Lower eBay FVFs Can Help Save The Economy

OK, I have a weird idea here, and this is a long post. Stick with me on this. It's more inspiring than watching CNBC right now. :)

Disclaimer: I am making this idea up. I have NO knowledge of any such plans being considered or undertaken by eBay. I hope they will do this because it's a good idea. And I'm publishing it so that if they do it, I get to say "I told you so." :)

http://web.archive.org/web/20040211012310/http://pages.ebay.com/help/sell/fees.html Remember early 2004? I do! Ah, the good old days. eBay Final Value Fees were much lower. I am asking eBay to drop their FVFs to these numbers, and to go back to the same FVFs no matter what category you're in.

Problem 1: Between eBay and PayPal/credit card processing fees, someone can easily be losing 12%, 15%, even 18% of their sale price. We even had a client recently tell us her eBay fees were 20-25% of her sale price. This fee is probably most or even all of your entire markup. You can't have money in your pocket when the costs of doing business leave you with little or no profit (or even a loss).

And what is your time worth? Even if you end up with a profit, if you are your worker, that money left over is your pay. If you spent an hour photographing, describing, determining the price, determining the best title, researching the best times and ways to list, answering questions, packing and shipping, dealing with any post-sale issues, etc... then whatever you made on that sale was your hourly pay. $1? $5? $10?

Problem 2: Sellers want to list items in the WRONG category because the category they should be listing in has higher FVFs than other categories. Bad idea since that would break rules. Bad for shoppers trying to find you and your item.

Problem 3: What I'm calling the Negative Equity Mentality. People have become used to paying more than they should for things with ever-dropping values. My not-quite-2-yr-old car is in perfect condition, and I pay my car loan on time every month. I still owe over $26K on it, but the Blue Book on it is $19K. Your home? You may be one of those people who owes more than it's worth. Things you've put on your credit card? The late George Carlin does a bit about people paying 18% for years on a $12 item they didn't like when they bought it.

Here is an example of how this moves onto eBay. I once had a fight with a seller who told me that she buys her items for $9, and sells them on eBay for $10. I told her after her fees, she was LOSING money, and this was a BAD idea! "NO!" she barked back at me, "That's a dollar I didn't have yesterday!!!" Negative equity mentality.

We also know sellers who have ruined their product line on eBay by undercharging. I remember in 2004, I was selling body jewelry with my then-boyfriend. We got many pieces for 57 cents, sold them for $3.99 plus shipping, and undercut the mall and stores, which had the item for $12 and up. So we were doing OK, making a few dollars on each sale. A guy then started selling the same item for 99 cents. Even if he got it for FREE, by the time he pays all his fees, this is NOT going to be a major money-maker for him. He could have done better by undercutting us and charging say $3.49.

We actually got hate mail for charging $3.99 once this guy came on the scene. People were so mad that we wouldn't price match because the item is only WORTH 99 cents. So not only did this guy ruin his own (and our) ability to make a profit. He priced it so low that the perceived value of the item plumetted. This is part of why manufacturers have MAP (minimum advertised price)... they don't want you to sell an item for less than what they want the public to think it's worth.

Problem 4: The economy. Hey have you seen our economy? It's a mess. People can't pay their mortgages. They are taking their kids out of good schools and putting them in stinky schools because they can't afford the good school. There goes that kid's education. People have to decide between eating and gassing up their car. They're losing their jobs. They got into mortgages, credit card balances, and other things their either couldn't afford then or just can't afford now. People are losing their lives and homes. People are going without health insurance, procedures, or medications because they can't pay for them.

As my husband put it on Friday, "I think we've seen five or six 1929's over the last week or so." The Dow dropped 2400 points (22%) over the last 2 weeks. The credit markets are frozen. This is NOT a blip. Whatever any pundit or politician wants to call this, this is life-changing for just about everybody (other than the ultra rich).

Forget McCain's proposed $2500/$5000 health care tax credit, or Obama's tax drops, though you probably would like to have both. Serious eBay sellers seeing their fees drop like this could actually help the middle class. There are over 1 million people who make a full-time or part-time living selling on eBay. Make them more profitable, and it can ripple out. Maybe they can pay their workers on time, or hire the people they had to lay off. That's a million people who might make their mortgage payment more easily this month. This could be big.

How does eBay slashing FVFs solve problems? Because math can be your friend. :) Let's take a few examples for someone who sells around 500 items per month (17 items each day):

• $10 sale price. FVF now, $1.20. Feb 2004 FVF, $0.53. Sell 500/month, and $335 goes back into your pocket.
• $50 sale price. FVF now, $6. Feb 2004 FVF, $2. Sell 500/month, and $2,000 goes back into your pocket.
• $100 sale price. FVF now, $9. Feb 2004 FVF, $3.37. Sell 500/month, and $2,815 goes back in your pocket.

OK, maybe the low ASP seller gets his gas money back for the month. But look at the other sellers. One month of these lower FVFs could pay a month of a mortgage. For many people, that one month could be TWO months of their mortgage, and NOW the economy is getting stimulated. Now people have that money to keep their kids in the good school... or pay down that credit card... or hold onto their homes... or buy something from that local shop... who can then keep their staff employed and the shop open.

This would be a marketing COUP for eBay, and could raise their stock price. Their stock price is partially a reflection of consumer confidence and what the media and experts say about them. What would the media and experts say about eBay if eBay made a move that could almost be seen as a "bail out" of the American middle class? eBay would be helping Joe Six Pack pay his mortgage and keep his house. I'm no economics expert, but I think that if people saw buying and selling stimulated on eBay, and public feelings about eBay improved, that could help their stock price. Which means a winning situation for EVERYBODY.

More items on eBay. Sellers being able to move their inventory, especially during the holiday selling season. Best Match showing shoppers lots of great items from great people, many of these people are the hard-working middle class just trying to make a full-time living on eBay or possibly desperately-needed side money. Joe Six Pack gets to keep his house... or get that medication he needs... or put his kids back in the better school.

This is a crisis, and eBay could help. Think about it. Do your own math. Based on your eBay sales, especially what they tend to be during the holiday season, how much more could you put back in your pocket with 2004 fees instead of 2008 fees? Would it solve your economic concerns right now? Does it pay your mortgage or rent? Does it put money in your pocket that you can save? Does it give you money to put back into the economy and put into play?

If you feel how I do, blog about it. Link back to this post, and let people know how a drop in eBay fees would change your life. Does it pay your mortgage? Does it allow you to create a job? I would love to know how this could work. I believe eBay is listening to people now, and we can at least communicate this to them in a friendly and honest way. Let's let eBay know how lower FVFs could help save the economy. :)

Posted at 05:00 AM in Just An Observation | Permalink | Comments (3) | TrackBack (0)