Will fees become a new Marketplaces battleground?
During the Marketplace Madness session at ChannelAdvisor Catalyst this week some of the newer marketplaces in attendance made the point that one of their advantages was that they were cheaper than the big players eBay and Amazon.
Indeed recently, we’ve written about Pricesearcher (not strictly a marketplace) and Buuy which make a merit of being free for sellers.
There are all sorts of business models out there. But Amazon and eBay are pretty similar and also fairly expensive. And, of course, with eBay’s introduction of UK VAT on fees coming over the summer, many sellers are going to see a substantial increase in their monthly eBay bill.
Obviously neither Amazon nor eBay are charities and exist to make a profit, but do they generally charge too much for the service? The fees can really add up when you consider PayPal fees on eBay and maybe other extras on Amazon like FBA or Amazon Sponsored Products. Consider too what you get for your money. You could be spending tens of thousands of pounds a year and not even have access to a dedicated account manager or even specialist customer support. In any other sector, if you were spending that much, you expect that as standard.
Of course, when you pay eBay and Amazon to sell on their marketplaces you are plugging into a massive marketing network and surfing their reputation. They spend many millions on marketing and also investing in the platform and maintaining a brand. Anyone who has established their own transactional ecommerce website will attest that getting eyeballs and visitors, and then converting them to shoppers, is both tricky and time-consuming. But that’s what you get in spades as standard on eBay and Amazon: traffic to your goods.
It’s good to see that we have new and emerging marketplaces in the pipeline and it’s good that they’re approaching the issue of fees in a new and different way. Perhaps that will influence the big boys and stop the pricing trends hitherto where the received wisdom of the marketplaces is that when it comes to fees, the only way is up.
Unfortunately, Dan, the only way is up for fees on Ebay and Amazon, for entirely different reasons.
On Amazon, fees will rise because that is what tends to happen when a single player becomes predominant in a market place. It’s an extension of what all businesses try to do, i.e., charge as much as the market will bear.
With Ebay, things are less clear cut. The problems started with the split from Paypal, which had helped disguise the somewhat disappointing growth in Ebay profits. It’s not that Ebay is in danger of making a loss any time soon, it’s a question of sentiment. I’ve read quite a few write-ups in economic journals expressing disappointment with Ebay both in terms of growth and how it’s addressing the changing e-commerce landscape.
Put simply, Ebay has been cranking up fees, not out of a position to bully the market like Amazon, but because it needs more revenue to reassure markets and to stave off the prospect of a hostile takeover, if the share price were to fall substantially.
You can only get revenue from two sources; growth in sales or higher fees from exisiting ones. Easy to see which route Ebay is now taking.
My eBay account is in process of being closed.
eBay will not be unhappy, it will make no difference to the sales on their site and they will have one less entity to deal with.
eBay does need to be careful not to lose whole chunks of inventory though, ie if many sellers of ‘xyz’ all decide to stop selling there.
we would rather pay 10% to sell
than a lower fee to stock inventory and hope to sell
I agree – with the proviso that the site is operational as near 100% of the time as is possible. The glitches and blackouts over the last few months especially, have meant that we did not get what we are paying our fees for.
eBay are making themselves lose out. They gave themselves a whopping pay increase when they introduced 10% fees to include shipping.
Instead of implementing a band of charges you can charge for items, to stop loading of 99p items with £5.99 shipping etc. But rather than do that they saw the opportunity to make massive profit across the board.
They then increase charges for shops which is not really necessary as the more we sell the more they make and when we increase prices to counter their increases we sell less.
They implement silly little gimmicks like the 310 packing voucher to try and fool us into thinking we are getting a good deal, then force us to use that voucher at a shop selling sub standard products and not providing VAT receipts and with prices up to 3 times higher than our current packaging supplier.
They need to wake up and work out how to better Amazon instead of keep hanging onto their shirt tails.
ebay and amazon fees are really high, at a point that some products it is worthless to sell (products with small net margin). I’m closing my ebay anchor store, too expansive, every months my fees are over 20% not counting paypal. On Amazon you should add the cost of returns and the cost that every case, every package that is late it will cost you money. I keep on selling in both marketplaces but only items with a large net margin
Yes and this is what we need in the UK more than ever. Also is essential to meet that marketplace half way on price.
We have dedicated account managers on the more niche sites and things GET done, although the service tends to drift away when they have you.
Subscription fees are a massive bug bear for us. We simply do not think these offer any value for money with FVF loaded on top. Also FEES on Post they all seem to be profiting from a business expense, all they need to do is CAP the post price to stop sellers taking advantage.
That onBuy site had the right idea, but sellers just did not take it UP just do not get it, but alas they were all talk and no action. However just sub fees and no FVF was value for money.
People seem to want to pay sub fees and FVF for some reason.
Better FEES you give us the more we work with you.
Make the marketplace “fight” it out for your business. FBA least take away mail issues, and much of the time it works out a LOT better value than eBay.
Also self fulfilment costs come into account, we actually do no want to sell in the UK and find it much more profitable to sell into the EU.
We have gone from eBay exclusive in 2013, then added 2014 Amazon, to the last 18 months 6 new marketplaces (some better than others) plus we dropped two in that time., and built a fully functioning website starting to generate real margin.
OnBuy was a complete joke….
They started off saying no month to month fees, etc, and huge TV add starting in feb this year…
Was there ANY TV add’s…. Nope…
Are they now charging sellers a fixed month fee to sell YES, and they charging fees on sales YES are they now the same as Amazon, and eBay YES
They were a compleat and utter JOKE and should never have been allowed to pass the false claims on Tamebay like they did when tamebay gave them the post about the new system they were launching.
It turned out to ALL BE LIES.
The idea was “good”, an idea with another “provider” who can actually deliver.
Said right back at the beginning getting people to “change” their ways in the UK market was always going to be a tall order, plus sellers just did not get onboard. it was all talk however.
Another issue is all the marketplaces pretty much have the SAME format, lowest price WINS, last shop standing and all that.
Once one or two players are established it is very hard to break the market. Several try and nearly all fail.
The ones that do survive are the “niche” markets.
For box shippers, like many of the big businesses on these markets it just gets tougher.
When Danny said “OnBuy was a complete joke…. ” he was not joking! I would not sign up with them because they really did not understand the market, nor would they listen!!!
the joke is
as a seller if you cant make ebay or amazon work
you stand little chance of success spending time or effort on a market place that is attempting to compete with ebay amazon
OnBuy is a complete joke.They are hasty to grab your money with fees and have very little to offer as they do not have the traffic.Very slow in responding to queries and have shown quite early on that they can change the rules instantly and can easily be a trap worse than Amazon and Ebay who have the traffic more so Amazon.Ebay lately is becoming a joke as there little traffic since December and getting worse I am gong to build my website and build the traffic.Amazon competes with its sellers which should be against the law since it changes its rules in a second and traps its sellers.I am looking for other marketplaces but do not know other good ones near enough to Ebay or Amazon for the UK marketplace,frightening.