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eBay Postage Cowboys Cost Everyone Dearly
Ebay Fees Leaving Everyone Feeling the Pinch
eBay Postage and its Fees
Postage charges on eBay have always been a hot topic of conversation amongst buyers and sellers alike. Whilst the majority of sellers on eBay reflected their postal costs fairly on the auction website, the multinational company had been inundated for a long time with buyers who felt that some sellers were playing the system and charging extortionate and unfair postal prices.
Unlike Amazon, sellers on eBay have always been free to set their own postal charges and also decided which method of carriage they would use with options available for standard postal services as well as the often more expensive, courier services.
Final Value Fees
Some cash-hungry sellers had spotted a way of taking a bigger slice of profit by manipulating what they charged for postage on eBay. Previous to September 4th 2013, eBay charged a final fee on the total cost of the item sold, this fee is typically 10% of the value for private or individual sellers and between 5% and 11% for business sellers.
so for an item sold at £10 with £2 postage cost, the final fee to eBay was £1 (10% of the sale price). As the cost of postage was not subject to an eBay fee, greedy sellers were charging higher postal prices in order to make a bigger profit. Selling the same item at £8 but charging £4 for postage meant that the final value fee was this time only 80p leaving the seller with an extra 20p profit.
Post September 4th, eBay has closed this profit making loophole and now charges a final fee on the cost of postage, typically 10%. The £10 item with £2 postage charge now costs the seller £1.20 in a final value fee and thus eating into their profit a little further.
Ebay commented that its new final value fee policy would help combat the problem of charging abnormally high postage in order to make a larger profit. They also stated that they aimed to, "...reward sellers who offer free or competitive postage, in line with customer expectations".
Except the new policy doesn't reward those fair seller, it in fact penalises them. The cost of selling on eBay has risen for them. They now have one of two choices, absorb the cost themselves and make less profit or pass on the cost to the consumer. In this day and age of economic downturn, there are few sellers who are likely to take the weight of the extra cost themselves.
Not only are sellers losing out having to pay higher fees on eBay but now consumers lose out as they are in most cases paying extra for their purchases.
Double Postage Commission
For a number of years it has been mandatory that eBay sellers offer Paypal as a means of payment for their buyers. Today, around 90% of all purchases made on eBay are completed using Paypal. It is also no secret that Paypal is owned by eBay.
Paypal has always charged commission (3.4% + 20p) on all money being paid through its system and so, this has included the money paid for the cost of postage. The earlier example of a £10 item and £2 postage would have resulted in Paypal charging Commission on the full £12. Sellers had to take into account when factoring in the cost of postage, that if they only charged the physical cost of mailing an item then they would in fact be making a loss on their postage costs.
Since the new fees were introduced in September, the postage paid on eBay is essentially being charged commission twice, once by eBay at 10% and then again by Paypal as a part of the total amount that is processed for the sale.
The eBay community forums are littered with buyers and sellers expressing their opinion on these charges. A site that used to deliver bargains seems increasingly to be providing a more costly experience for all.