eBay UK To Introduce Buyer Fee In 2025 As Private Selling Goes Fee-Free
eBay UK sellers rejoiced yesterday at the news that private fee free selling had been expanded to all categories except Motors, but the company buried the lede on another shoe left to drop - buyer fees are coming in early 2025!
The "good news, sellers" was blasted across the world with media outreach and a major press push extolling the savings for private sellers and additional new benefits for business sellers too.
Liz Morton
But the bad news for buyers was quietly tucked inside of eBay's 8-K filed with the SEC today, carefully nestled into an otherwise bland and self-congratulatory internal memo from CEO Jamie Iannone (emphasis mine).
I wanted to share some exciting news just announced in the UK. Beginning today, eBay is removing selling fees for consumer-to-consumer (C2C) sellers in the UK for domestic transactions across all categories, excluding motors. This follows the introduction of free selling in pre-owned apparel categories for UK C2C sellers earlier this year.
Additionally, we are introducing significant enhancements for our UK customers, including a streamlined listing process, simple delivery, a revamped local pickup experience, and enhanced wallet functionality through eBay Balance.
Today’s announcement was many months in the making, and made possible through the hard work and collaboration of teams across the company. Importantly, this initiative was contemplated in our financial outlook provided to the investment community at Q2 2024 earnings.
We have a robust monetization roadmap to ensure these changes are good for both customers and our business overall. This includes value-added services like first-party advertising, financial services, and a new value proposition in shipping that we plan to scale in Q4.
We are also planning to introduce a buyer-facing fee in the UK in early 2025 alongside a set of buyer enhancements that provide additional value. There will be more we can share on our future plans at Q3 2024 earnings and our next Global All Hands event.
The expansion of fee-free selling in the UK is part of a strategy to boost consumer to consumer selling activity in that market with a dedicated team working to implement what eBay internally has been calling the "fix the fundamental aspect of UK Win back plan."
That plan is part of eBay's larger global strategy pivot since Chief Business Strategy Officer Stefanie Jay resigned earlier this year, putting more emphasis on the non-new in season C2C side of the marketplace that historically has been the "foundation" of the platform - a sentiment Iannone echoed in this 8-K filing.
Strategic focus on C2C
This is our second major initiative of its kind in as many years, and I believe it’s important to take this opportunity to discuss the strategic rationale behind our C2C initiatives.C2C sellers make our marketplace more vibrant by bringing some of the most unique, hard-to-find, and well-priced inventory. C2C selling drives holistic growth on our marketplace, as buyers who sell, on average, purchase roughly twice as much on eBay as non-sellers, with most of their incremental spend supporting small business sellers.
Our initiative in Germany last year has shown us that eliminating selling fees can strengthen our marketplace by lowering the barriers to C2C selling, which improves the breadth and depth of inventory on eBay.
The introduction of a buyer-facing fee on eBay will no doubt surprise both sellers and buyers alike.
As other competing marketplaces have gone this route, the most common comment I hear among eBay sellers is they don't believe eBay buyers would tolerate such a significant change to the way business is done on the platform.
Etsy-owned Depop initially shifted fees to buyers in the UK before expanding their new fee structure to the US in July, but being a more narrowly focused marketplace may have made that transition easier for buyers as other competitors in that space, like Vinted, already used a similar pricing model.
Liz Morton
Mercari also changed the fee structure on their US marketplace in March and they may be a better corollary to eBay in terms of broader category selection.
Liz Morton
So far results have been mixed for Mercari with an increase in abandoned carts due to initial lack of transparency about the buyer-facing fees and pushback on how high the variable fee may be, forcing Mercari to commit to capping buyer fees at 10%.
Mercari US CEO John Lagerling even had to admit the new fee structure had not resulted in the GMV performance they had hoped when internally announcing a layoff of ~45% of US staff in June.
Liz Morton
Mercari is an ecommerce giant in Japan, where the business does very well, but their US marketplace has struggled significantly, especially once the general pandemic-era ecommerce boom waned.
Making a risky hail Mary attempt to shake things up with a new fee structure is one thing when your business is already on the ropes, but that is not the case for eBay.
eBay's Q 2 2024 report showed stagnant Active Buyers and projections for only 0-2% GMV growth in Q4, which is nothing to write home about, but is more a continuation of a long, slow slide into increasing irrelevancy and a far cry from the precarious position Mercari's US business finds itself in.
Liz Morton
That could mean making such a change to eBay's fee structure may be significantly more risky, with the possibility of alienating buyers, and the potential rewards relatively much less.
As with most things on eBay - the devil will be in the details and the execution.
Will they split payment processing fees out and leave those on the seller side, as Depop has done, or will the full fee burden move to the buyer?
Depop and Vinted have both settled on buyer fees around the 5% range, plus a flat amount of either $1 or $0.70 per transaction while Mercari initially went with a variable buyer fee that exceeded 10% in some cases.
Will eBay opt for the lower end to stay competitive or choose something in between?
Interestingly, eBay had surveyed sellers in the UK earlier this year on a variety of topics related to financial services, payments and fees with some "questions about the fee structure being too complicated and the option given to select that fees are too high as reasons for answers to certain questions" according to one seller.
Liz Morton
That could certainly open the door for an arrangement where business sellers would still pay some fees, but possibly a lower amount that is flat across all categories to "simplify" things, and then a similar "small" buyer fee would be applied across all transactions as well.
Buyer fee tolerance may also depend a great deal on those planned value-added services - if they truly bring value to a wide variety of shoppers on the platform, buyers may be more willing to pay the price, but time (and market forces) will tell.
While the 8-K filing gives no hints at what those services may be, the mention of additional services for buyers brings to mind the rumored Trusted Buyer program that may provide some buyers with special perks like overriding seller immediate payment requirements and receiving advance refunds on returns.
Liz Morton
eBay could also look to introduce a buyer loyalty program of some sort, like Etsy is doing with Etsy Insider, which is their spin on Amazon Prime offering free domestic shipping, special access to discounts and other perks.
Liz Morton
They already offer eBay Plus in Australia, where buyers can receive exclusive discounts, free shipping and free returns for a $4.99/month membership fee, so it wouldn't be much of a stretch to introduce something similar for the UK.
US sellers have been clamoring for insights as to whether eBay will bring fee-free selling stateside anytime soon, and while there has been no public announcement or even hints that is on the roadmap, the UK market is often a testbed for changes that may eventually find their way to the wider eBay experience.
When asked in the past if I believed eBay would ever get rid of seller fees in the US, may answer has always been "not without instituting buyer fees" - and now that we see eBay is willing to at least test the waters on that strategy, it certainly opens up some interesting possibilities for the future.
Stay tuned for details as eBay makes this transition in early 2025 and let us know in the comments what you think of eBay UK going fee-free for private sellers and introducing buyer fees instead!
