customer relationship management
Posted by Abe Sauer on January 27, 2010 12:13 PM
Online auction site eBay is now the world's most profitable garage sale, worth around $8 billion. In an effort to increase profits and improve customer service, the brand is implementing a new pricing structure. Wall Street approved of the announcement, as eBay’s shares rose 1.7 percent.
The changes, however, risk alienating the brands most valuable asset -- its loyal users.
At the end of March, eBay will discontinue fees for items with a starting price below $1; instead, it will charge 9 percent of the final sale price, or $50, whichever is less. For more frequent sellers, eBay is offering customized subscription rates that could possibly decrease per item fees to as low as 3 cents for 30 days. Also, eBay’s search results will no longer separate storefront items from fixed-price listings.
The brand hopes the new pricing structure will attract new users and encourage existing ones to use its services more frequently. However, the logic behind the changes raises a question: Was the listing fee -- already quite low -- really that large of a barrier for prospective and existing sellers?
While the brand trumpets the changes as boon for its users, many buyers and sellers on eBay don’t see the changes as doing them any favors. In fact, eBay forums have lit up with user complaints -- and, for the record, compliments -- about the new structure. Brand loyal user ramonv falls into the former category:
"Once again, ebay is pissing on our legs, and telling us it is raining. Higher final value fees for auctions and higher insertion fees for fixed price items. Most of my items are fixed price and would now be 50 cents each to insert, and the same outrageous 12% FVF as it has been. In this economy, this is SO wrong."
Like all brands, eBay must navigate the fine line between its bottom line and the loyalty of its customers – a delicate balancing act, particularly during these tough economic times. So far, the brand has done an admirable job pleasing its buyers and sellers throughout the years, but in the unforgiving world of online auction platforms, yesterday’s success does not guarantee anything in the future.
Amazon and Craigslist will certainly be paying close attention to eBay’s endeavors.