eBay announced a new fees structure, as it is wont to do every Spring. While the good news is they are making insertion fees free for Auction-style listings, they are now charging the 9.0% Final Value Fee (FVF) on shipping charges as well as the amount of the sale. (Before, shipping charges were not included in the FVF calculation).
The intention behind this, as they have stated, is to keep shipping fees down. But keeping shipping fees down is an ongoing challenge for eBay sellers, as they keep going up in the real world; for the U.S. Postal Service as well as other services.
We'll crunch some numbers for a common listing in a moment; for now, here's the chart of the change for Auction-style listings:
The intention behind this, as they have stated, is to keep shipping fees down. But keeping shipping fees down is an ongoing challenge for eBay sellers, as they keep going up in the real world; for the U.S. Postal Service as well as other services.
We'll crunch some numbers for a common listing in a moment; for now, here's the chart of the change for Auction-style listings:
Fee Charts | ||||||||||||
* Up to 50 per month. After your 50th item, Insertion Fees will be charged. See Auction-style Insertion fees eBay Store Subscribers below for reference. ** When used with Free Auction-style Insertion Fee listings. Additional optional feature fees apply when added to your listings (for example, Subtitle, Bold, etc.). OK, so let's look at what happens to fees for an Auction-style item that sells for $9.95 plus $4.95 shipping. This is an example of the kind of price and shipping I might charge on a golf shirt, selling for a very low price based on its acquisition cost, and leaving a little bit of wiggle room on shipping, if you use First Class USPS. Under the Old eBay Fees Structure: Insertion Fee: $0.25; Final Value Fee = 9.0% x $9.95; which is $.90. The seller is paying $.90 plus $0.25 insertion fees, which is $1.15. (We won't even talk about PayPal or extra picture fees for purpose of this analysis) Now, they were charging $4.95 for shipping, which if we say costs $3.10 first class, they are making up $1.85 in shipping. Let's say they acquire the shirt at a thrift store for $3.50. They are making $9.95 - $1.15 in fees, which is $8.80; and then they make an additional $1.85 in shipping, which brings it to $10.65. Now they bought the item for $3.50, so they are really making $7.15 in gross profit per item Under the new fees structure, it would go like this: Free insertion fee, FVF = 9.0% of ($9.95 +$4.95 shipping); = 9.0% of $14.90, = $1.34. So here they are making $9.95 - $1.34 in fees, which is $8.61; and then adding the $1.85 they are still making on shipping (assuming they don't change their shipping charges), and they are making $10.46. So overall, they are making a little less; from $10.65 to $10.46; or $.19 less. Of course, this amount is going to vary a lot depending on what you are selling and how much you charge for shipping. I understand eBay is doing this (at least one reason they are doing this) is to encourage sellers to keep their shipping fees low. I do understand that; but I also think many sellers already are keeping shipping fees low, and in some cases losing money..such as the example of a heavy set of books which they can charge $4.00 media mail maximum. There have been many instances where I have sold heavy, antique books (or even heavy newer books such as textbooks or reference books) and only been able to charge $4.00 maximum; I may have to pay $8, $10 or more on shipping. And that's without any handling fees. In general, I have avoided charging any handling fees over my whole career selling on eBay; I only recently started charging the $4.95 because the golf shirts can make so little profit per item; everyone expects a great bargain. So I think overall these fees will make sellers' margins tighter; they will either bite the bullet to make a little less, or they may sell higher-dollar-value items so the margin doesn't pinch. Or they may change their selling habits. I think it's a good idea to sell on multiple venues so you won't be tied to any one venue. How will these fee changes affect you? Will you change your selling habits, or will the effect be negligible, or do you foresee it even being positive, with more potential buyers? I'd love to hear about it; post a comment here or email me at juliawilk@aol.com. | ||||||||||||
I don't understand this statement: "a heavy set of books which they can charge $4.00 media mail maximum." If you look at the Media rates on USPS site, the maximum weight is 70 pounds at $29.29. I sell and ship books all the time on Ebay, using the Media rates, which often go well above $4.00. What am I misunderstanding here? Now if we're talking Amazon, that media rate IS limited to $3.99, but you were writing about Ebay, correct?
ReplyDeleteHi Dherself! Great point...I did more poking around into this and found that while there is a max (for me it's been a $4 max that I've seen from eBay) for what you can charge via USPS Media mail in your flat rate S&H fee, if you use their shipping calculator, you can go above that.
ReplyDeleteHere are a couple quotes from an eBay discussion board that may illuminate this:
"Re: Getting around eBay's strict Media Mail fee interference
Mar 20, 2010 8:36 AM
You are allowed to charge the actual fee if you use the shipping calculator rather than a flat fee. eBay cannot force you to charge less than actual shipping no matter what some say. You have not agreed to that in your user agreement. [part deleted]"
What I see as the reason for the increase is that many seller have been charging small amounts for their products and large shipping fees to get around the fee structure. I looked at many new sell phones for $.99 with $600.00 shipping. That is what has ruined it for the rest of us.
ReplyDeleteYou're probably right about that...it's a shame! Hopefully most sellers will make it work, or move to selling higher-priced (and maybe even lighter!) items.
ReplyDeleteSeems like just one more squeeze eBay is placing on it's sellers, especially the little guys. WHile I agree some seller's grossly inflate their shipping charge, shouldn't it be up to the buyer to decide if he thinks the fee is fair?
ReplyDeleteDude @ http://www.moneyinthegarage.com