If you're a casual seller on eBay (NASDAQ:EBAY) -- the kind that only lists on the site when you clean out your garage or outgrow your designer jeans -- your world is about to change. Beginning June 16, the online marketplace will allow you to list your first five items in any given 30-day period for free.
There's a catch, of course. In lieu of listing fees, which typically set sellers back between $0.10 and $4 for every item posted, sellers will pay eBay 8.75% of the final value or $20 -- whichever is lower -- of the final value on successful items. That is higher than eBay's current fee on completed auctions for items that sell for more than $25.
In nightclub terms, the cover charges are gone, but eBay is slightly jacking up the drink prices once you're inside. Taking the metaphor one step closer to the beer goggles, you may not like the way the dance floor looks once the velvet rope and bouncer are gone.
Sure, this may sound like great news for the casual seller who has ditched eBay over the years, but eBay was never supposed to be the price leader. Magnetic websites like Yahoo! (NASDAQ:YHOO), Amazon.com (NASDAQ:AMZN), and Overstock.com (NASDAQ:OSTK) have failed over the years to win traffic to their fledgling auction sites by charging less. Dedicated sites like Liquidity Services' (NASDAQ:LQDT) Liquidation.com and the adrenaline-tickling Bidz.com (NASDAQ:BIDZ) are clawing away hard, but are still distant afterthoughts. eBay's success -- and recent lack thereof -- has been the result of the network effect. Sellers go where the buyers are. Buyers go where the sellers pitch their virtual kiosks.
This move is risky because it threatens to clutter the site with noise. If a casual seller gets five free swings every month, they may as well swing for the fences. Maybe I can get $500 for a Pikachu card in near0mint condition. Let's start my Best of Dexys Midnight Runners CD at $75. If you want my Bipartisanship.com domain name, I'm going to draw the starting line at $20,000.
See the problem? Wacky pricing sensibilities will be time-eaters for those browsing the site.
eBay has seen this in action. Until 2004, it traditionally offered free listings for an entire day -- typically a day or two after Christmas. I was one of the many cheapskates looking forward to that day to load up the site with freebie listings. Eventually I realized that few of the items were selling, because the site was overrun with everyone else looking to unload wares. Five years ago, eBay put in a token tollbooth, charging just $0.10 for every item during what was historically its day for free listings.
Thankfully, eBay is restricting the new offer to just five insertions over 30 days. This should help both trim the number of unmarketable listings and spread them out over longer periods of time.
Clearly eBay needs to mix things up. Marketplace revenue fell 18% this past quarter, and that is with the company's non-eBay.com classified and trading sites offsetting deeper weakness at the flagship site. The site has alienated power sellers and bored casual buyers. Normally I applaud anything that strays from the status-quo path for a fading company, but I've seen this eBay before.
Stroll through eBay.com today. Come back and stroll through the site in five weeks. I don't think you will appreciate the difference.
If "buy it now" doesn't work, how about "read it now"?
