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January 2005

PeSA Official Statement on eBay's Fee Changes:
eBay Fees Changes Impact the Marketplace

For sellers who often operate on exceedingly low margins, the substantial increase in fees will dramatically affect their businesses. eBay fee changes include a 40% increase in its Gallery fee, up to a five fold increase to use the Buy it Now feature, and a 52% increase in commissions charged on eBay Store sales. Overall, our members are reporting that they will pay up to 22% more to eBay than before the increase. That is unprecedented, and will have broad marketplace implications.

The history and spirit of the eBay marketplace is one of partnership between buyers, sellers and eBay. The success of eBay has been driven by value opportunities sellers provided to buyers on eBay.

Sadly, the fee increases fly in the face of that partnership, reducing the value opportunities sellers can offer to buyers because eBay will be boosting its take of each transaction. While sellers may compensate for the fee change by raising prices, the effect on the marketplace will be that buyers will not find as many attractive offers as in the past. The fee changes will boost eBay revenue in the short-term; however, the long-term vibrancy of the eBay marketplace is diminished.

The increase comes at a time when large sellers that comprise PESA's membership have seen a degradation of the marketplace. PESA members would be interested in investing in a higher fee structure if there was visibility that those funds would result in substantive investments to improve the marketplace. However, it appears that the higher fees will be invested in international marketplaces and other platforms outside the eBay US auctions and store formats.

Our members believe that unless eBay invests to improve the integrity of the marketplace, their best growth on eBay is behind them.
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"PeSA has helped thousands of merchants optimize their eBay sales and I am pleased to say that my business is one of them."

- Jonathan Garriss, Executive Director and online merchant of shoes and posters.
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