EBay Cuts Fixed-Price Sales Fees by 70%

EBay, the world's largest Internet auctioneer, lowered fees for listing fixed-cost items by more than 70 percent to attract additional sellers and compete with Amazon.com. EBay said the changes won't affect its annual earnings projection.

Starting Sept. 16, sellers will pay 35 cents to list multiple quantities of the same item for 30 days, the San Jose company said yesterday in a statement. Sellers currently pay fees ranging from 35 cents to $4 per item listed for seven days.

Chief executive John Donahoe's strategy of removing most upfront fees is designed to boost listings and grab market share from Amazon.com, the world's largest online retailer. EBay's sales growth in the second quarter slowed the most since 1998 as consumers, hurt by rising energy and food costs, reduced purchases.

"The news signals eBay's renewed focus on competing with Amazon.com and other e-tailers in fixed price," said Benjamin Schachter, an analyst with UBS Securities. "While these changes will increase listings, impact to the demand side of the equation remains to be seen."

So-called final value fees, paid once an item is sold, also have been "rebalanced" so that most seller costs will come after an item is purchased, eBay said.

The change in those fees enabled eBay to maintain its full-year profit forecast made in July of $1.72 to $1.77, excluding some items. Analysts forecast earnings of $1.76, the average of 21 estimates compiled by Bloomberg.

"Given that eBay made no change to financial guidance as a result of the lower insertion fees, the increase to final value charges are clearly significant," Schachter said.

EBay also eliminated the use of check and money orders and shifted to electronic checkout solely through its PayPal service. Last month, Amazon.com introduced an electronic-payment system to compete with PayPal.

"Our goal with our pricing change is to be the most competitive marketplace on the Web -- period," said Usher Lieberman, an eBay spokesman, in a phone interview.