EBay slashes fees in attempt to attract more big retailers

The online auction giant eBay has simplified and slashed its charges on fixed-price items sold on its site, as it seeks to compete more aggressively with its rival Amazon by enticing small businesses and big ticket retailers to its website.

EBay UK said the pricing changes, which comes into effect on 24 September in the UK, mean the "majority of sellers" will see their overall fee reduced, although fees will vary depending on the size of the seller's offer.

The initiative is an attempt by eBay UK to grab a larger share of booming online retail sales and to change the perception of its site as primarily an auction site for consumers. The UK changes were unveiled on the same day that eBay in the US introduced a different set of cost reductions for listing on its Buy It Now marketplace.

EBay estimates that 178,000 people in the UK earn a primary or secondary living by running a business on the site. Retailers, including the home shopping specialist Shop Direct, formerly Littlewoods, and the mobile phone company Orange, also sell products on the site.

In the UK, a key change is that for identical items, such as an iPod, sellers will pay a flat fee for a single listing, which they can use to sell as many items as they want. EBay will also move fees to the back end so that sellers only pay the auction giant when an item has been sold. An eBay UK spokeswoman said: "Currently a seller could pay as much as £1.30 to list a single fixed-price item for a maximum of 10 days. That will now come down to a flat rate of 40p regardless of the price of the item, and will be on the site for up to 30 days – up from 10."

For those paying the highest premium anchor shop subscription monthly fee, the listing price will come down to 1p for up to 30 days and there will be no extra charge for limitless items. However, the subscription fee for premium anchor custom-ers will go up to £350 a month.

Nick Gladding, lead analyst at Verdict, said eBay hoped to increase revenues by attracting more retail customers, but said the overall change to the listing fees it receives would "be revenue neutral". Mr Gladding said: "The main focus is to grow the site to appeal to retailers. At the moment, it is used by very few retailers and eBay sees potential in growing itself as a platform for anyone to buy anything."

Robin Goad, research director at the online market research company Hitwise, said brand recognition on the internet is becoming more important, which is driving high-street retailers' online sales. "You cannot afford to ignore eBay, but if you have a well-developed online presence it will probably be not so important [for high-street retailers]."