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NealEbay hopes higher fees will reverse trend
SAN FRANCISCO (MarketWatch) -- EBay Inc. is about to find out whether a fee increase will help the company reverse a strategic error and boost revenue - or drive away some of its highest-volume sellers.
Starting Aug. 22, the San Jose, Calif.-based company will raise the fees it charges to those who sell items through any of its approximately 500,000 online stores, which are set up more like a retail site than eBay's traditional auction listings.
The increases come about two years after eBay reduced those same fees in order to give the feature a boost.
While the increases may appear small -- amounting in some cases to as little as $1.20 more per item sold - they've already set off a backlash that has resulted in a boycott among some eBay sellers.
EBay hopes the extra fees will encourage a certain amount of store operators to switch back to selling items through auctions, or "rebalance the marketplace," as Chief Executive Meg Whitman said on a conference call last month.
Investors and analysts will be looking to see if the move can boost growth at eBay.
The new fees initiative comes on the heels of eBay's second-quarter financials, reported in June, in which net income fell by more than half, hurt by the cost of employee stocks options and higher operating expenses.
The company's gross margins during the quarter, or revenue minus product costs, and its operating income both fell as a percentage of sales form a year earlier, as it spent more on product development and marketing.
Worries that the company's sales and profit growth are slowing have helped push its shares