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EBay goes after Amazon with fee changes for sellers

A sign is shown at the headquarters of eBay in San Jose, California February 2, 2010. REUTERS/Robert Galbraith
A sign is shown at the headquarters of eBay in San Jose, California February 2, 2010. REUTERS/Robert Galbraith

By Alistair Barr

SAN FRANCISCO (Reuters) - EBay Inc said on Tuesday it will overhaul fees for sellers on its online marketplace, lowering them for many sellers as it steps up competition with Amazon.com Inc.

EBay is simplifying its "final value fees" with the percentage fee levied on each sale determined by product categories. Currently, the percentage fee is based on an item's price.

Some of eBay's listing fees, a bone of contention among sellers, are also going away. Most of the changes will kick in April 16, with others taking effect May 1.

Many sellers will pay lower fees after the changes, especially those who are not volume sellers and list fewer than 12,250 times per month, according to Scot Wingo, chief executive of ChannelAdvisor, which helps merchants sell on online marketplaces including eBay and Amazon.

"These fee changes definitely make eBay more competitive," said Wingo.

EBay's move comes as sellers on Amazon's marketplace become increasingly upset with fee increases.

The company's announcement about the new fees included a table comparing its charges to Amazon's fees, a move that Wingo said he had not seen before.

"EBay is really coming out swinging against Amazon," Wingo added.

EBay shares rose 2 percent to close at $51.10 on the Nasdaq. Amazon slipped 0.6 percent to $256.41.

11 PERCENT CUT

For consumers who sell only a few items a year, eBay will offer 50 free listings per month. If the item sells, the company will take 10 percent of the sale price.

EBay has been using a fee structure that included a listing fee of 50 cents per item for full-price listings. The company has been offering free listings only on auctioned items.

For larger-volume sellers, eBay will introduce new final value fees ranging from 4 percent to 9 percent, depending on the product category.

Seller Phil Forman said he received an email from EBay on Tuesday morning, estimating that he would see an 11 percent decline in fees.

"I can work with an 11 percent cut," said Forman, owner of Newtownvideo.com, which sells CDs, DVD and video games on its own website and on marketplaces including Amazon.com and eBay.com.

The reduction in listing fees should encourage sellers to list more products, getting more inventory onto eBay, he said.

"Sellers like to only pay when they actually sell something," Forman added.

However, Forman said he was concerned because Newtownvideo.com lists many thousands of products per month, so the business may still pay some listing fees on eBay. This is because the new free listings top out at 2,500 per month for subscribers to eBay's premium "Anchor Store" selling program, he noted.

Amazon has never charged sellers listing fees, one reason why its marketplace has been gaining strongly against eBay in recent years.

"For most of our sellers the complexity of our fees were keeping them from being on eBay and preventing them from having full transparency into their profitability from selling on eBay," Michael Jones, vice president of merchant development, said.

"There will be some sellers who will pay a little bit more on eBay, but most sellers will be impacted positively by this," he added.

(Reporting by Alistair Barr; Editing by Jeffrey Benkoe and Leslie Adler)

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