Is eBay facing seller revolt?

The company made an announcement last week about lowering the listing fees for items--even though, in many cases, final value fees will be raised. The company's discussion forums simmered with outrage over the executive decision, and frustration over the lack of other options for auction-style e-commerce.

"What a joke," commented one person on the eBay Seller Central forum, asking for advice about transferring the items from an eBay "store" to another auction site. Another suggested putting together an April Fool's Day protest.

eBay representatives say that these opinions come from the minority. "A lot of the sellers that we're talking to are very, very happy with these changes," said Todd Lutwak, eBay's senior director of seller experience. He said it gives a better array of options for different kinds of sellers. "What we've done with these price changes is, we've segmented the seller population and then we've provided those segments with what we feel are better options to meet their needs."

Here's the math: Individual eBay items with a starting price of 99 cents or less no longer have a listing fee, and if they don't sell, the seller pays nothing; but if they do sell, the final value fee is 9 percent with a maximum of US$50. Previously, it had been 8.75 percent for the first US$25, and 3.75 percent after that. For more serious eBay sellers who purchase subscriptions to run "stores", final value fees have been altered so that they start at a lower threshold, but in some cases can ultimately get higher. eBay piloted these changes in some European markets starting in 2008 (with success, representatives say), and later added some U.S.-based beta testers whom it's showcased in a new promotional site explaining it all, called "The Best Place To Sell".

"People who have store subscriptions, who sell thousands of items a month, are being advantaged," explained Alan Lewis, who worked at eBay as a product manager for five years and now serves as the platform manager for Auctiva, a site that makes tools for eBay sellers. "(This) continues the direction that they've been going for the past couple years, which is catering more and more to large sellers...It's something that makes sense for eBay. They just have to deal with the consequences. If they are bringing on larger sellers, there will be consequences for smaller sellers."

An eBay pundit who goes by the handle "AuctionWally" wrote a blog post in which he speculated that the fee changes "will benefit the savvy consumer of collectibles, antique and unique items as this plan brings a lot more product to the marketplace with low starting bids," and that "this stuff can be more like reading tea leaves than a flow chart, but it looks pretty good from an auction seller's perspective, and just as nice for most store sellers." Still, many of Wally's own commenters disagreed with him--some with extremely strong language.

Granted, when a company makes a product change announcement, it's the ticked-off ones who are the most vocal. But those dissatisfied sellers sure want to be heard.

"The lower announced listing fee decreases are absurdly trivial to the extreme, and will cause eBay to become more cluttered than ever with overpriced, worthless stuff that people will put purely on speculation that some fool will bite," an Alexandria, Virginia-based antiques dealer related to CNET in an e-mail. "I have been selling on eBay since 1997 and I know eBay like the back of my hand. It is a true love-hate relationship."

Any community site--particularly one where members may be making a profit by participating in that community--is sure to experience some dissent when changes are made. For eBay, however, the uproar from some sellers about this week's fee changes was more vociferous than usual. It amounted to Orwellian doublespeak, some claimed; and the "Best Place To Sell" microsite was little more than propaganda.

"Maybe eBay thinks a simple and transparent 'spin' that they are trying to offer will work--dropping their listing fees, which are small, and then upping the final sale fees from 3.5 percent to 9 percent--and just slip by all their sellers," said Northville, Mich.-based eBay seller Bill Wever, who says he has used the site for over a decade and owned eBay stock since its initial public offering in 1998, in an e-mail to ZDNet Asia's sister site CNET.

"After reading (this week's) announcement, I will be expanding my presence on other sites and will be significantly reducing my presence on eBay," another seller e-mailed to CNET on the same day the fee changes were announced. "It never ceases to amaze me that eBay management seems to dismiss or disregard how constant change negatively affects their fee-paying sellers. Last year, there were two major change announcements. This year there will be three."

At the center of the mayhem, really, is a problem that eBay has had a rough time with in recent years: It obviously wants to make a profit. That profit comes from commission fees, and those commission fees are biggest coming from the sales of relatively expensive goods by well-established sellers--many of whom pay a subscription to operate "stores". Hiking up listing fees has had a noticeable impact on eBay's quarterly earnings in the past.

"All the things that they've done in the past couple years have been to bring more large sellers onto the site and bring them the economic incentives to do so, and they really haven't done anything for small sellers," said Alan Lewis of Auctiva, which targets smaller-scale sellers.

And eBay has been feeling the pressure for years. It made some arguably poor acquisition choices in the past half-decade that ultimately resulted in the selling off of properties like Skype and StumbleUpon, all of which dealt a blow to shareholder confidence. Plus, online auctions are no longer the hub of deals that they used to be: An increasingly diverse cornucopia of e-commerce innovations has emerged in recent years, from handmade-goods emporium Etsy to fire-sale deal-a-day outlets like Woot and Gilt.

But the flip side of this is that eBay still has a lock on auctions. It smoked out much of its would-be competition years ago, and many of its sellers deal in niches that are better off operating as auctions rather than flat-fee sales that could be handled over Amazon or Craigslist. eBay can make many of these controversial descisions and rest assured that it still owns the market.

"All of us have been hoping for someone else, perhaps Google or Amazon, to step in and provide true competition, but that has not happened," said the antiques dealer from Alexandria. "It would require a huge investment to do a proper worldwide advertising campaign to get something going."

eBay admits that the most recent changes will make the auction process more expensive for some sellers, but stands by its decision.

"There are cases in which this new fee structure is actually more expensive than what they were paying before," admitted eBay's Lutwak, "but the fact is, what (the sellers) asked us for is they want the lower risk associated with lower fees on the front end, and that they were willing to pay the final fees."

eBay hopes to extend an olive branch in the form of new buyer-protection coverage that it says will make buyers more comfortable spending money on eBay, particularly in large amounts--and that sellers will make more money as a result. "Coupling these two messages not only shows that we're making some adjustments to the fee structure but that we're also making major investments as a company to ensure that our customers are coming back more," said Kellie Cobaugh, manager of the buyer protection program.

eBay, after all, has seen this sort of mutiny before. Two years ago, after eBay raised seller fees and chose to prohibit sellers from leaving feedback about buyers, sellers organized a weeklong boycott The company ultimately weathered the storm. Around the same time, it attempted to mandate the use of its PayPal payment system for Australian customers--and then backed down amid protest.

Todd Lutwak suggests that sellers protesting the new regulations take a look at their own tactics for profit. "If you see that these changes do not have the impact on your business that you want, I would re-look at your eBay strategy," he said, pointing out that the new "Best Place To Sell" site has a listing fee caluculator for members to try. "There could be another selling approach that might be more beneficial to you."

Some sellers agreed. Rhonda Shrader, a San Francisco-based eBay seller who has "a half-time job" selling primarily women's clothing on the auction site, thinks she'll ultimately benefit from the listing fee changes and thinks that other sellers should figure out how they can, too. "I think for any small business person, any change in your macro and micro environment is going to cause you to react. I'd rather spend time doing that than complaining," she said.

"Sellers with strong business acumen will adapt to new (rules) and find ways to thrive," an eBay seller who goes by "Compulsive Collector" announced on Twitter. "As for others? Survival of the fittest, and all that."

But frustrated sellers scoffed at that thought.

"Given the current announced changes, coupled with eBay's history of revisions after changes roll out, it is impossible for a seller to build a business strategy that lasts longer than a few months," one said via e-mail.

This article was first published as a blog post on CNET News.