Dear Cheaperknives

Since its debut in 1995, the eBay marketplace has continually evolved to meet the needs of the eBay Community. For the most part, the behavior of buyers and sellers has naturally adapted to changing conditions -- over time, we've learned to allow the marketplace to direct itself as much as possible. On some occasions, though -- in the interest of the eBay marketplace's long-term vitality -- we've had to step in and implement new policies, introduce new formats, or make changes to our fee structure to create needed incentives for eBay members.

Put simply, we at eBay have two basic roles: to deliver the best overall value for buyers, and to maximize cash flow for sellers. As eBay has grown over the years, we've added various enhancements and tools to the site -- but in essence, our "products" are two types of listings:

• Core listings (auction-style, auction-style with Buy It Now, and Fixed Price) deliver the signature eBay buying experience. For sellers, they're the fastest way to sell inventory on the Internet -- the only place where items typically sell within about two weeks.
  
• Store Inventory listings were introduced in 2001 and intended as a low-risk way for sellers to display large amounts of product in their eBay Store. This format employs low insertion fees and higher final value fees to encourage an abundance of inventory on the site.

Amid all this change, one thing has remained constant: auction-style listings are the foundation of eBay. Auction-style and other core listings made eBay what it is today -- and they'll always be front and center on eBay.com. They account for about 91% of the gross merchandise value sold on eBay.com. But recently, we've been wrestling with some troubling facts:

• Store Inventory listings now comprise about 83% of active eBay.com listings on average.
  
• While eBay.com core listings typically sell in about two weeks, Store Inventory listings on average take 14 times longer to sell. In some media categories, Store Inventory listings take more than 40 times longer to sell than core listings.
  
• And, when you compare our operations costs for an average Store Inventory listing and an average core listing - factoring in the duration of each - our cost to host a Store Inventory listing is more than 50% higher than for a core listing. In fact, current Store Inventory insertion fees don't cover eBay's costs for hosting them.

It's vitally important -- to your business and ours -- that we maintain a healthy balance between listing formats on the eBay marketplace, and ensure that inventory conversion across the site remains strong. So we're taking action.

Today, I want to inform you of changes we're making to eBay.com -- changes intended to rebalance the overall eBay marketplace by further distinguishing the roles of core listing formats and our Store Inventory format. In short, we're improving the advantages of selling in core listing formats -- and taking action to manage the proportion of Store Inventory listings -- to ensure that the buying experience on eBay stays true to shoppers' expectations.

Core Listings
Core listing fees will remain unchanged. So for the vast majority of eBay sellers who use only these formats, their fees are not increasing.

And we'll be providing greater exposure for core listings on eBay Express. In late August, we'll begin displaying auction-style listings with Buy It Now on eBay Express for qualifying sellers. Also in late August, core fixed price and auction-style Buy It Now listings that qualify for eBay Express will be advantaged over Store Inventory listings.

Also, in response to the requests of many large sellers, we're raising the 10-item multiple listings limit to 15, effective Aug. 22.

Store Inventory Listings
For those of you who operate an eBay Store, we're making changes to Store Inventory listing fees, as well as to the on-site exposure we provide for this listing format.

We'll begin charging variable insertion fees for Store Inventory listings, as we do for core listings. Beginning Aug. 22, eBay.com Store Inventory format insertion fees will be tiered with an item's starting price.

• These Store Inventory format insertion fees take effect Aug. 22, 2006:

Starting Price
New Insertion Fee
Current Fee

$0.01 -- 24.99
5¢
2¢

$25.00 and higher
10¢
2¢

• Some Store Inventory format final value fees also will also increase, effective Aug. 22, 2006:

Selling Price
New Final Value Fee
Current Fee

$0.01 -- 25.00
10%
8%

$25.01 -- 100.00
7%
5%

$100.01 -- 1,000.00
5% (no change)
5%

$1,000.01 and higher
3% (no change)
3%

 

Please note that for current listings, the new final value fees will apply only after these listings are renewed.

• For more detailed information on these fee changes, please see our fee changes overview.

For some time, we've been working to identify the best way to display Store Inventory listings on the site. In the spring, we pledged to sellers that we would test a variety of ways to mingle their Store Inventory listings with core listings on eBay.com. We've tested several alternatives and these tests showed the ideal approach is how we're doing it today - that is, when a buyer's search returns 30 or less core listings, we display up to 30 Store Inventory listings. This is what we'll stick with going forward.

However, starting in about a month, we'll also include an unlimited number of Store Inventory listings after all matching core listings, when the buyer clicks the Buy It Now listings tab at the top of every search results page. When the buyer hasn't selected this option, eBay.com will display Store Inventory listings along with core listings as described above.

Half.com Listings Added to eBay.com Search Results
I recognize that sellers in the Books, Movies, Music and Video Games categories will have unique challenges with the changes we're making. As many of our media sellers have requested, starting in late August we'll again provide visibility for Half.com listings in core search results, by bringing back the Half.com listings merchandising feature we used previously (click here for an example). We're also exploring additional ways to promote Half.com listings in search results on both eBay.com and eBay Express.

How These Changes Affect You
I'm confident the actions we're taking are the right thing to do for the overall eBay Community. We'll more effectively deliver on our buyers' needs and expectations. And for sellers, these changes will ensure that eBay remains a differentiated and distinct e-commerce channel with fast inventory turnover.

I know there's a lot to digest here, and that you're probably most interested in quickly determining if and how these changes will impact your business.

A typical eBay Stores seller who uses Store Inventory format -- making no adjustments to his or her selling strategy following these changes -- will experience an overall fee increase of less than six percent, based on our analysis of all June selling activity. Of course, you need to clearly understand the impact on your business -- which could be greater or less than six percent. To get started, please visit the seller resources page or consult the Frequently Asked Questions we've prepared. Also, use your seller support resources in Customer Support. Our CS teams are fully prepared to help you understand the effect on your business, and discuss your options for adjusting your eBay selling strategy to minimize impact to your bottom line.

In addition -- to help eBay Stores sellers make informed decisions about any changes to their selling strategies -- we're making eBay Marketplace Research Basic available to them at no cost for eight weeks, starting today. Through September 19, eBay Stores sellers can use this data to compare selling formats or determine how best to price inventory on eBay. You can access eBay Marketplace Research here.

I'll be hosting a Community Town Hall discussion on Thursday, July 20th at 4:00 p.m. Pacific time, where I'll answer your questions. Please click here for more details on the Town Hall, or to submit a question in advance.

Sincerely,

Bill Cobb
President
eBay North America