Is Germany's freshly remodeled eBay (Nasdaq: EBAY ) website a portent of things to come for its flagship stateside marketplace? To capture a bigger share of the potential consumer auction market, eBay is slashing listing fees in half, encouraging free photograph insertions, and reducing charges to German sellers for telephone support.
As eBay's largest market outside of the United States, Germany is very important to the company. Business was slow in both Germany and the United States, which led to this past quarter's 6% dip in global auction listings.
Investors troubled by the implications of lower fees need to lay off the Rhine whine until we see the public's reaction. If eBay's moves spur an uptick in activity, the company can make up the shortfall in volume, restoring the namesake site as a growth vehicle in a company where it seems as though every verb in its portfolio is growing quickly except for eBay itself.
What will this mean for eBay Power Sellers close to home? If this week's fee cuts in Germany succeed, it would make sense to give them a shot domestically. The market is getting more and more competitive as folks flock to Craigslist, Facebook, and Google's (Nasdaq: GOOG ) Base for free, rudimentary item and service listings.
It should happen, but keep in mind that insertion fees are a small part of the equation. The company's real windfall comes from its cut on successfully completed auctions. Listing fees are important: They keep prices realistic by forcing sellers to make an upfront commitment to price their wares competitively. You wouldn't believe the outrageous asking prices on eBay when it has a promotional listing period. But if a reduced cover charge would get more bodies on the dance floor, eBay will have little choice but to play that tune if listings continue to lose volume.
eBay may have vanquished competitive consumer-to-consumer auction side projects at established Web giants such as Yahoo! (Nasdaq: YHOO ) , Amazon.com (Nasdaq: AMZN ) , and Overstock (Nasdaq: OSTK ) , but something is clearly hindering eBay.com these days. Higher conversion rates and average selling prices are more than offsetting the decline in listings, but eBay is going to have to do more to get back on the growth track than making its namesake site fun.
Signs that CEO Meg Whitman isn't standing still:
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