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EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort


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EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort

Bloomberg News
March 15, 2011

EBay Inc., owner of the world's largest e-commerce market, lowered fees for the second time in a year to attract more sellers to its main site and boost a three-year turnaround.

Users may list for free as many as 50 auction items a month on the site beginning in April, the San Jose, California-based company said today in an e-mailed statement. EBay also will charge a smaller commission on items sold, beginning in July.

EBay Cuts Fees to Attract Merchants, Boost Turnaround Effort

The company is trying to attract more buyers and sellers, many of whom have fled to Inc. in recent years, according to Forrester Research Inc. EBay also is encouraging merchants to offer free shipping by taking a larger commission from businesses that charge for delivery. The move may help consumers even as it means higher fees for some sellers.

"We think these changes will really improve the marketplace for both buyers and sellers," Todd Lutwak, vice president of seller experience, said in an interview. "We're listening to our customers. We're trying to understand their needs."

As part of the new fee structure, EBay will charge a 10 percent commission in the apparel category on the first $50 of merchandise sold, down from 12 percent. Commissions vary by category. Sellers offering less than 50 auctions a month used to pay anywhere from zero to 20 cents a listing, depending on the initial asking price.

New Shopping Cart

The company also introduced a shopping cart to help consumers keep track of multiple items. Previously, consumers had to buy items individually in checkout carts provided by EBay and by third-party software developers such as Auctiva and ChannelAdvisor Corp. Those independent carts will be eliminated at the end of June.

EBay, whose shares have risen 9.4 percent this year, slipped 33 cents to $30.44 today in trading on the Nasdaq Stock Market.

Chief Executive Officer John Donahoe is two-thirds of the way through a three-year effort to reinvigorate growth after losing ground to Amazon and other e-commerce providers.

As EBay retools the site, it hasn't escaped the ire of some small merchants, who have said changes to seller rating systems and the site's search engine last year hurt their business. Today's changes were no exception, they said.

"It may 'encourage' offering free shipping, but will wind up costing the buyers more by sellers having to build in enough shipping cost," Melissa Arnold, who runs a store on EBay selling china, pottery and other collectables, said in an e- mail.

Still, the turnaround efforts have been largely positive, according to Colin Gillis, an analyst at BGC Partners LP. EBay reported record sales of $2.5 billion in the fourth quarter, helped by growing demand for its PayPal payment service.

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