful sales will go up.

Feedback ratings measure reputation on eBay. Each time a deal is struck, buyer and seller can leave positive, neutral or negative feedback, with a comment on the success or otherwise of the transaction.

There have, however, been growing concerns that the system has ceased to be a credible measure of trust and eBay have adjusted their five-star ranking system in favour of a new and more detailed feedback system allowing buyers to rate sellers on a number of aspects of a transaction (such as the accuracy of the item description or charges for postage and packaging). The scheme, dubbed Feedback 2.0, was piloted early last year.

From February 20 sellers will also be subject to ‘search exposure’, giving prominence to the listings of sellers with the best buyer satisfaction ratings.

EBay’s most active users, known as “power sellers” – who have been defecting in increasing numbers to websites such as Amazon – will receive fee discounts of up to 15 per cent when their user satisfaction degree reaches a certain level, and their goods will feature at the top of search results. Those sellers whose overall ratings fall below 4.2 on a five-point scale will find their goods ‘buried’ at the bottom of any list.

These unreliable sellers will also be obliged to offer a secure payment option, such as PayPal.

However, in undoubtedly the most controversial aspect of the shake-up, sellers will no longer be able to leave negative feedback for problem buyers.

EBay argue that the feedback system was being abused, citing a four-fold increase in the number of sellers leaving ‘tit-for-tat’ negative feedback for buyers who complained about a transaction. Their research suggests that this retaliatory feedback was one of the strongest reasons former eBay buyers have for no longer using the site.

But as users began to digest the proposals, eBay discussion boards were white hot with protests from their vocal community who – if often critical of the Feedback system – were less than happy to see it removed it altogether.

“Sellers will no longer have a way to protect themselves against bad buyers, deadbeat bidders, scam artists, buyers who make unreasonable demands, buyers who don’t read the description then demand a refund, the list goes on and on,” one merchant wrote in a forum.

Others took glee in pointing out that eBay had no financial incentive to stop non-paying bidders, because they charge fees and commissions regardless of whether a transaction goes sour. EBay admit as much as six per cent of auctions on the site end in non-payment by the winning bidder.

In the wake of 12 years of remarkable growth, the incoming chief executive conceded eBay were now faced with stagnant user numbers.

Addressing more than 200 top North American sellers at the forum, Mr Donahue said he believed the “flea market” culture on which the company initially thrived had started to hold them back as internet commerce has become mainstream.

A new fee structure is aimed at boosting listing numbers. The fee changes are complex and will vary by country, but, starting in the United Kingdom, sellers should see reductions of 25 to 50 per cent for listing an item. ‘Gallery’ fees for posting groups of photos will also be eliminated, making the financial exposure of listing an item very small.

However, as eBay are balancing the changes by increasing the ‘final value’ percentages they charge whenever an item is sold, the response from the online community has again been lukewarm.

For example, on items selling up to £599.99, eBay currently take a 5.25 per cent commission on bids up to £29.99 and 3.25 per cent thereafter. From February 20 eBay will charge 7.5 per cent on the first £29.99 and 4.5 per cent thereafter.

In the chatrooms the term ‘feeBay’ has already been coined.

By Roland Arkell