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eBay Wants to Be Your Craigslist

By Rick Munarriz – Mar 20, 2013 at 1:16PM

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The leading online marketplace makes it easier to list -- but be careful on the way out.

The leading online marketplace is shaking up its seller terms again.

eBay (EBAY 1.05%) is making it easier to populate the website with merchandise, looking to make less in insertion fees while further aligning the website's interests with the success of its sellers.

Just don't go thinking that eBay is doing this out of the kindness of its own heart.

eBay's been offering casual sellers up to 50 auction-style listings without initial insertion fees, but now it's allowing them to have fixed-price items available among those 50 items. That's the good news. The bad news is that the final value fee -- the amount that eBay charges on any successful sales -- is going from 9% to 10%.

The marketplace is also shaking things up for its more active eBay Stores subscribers. They will now get between 150 to 2,500 listings that are free of listing fees based on the premium monthly plan. The final listing fees will now be between 4% and 9% of the final selling prices, a move that will bump rates higher for many sellers.

Some sellers will groan, but it's a smart move by eBay to compete with (AMZN 1.26%) -- which doesn't charge insertion fees -- and the Wild Wild Web realm of Craigslist.

Craigslist is entirely free of fees outside of those offering brokered apartment vacancies in New York City, job listings in major metropolitan cities, and therapeutic services in the United States.

As long as the new move doesn't motivate more casual sellers to pollute the site with overpriced listings, one can also imagine that the experience will be better for potential buyers.

The virtual flea market that eBay was in its infancy has become more of a marketplace for larger merchants over the years, and there's a price to pay for going mainstream. Growth slowed in eBay's marketplace business. eBay's PayPal -- with 122.7 million active users by the end of last year -- overtook the namesake site's 112.3 million active users.

eBay had to do something to get the buzz back, and this is better than standing still. Marketplace revenue grew 11% last year. That's a nice move after a few ho-hum years, but it's a laggard in e-commerce. Net revenue at Latin American peer MercadoLibre (MELI 4.05%) grew at a 25% clip last year, and the top-line pop would actually be closer to 39% on a constant currency basis. Net sales at Amazon soared 27% last year.

The new fee terms won't transform eBay into a growth darling again overnight, but it should create an incremental uptick in listings.

That's a good place to start.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends, eBay, and MercadoLibre. The Motley Fool owns shares of, eBay, and MercadoLibre. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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