In addition to taking a percentage of each sale, they've added a charge for listing items, regardless of whether they sell or tank. First to introduce listing fees was eBay Australia on October 21 with Sold.com.au following suit on November 6.
Listing fees appear to be a revenue-spinner that only market-leading auction sites can afford to indulge in. They are of the view that their size and dominance is enough to negate the risk of defection by customers alienated by the fee hike. Smaller auction sites, such as Gofish.com.au and Stuff.com.au, say they have no plans to tack on similar fees.
The timing of the new fees was not so much dictated by the online auction business model as it was a judgment call, said eBay Australia managing director Simon Smith. "The site has reached critical mass and we feel we have attracted enough people in Australia such that we no longer need to subsidise listings." Results to date have justified the decision, according to Smith.
The new fees make sellers think twice about listing items that are unlikely to attract interest, he claims, "so it has improved the success rate for sellers and makes life easier for buyers who don't have to wade through second-rate material".
Then there is the little matter of pumping up revenues. On a $100 item, eBay will earn $3.50 through its success fee and another $2.50 from the new listing fee -- a 70 per cent revenue increase.
Sold.com.au also sets a listing fee limit of $2.50 and the new fees will contribute importantly to revenues, although success fees will remain its primary revenue source, said CEO Martin Hoffman.
Some rivals argue that the introduction of the new fees is an indication that the two leading sites are feeling the heat from investors looking for larger returns. "I think the reason both eBay and Sold suddenly started charging is they were under pressure from their shareholders to perform," said Stuff.com.au managing director Simon van Wyk.
Like paring marketing costs and becoming more conservative in spending habits, finding ways of generating extra revenues is an investor expectation, van Wyk said. Stuff has "no immediate intention" of levying listing fees because it has fewer people running its website and follows a much lower-cost business model than eBay or Sold, he said.