eBay Fee Change Statement

eBay Fees Changes Impact the Marketplace
January 2005

The Members of the Professional eBay Sellers Alliance (PESA), the trade association of more than 600 of eBay's highest volume sellers (accounting for over $1 billion in annual eBay sales), express our dismay at eBay's recent price increases.

For sellers who often operate on exceedingly low margins, the substantial increase in fees will dramatically affect their businesses. eBay fee changes include a 40% increase in its Gallery fee, up to a five fold increase to use the Buy it Now feature, and a 52% increase in commissions charged on eBay Store sales. Overall, our members are reporting that they will pay up to 22% more to eBay than before the increase. That is unprecedented, and will have broad marketplace implications.

The history and spirit of the eBay marketplace is one of partnership between buyers, sellers and eBay. The success of eBay has been driven by value opportunities sellers provided to buyers on eBay.

Sadly, the fee increases fly in the face of that partnership, reducing the value opportunities sellers can offer to buyers because eBay will be boosting its take of each transaction. While sellers may compensate for the fee change by raising prices, the effect on the marketplace will be that buyers will not find as many attractive offers as in the past. The fee changes will boost eBay revenue in the short-term; however, the long-term vibrancy of the eBay marketplace is diminished.

The increase comes at a time when large sellers that comprise PESA's membership have seen a degradation of the marketplace. PESA members would be interested in investing in a higher fee structure if there was visibility that those funds would result in substantive investments to improve the marketplace. However, it appears that the higher fees will be invested in international marketplaces and other platforms outside the eBay US auctions and store formats.

Our members believe that unless eBay invests to improve the integrity of the marketplace, their best growth on eBay is behind them.

About PESA

The Professional eBay Sellers Alliance is a non-profit trade association organized to provide common resources to business merchants operating on eBay. The Group's mission is to help members improve their businesses through member information exchange, coordinated interaction with eBay on marketplace issues, and group purchasing opportunities.