eBay Seller Release – Fee changes case study

Following the eBay UK Seller Release I met up with an eBay seller last night and over a couple of beers we did some “back of the fag packet” calculations to see how the changes announced yesterday would financially affect his business.

Postage Fees

The biggest item on the agenda was of eBay charging fees on postage. First up all of his UK items have free post anyway so he’s already paying fees on postage. For him at least, eBay charging fees on postage just levels the playing field against competitors who charge postage separately.

Top Tip – if you can offer free post and then when you qualify your item as a Top Rated item you’ll get 15% discount on final value fees charged on your postage – there’s no point charging postage separately unless you typically have multi-quantity or multi-SKU orders.

International Postage Fees

International shipping is of course something quite different. That’s where the big worry for sellers is as International Postage is significantly more expensive that domestic. So just how badly is he going to get stung?

Thankfully he loads international postage a little and makes about a £1 an item profit on overseas shipments which would pay eBay. He’d rather keep that extra profit for when he has to refund return postage though.

The fact remains however that with a cost of between £8 for Europe and £12 for Australia and typically a 200 cross border sales each month that’s a postage bill of around £2000/month that eBay will be gouging 10% in fees from – a bill increase of £200 per month with no additional benefit. Ouch!

eBay Shop downgrade makes sense

Now the good news – currently the account is run on an Anchor store at £349.99 per month. However with free listings in France, Italy and Spain as well as 200 listings in Australia and 500 on eBay.com, a Featured Shop looks like a money saver. The disappointment is eBay Germany, but with insertion fees down to €0.05 (about 4p a listing) he doesn’t mind paying those.

The thing is he’s only got about 200 eBay listings on eBay UK in total – although with multi-varitations that equates to approaching 1000 products. With 200 listings he has plenty of room for expansion before he has to worry about paying UK insertion fees – A Featured shop comes with 1200 free eBay UK fixed price listings. To put all 200 listings on eBay Germany will cost about £8 per month, as would insertion fees for any other EU sites he chose to expand to.

Because many of his products are on multi-variation listings, the number of listings on eBay Australia might creep over 200, but it looks well worth swallowing any additional insertion fees – cost works out around £2 per listing.

Now the really good news, by downgrading to a featured shop the cost drops from the current £349.99 down to £69.99 per month. That’s a massive saving of some £280 per month, more than balancing out the fees he’ll be paying on postage and eBay Germany insertion fees. Even if he decided to expand massively (he doesn’t need to with multi-variation listings, a couple of listings is a lot of product!), the cost of an Anchor Shop is being reduced to £249.99 per month with free insertion fees for the EU, Australia and eBay.com.

How do the numbers stack up?

Have you run the figures for your business? They will of course be totally different to the example above and the costs could easily swing either way. For instance if overseas sales tripled in the next year the savings would be swallowed up in the additional postage costs. If he had been charging UK postage, instead of including postage in the item price, then that again would have resulted in a fee increase rather than a decrease.

However for this seller at least, the overall seller release package is great news and he’s onto a winner. As soon as the new fees kick in he’ll downgrade his eBay shop and start saving money.