EBay to unveil lower fees and tighter seller standards

EBay is expected to unveil changes to its online marketplace Tuesday that the company characterizes as sweeping and historic and that are aimed at boosting sales by making the shopping experience simpler and safer.

The changes, which include lowering some fees and raising merchant standards, will be announced at the company's eCommerce Forum by John Donahoe, who will succeed Meg Whitman as president and CEO in March.

Donahoe said last week during a conference call to discuss eBay's fourth-quarter financials that the eBay marketplace business hasn't been growing as fast as he would like and that changes would be coming to make the shopping experience easier and safer.

"Buyers have become accustomed to streamlined purchasing experiences that put a premium on speed, convenience and reliability," Donahoe, president of eBay Marketplaces, said last week. "While we've made strides in these areas, I'm clear we need to do much more."

On Tuesday he is expected to announce that eBay will introduce an insertion fee reduction in the U.S. Feb. 20 by cutting the cost of listing items by 25 percent to 50 percent. By reducing the impact of items that don't sell, eBay hopes merchants will list more products. In turn, eBay is increasing the so-called "final value" fees it charges merchants when items are sold.

EBay will also do away with fees it charges U.S. merchants for its "gallery" option, in order to encourage merchants to include more photos with their listings. Fee changes will vary by country.

In addition, eBay will alter its search engine so that merchants with lower rates of customer satisfaction get less exposure on search results. Meanwhile, sellers with higher buyer satisfaction ratings will get better exposure in search results.

EBay will also require a "safe payment option," such as PayPal or a major credit card, from merchants with lower customer satisfaction and from those in product categories that generate many buyer complaints. Moreover, eBay will also raise the requirements for qualifying as a PowerSeller and update its feedback system.

EBay's fourth-quarter earnings and revenue exceeded Wall Street's expectations, but its outlook for this year was considered generally disappointing. For example, the conservative 2008 forecast, coupled with slowing growth in the marketplace business, led Citigroup to downgrade the stock to "hold."

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Copyright © 2008 IDG Communications, Inc.

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