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eBay Becoming More Like a Mall Than Auction House

by John Lister on August, 27 2008 at 08:08AM EDT

Aiming to put a much stronger emphasis on traditional fixed-price retailing, eBay is making dramatic changes to its fee structure. Analysts say it's a move to compete with Amazon, though the company insists it's not abandoning the auction model.

The main changes include a reduction in listing fees for flat-rate goods to 35 cents per item: previously this had cost as much as $4, depending on the value of the product. This fee now covers multiple identical items, whereas previously sellers had to pay extra to list multiple quantities. In addition, fixed-price listings now last for a month rather than a week.

The company has also announced that the final value fees -- the cut eBay takes if an item sells -- have been "rebalanced on a category-by-category basis". While that means there will be winners and losers, eBay insists the total amount sellers pay will be lower "in most cases".

The new prices take effect on eBay.com in September and there will be similar changes to the British and German versions of the site.

Lorrie Norrington, who heads eBay's fixed-price department, says the changes don't mean an end to the firm's auction business: "We love auctions. Auction-style listings remain the ideal choice for sellers who are uncertain about the value of their item, have a scarce item in high demand, or are willing to start at a low price and let bidding determine the final value." (Source: ebay.com)

Fixed-price fees made up 43% of eBay's income in the last quarter, and that figure is growing rapidly. While private sellers will benefit from the changes, it seems the price cuts are aimed particularly at retailers. (Source: msn.ca)

eBay appears to be aiming to capture business from Amazon, a company that has profited from building a strong and trusted reputation and then acting as a middle-man for other firms. The difficulty for eBay will be in trying to foster the trust of potential bidders; in other words, the company better make sure those items arrive safe at the winning bidder's doorstep.