eBay Experiments with Free Listing Model in a Bid to Boost Revenues

eBay (NASDAQ:EBAY) is experimenting with the free listing model by making it free to list Sports Memorabilia, Cards & Fan Shop on eBay Marketplaces in both auction and fixed-price formats through the end of the year. The current eBay fee system is quite complex; there are fees to list a product for auction (The Insertion Fee) and fees when the product sells (Final Value Fee), plus several optional adornment fees, all based on various factors and scales.

The offer had a limited roll-out and is available only on eBay.com and eBay Canada. It came into effect Sunday, August 19 and ends on December 31. The move has surprised sellers and given rise to some skepticism regarding the reasons behind this move.

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Free listing could be a ploy to challenge Amazon

Forrester analyst Suchitra Mulpuru opines that this move is an attempt to disrupt Amazon’s ecosystem. Free listings are expected to boost product availability across the categories covered, offering users a wider variety of products to choose from. Whether this increased product availability results in an influx of quality items that sell through or just adds to the clutter remains to be seen.

This move can also be a reactive move in response to Amazon’s Sport Collectibles Store. The store lists autographed trading cards, baseball gloves, game-worn jerseys, etc.

The website eCommerceBytes released the results of a survey it carried out to gauge public’s opinion regarding the move. Almost 79% of those surveyed were in favor of zero listing fees while 21% were against it. The common opinion was that a drop in listing fees would probably be coupled with a hike in commission fees, though most were not in favor of such a move.

We believe that such a move would give a fillip to the revenues eBay earns from its Marketplace division. As more products are listed and sold, a credible increase in numbers would help offset the drop in revenues from the zero listing fees. eBay Marketplaces currently constitutes almost 50% of our $50 Trefis estimate for eBay, which stands nearly 7% above the current market price.

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