Another interesting perspective on eBay

Also posted at msn's money page.

EBay's unfair discount program

Posted Jun 20 2008, 04:25 PM by Kim Peterson

EBay sellers have been looking suspiciously at eBay's Buy.com store for a while now, and with good reason. There are currently more than 500,000 items for sale in this one store, and Buy.com appears to be offering all of them as a "buy it now" option. 

The fee eBay charges a normal seller to list this many items is astronomical. But Buy.com can afford it because EBay has started discounting fees for large sellers. And that's got small sellers worried they're being pushed out. The S.F. Chronicle has the details: Sellers get a discount if they have sales of $500,000 a month and a feedback score of 4.9 out of 5.

EBay shares fell more than 3% today to close at $28.17.

It's unclear what level of discount eBay will give its biggest sellers, and some have already wondered if Buy.com gets to list for free. Why else would Buy.com be selling a single AA battery for $7.99 with $6.98 shipping?

EBay has for years promised sellers an even playing field, according to the terrific AuctionBytes blog. Former CEO Meg Whitman has reportedly said that "EBay has to be a level playing field. That is the core part of our DNA, and it has to be a part of it going forward."

Now, eBay says the policy changes will encourage good customer service. Is it fair? Absolutely not. Smaller sellers are being pushed out, and many are finding better opportunities on their own Web sites or at rival auction sites. EBay wants its sales to skew toward bigger, fixed-price listings, and the vendor discounts are one way to reach that goal.