eBay Inc (EBAY) Is Ready to Challenge Amazon.com, Inc. (AMZN)’s Dominance

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In the minds of many a buyer and seller, Amazon.com, Inc. (NASDAQ:AMZN) long ago passed Internet retail pioneer eBay Inc (NASDAQ:EBAY). Today, Amazon’s third-party marketplace is a core enabler of the company’s expanding margins and rising profits. It’s the perfect catch — a slice of every item sold, and minimal selling costs, all while providing a best-in-class experience for its 2-million-plus seller population. But now, eBay has decided to narrow the gap and adopt similar seller terms. If the auctioneer is successful in stealing these independent e-store owners, there could be big trouble ahead for Amazon.

Amazon.com Inc. (AMZN)Change in terms
For eBay Inc (NASDAQ:EBAY), the seller agreement was long overdue for an overhaul, and it’s a big reason Amazon.com, Inc. (NASDAQ:AMZN) was able to expand its third-party marketplace as quickly as it did. At eBay, sellers fall into two categories: store owners and non-store owners. Traditionally, non-store owners paid a $0.50 listing fee in addition to what the company calls a “final value fee” – a variable number that depended on the amount the item was sold for. For store owners, eBay charged a monthly subscription fee in addition to the typical listing fees and final value fee.

To many sellers, both store and non-store, this was not nearly as attractive as Amazon’s fee-less listings, for obvious reasons.

This week brought a major policy shift, and on the heels of eBay’s record fourth-quarter marketplace sales of $2 billion. And the folks over at Amazon.com, Inc. (NASDAQ:AMZN) likely aren’t thrilled.

Now, for non-store owners on eBay Inc (NASDAQ:EBAY), there is just one final-value-fee of 10%, capped at $250. Each seller receives 50 free listings per month, with a $0.30 insertion fee thereafter. Store owners now have the option of a discounted annual subscription fee, starting at under $200 per year, with 150 free listings per month. If you opt for the top-of-the-line “anchor” store, you pay roughly $2,160 per month, with 2,500 free listings. Final value fees are as following:

4% for computers, tablets, and gaming consoles

6% for consumer electronics (think cameras)

7% for musical instruments

8% for motor parts and accessories

9% for basically anything else you can think of

On the surface, some of these figures are more appealing than Amazon.com, Inc. (NASDAQ:AMZN)’s current fee schedule, which can be as high as 20 % for sports collectibles and jewelry.

eBay is clearly trying to steal away some of that robust Amazon marketplace, but will it work?

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