Ebay is a Rip Off for Sellers?

There are some people online saying that Ebay is a ripoff for sellers.  While I’m not a huge fan of Ebay’s virtual monopoly on the reseller marketplace, I wouldn’t say it’s that huge of a ripoff.

Let’s look at the fees:

  1. Final value fee: 10%
  2. PayPal transaction fees: .30 + 2.9%
  3. Listing fee: around .25

That’s it.  The fees are charged on postage, so they are actually higher than the price before shipping.  The amount of the increase, relative to the price, is proportional to the price of shipping.

If the item costs $7, and the postage is $7, then the FVF is:

    $1.40 + .30 + .40 = $2.10

That is 15% of the total price with shipping.

However, if you ignore the shipping, then it is 30% of the price before shipping is added.

For a more expensive item, like a $30 pair of pants, in a $7 envelope, the numbers are:

    $3.70 + .30 + 1.07 = $5.07

That’s 14% of the total price with shipping.  If you ignore the shipping, then it’s 17% of the total price.

If your item costs more, relative to the price of shipping, you won’t feel so bad about paying the fees.

What You’re Buying with the Fees

Fees aren’t only profit to Ebay, though that is obviously one big part of the fees.  Fees also pay for some insurance against fraud.  They pay to deal with Global Shipping Program fraud. They hold the repository of feedbacks.

Fees  pay for the software, by paying the programmers and designers. They pay for the phone service.

Most importantly, they pay for marketing and search engine ranking.  Ebay buys ads.

So, is Ebay worth it?

Not always.  I have a lot of long-tail items that I really should list on a website in addition to Ebay and other platforms.

When some items generate 5 to 10 views per month, they aren’t doing much better than an ecommerce website.

On the other hand, if I get 70 views in a month, for something like a pair of shoes, that’s 70 opportunities to sell.  I wouldn’t be able to generate that kind of traffic, at least not without spending a lot of money.

Author: John

I can be reached at johnk@riceball.com.

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