eBay announces that beginning in late August they will be increasing the store listing fees by as much as 500%, and final value fees for store listings by an additional 2%. Many store owners are listing using drop shippers. These merchants list the suppliers products, sell them, then purchase, and have the supplier ship directly to the buyer. Drop shipping has been a great way to earn money on eBay. And has given eBay buyers a great place to purchase new merchandise. Many e-books, infomercials, and articles have been published on how to make money with drop shippers. Since so many have climbed on board the drop shipping train it has become a very competitive market. The drop shippers usually have a minimum mark up of 100%, or, the cost of the product X 2. Since the market is competitive that's the price merchants will generally list it for. Auction format does not work well for these merchants. They have to have a minimum bid of 2X the product cost, they generally will loose money or make very little profit if they sell in this format because of the cost in listing fees, final value fees, and pay pal fees, not to mention drop shipping fees. In order to make up for the auctions, they will generally use the buy now button option in hopes of selling from the store inventory. Using the auction to advertise their store, meant they could take a loss on the auction. You may have seen a lot of new merchandise listed on eBay with a starting bid of .01 or .99 and think.. wow, I'll bid a dollar. When you win the bid, you find out there is a shipping fee of $55.00. This is a dirty trick to sell the item in the auction format. Obviously they made the money in the shipping fees. You may have gotten a good deal still, but, you feel like you got ripped off because you did not expect to pay that much. Auction format works great if you purchased an item at a yard sale, made the item yourself, if you have a hot, hard to find item, or a collectible item. eBay sellers that sell these goods will continue to do well with eBay. Even if you are selling a high dollar item, then there is enough room for the fees to be absorbed, eBay will continue to do well. The merchants that buy wholesale, or use drop shippers are going to find it difficult to make a profit. They will be forced to increase the sell price, or pull out completely. The terrible secret is that many merchants also run web sites where they can list as many items as they want, and sell at lower price and make a higher profit due the lower overhead. If eBay buyers ever learn this secret, there will be a huge increase in web site purchases. Either way, this increase may be a bad move. Store listing currently account for 83% of active listings on eBay. If they decide to start listing at other auction sites, or web sites exclusively, then buyers are eventually going to start moving too. This could be the start of the end of the eBay dominance. |
