eBay Turns into Just Another Online Retailer
Rumors that eBay was going to move away from its auction model and shift to fixed-price sales have been confirmed by the company, reports the New York Times.
The open marketplace that eBay is known for has lagged as consumers become less interested in auctions when presented with equally low-priced goods from online retailers.
eBay’s new pricing plan, which offers a 70% cut in upfront fees for fixed-price, “Buy it Now”-enabled items, charging just 35 cents for a 30-day listing, is designed to encourage bigger sellers and offer a larger selection. The company hopes this will help it compete with larger retailers like Amazon.com.
eBay is also changing the rules on payment options: All customer payments will have to be made by credit card or through PayPal, eBay’s online payment service, rather than previously acceptable - albeit rare - check or cash transactions.
The shift toward a fixed-price format upset some small, independent sellers who rely on the auction model to move one-of-a-kind inventory, so much so that they’ve organized boycotts and tried to disrupt a company event in June.
The auction model is not being pushed out, the company has countered. It is still viable - particularly when an item is in high demand, or if the seller is uncertain of its value.
The changes are part of eBay’s necessary effort to improve merchandising performance: Its gross merch volume growth is not nearly as high as it has been in previous years, and though revenue has increased 20% to $2.2 billion, much of it was due to advertising, global classifieds, and the success of PayPal.