Selling on ebay sucks

It has for a while, now. This isn’t news.

Ebay doesn’t have resources to properly research Buyer Protection claims. They used to try to make the process fair, and required the buyer to provide evidence, including appraisals from allegedly neutral third parties. Proper arbitration is too costly in most cases, so they did away with all that, streamlined it, and now people can abuse the system by making a claim on the barest of pretenses, or even outright fraudulent pretenses, and there’s very little the seller can do about it to keep their money. You’re well protected as a buyer, but as a seller, you’re at the mercy of the buyer’s honesty.

That’s one thing.

Another thing is the outrageous fees that ebay is charging. Some years ago, the final value fee that ebay applied to your sale was 10%. 99% of the time the buyer would pay for the item using PayPal or a credit card, and there would be transaction fees in addition to the ebay Final Value fee. Typically this would be about 3.5% of the item, so your total cost of doing business on ebay would be about 13.5%. And it could be more if you paid for “value added” listing features, such as a reserve price, or additional photos, etc.

Ebay also included the cost of shipping as part of the “final value fee” even though the expense of shipping is yet another cost. So you’d pay for packaging, postage, maybe insurance, and whatever you charged the buyer for this, ebay took a slice of that for their final value fee as well.

If it weren’t for this, sellers could have listed a $10 item for $0.01 + (actual cost of shipping) + $9.99 shipping, and if ebay didn’t include the shipping costs in the final value fee calculation, the seller would have gotten that $9.99 overage on the shipping charge, fee-free.

It made selling small items cost prohibitive, which was a shame.

Ebay bought PayPal in order to collect the transaction fee side of the costs as well as their final value fee. So they were really getting about 13.5% on every transaction.

A few years ago, ebay sold off PayPal, and gradually phased out accepting PayPal for payments. Existing PayPal payment methods are grandfathered in, but it’s no longer possible to use PayPal as a payment method, otherwise.

A few years ago, the government finally stepped in and forced ebay to collect sales tax on all transactions, except for tax-exempt merchants such as charities, who had to file special paperwork proving they were tax exempt. You even have to pay sales tax on secondhand goods, even though sales tax would have been paid on the original purchase of the item, and thus shouldn’t be owed again.

Of course, ebay includes the sales tax that they collect on your behalf and send straight on to the government, and you never see, as part of the “final value” when they calculate their final value fee.

Oh, and they’ve raised the final value fee to $14.5%. So that’s why I call them Greedbay.

Ebay’s “greedbay” fees in action

Take this item I sold recently for $50 + tax + shipping. The postage was $9.13, so I’m getting a total of $59.13, of which I immediately have to pay out $9.13 for the shipping, meaning a net of $50 to me.

Sales tax added another $4.29 to the cost, and ebay considers that part of the final value, so they charge me 14.5% of 63.42, which is $9.48 — and not 14.5% of $59.93, in which case the feel would been only $8.96.

And if they didn’t include the cost of shipping in the final value, their fee would have been $7.25.

And if they had kept to the old final value fee of 10%, it would have been only $5.00, or ($5.91 with shipping included in the calculation)!

So if you look at it, over time ebay has gradually almost doubled the cost of their services.

I can accept the rationale behind charging final value fees that include the cost of shipping, but it’s outrageous to me that ebay thinks it’s right to include the cost of sales tax in their final value fee calculation.

As a seller, I hate this, but there’s very little I can do about it. There’s a few competitors to ebay, but none of them have the volume of customers that ebay has, meaning that sales are slower and fewer. And their fees aren’t much less — in part because if ebay is the standard they are competing against, then they think they only need to undercut them by a slight amount.

As a buyer, it’s outrageous to me that I have to pay sales tax on ebay for secondhand goods that have already been taxed once, at their original sale when they were new. Sales tax should never apply to secondhand items. This would encourage people to buy secondhand, rather than waste resources producing new items, which would be good for the environment.

Updated: 2024-Feb-06 — 1:52 pm

Leave a Reply