eBay’s Free Listing Experiment

eBay offered free listings on Wednesday… with a catch. It’s all part of a plan to see why the number of listings has dropped.

EBay Inc. on Wednesday gave sellers in the United States and Canada a one-day reprieve on listing fees for certain auction and fixed-price items, in what it called a test of potential improvements to the buyer experience.

The move could give a small boost to listing numbers at a time when many Wall Street analysts are gloomy about a trend of declines in the U.S. and several other markets, which they consider a sign of weak demand. EBay’s U.S. listings, excluding eBay Motors and Stores, are down 4.6 percent compared with last year, according to J.P. Morgan analyst Imran Khan.

The company has said listing declines are due to its ongoing effort to cull poor-quality listings and counterfeit products. It notes that its so-called "Marketplace rebalancing" effort has successfully improved average selling prices and the overall value of merchandise sold on the site, which it considers more important measures of the strength of its business.

The online auctioneer typically runs listing promotions in the summertime, its slowest period of the year. However, a free-listing day is out of the ordinary, said Scot Wingo, chief executive of ChannelAdvisor Corp., which works with many large eBay sellers. The design of the promotion indicates that eBay is "testing the dynamics of the marketplace," he said.

EBay lifted insertion fees on items starting at prices of $9.99 or less with the purchase of eBay’s Gallery feature, which allows sellers to show images of their products for an extra cost of 35 cents. In essence, the listing was getting the gallery feature free.

Promotions are "yet another lever we can pull to try to promote certain activity or behavior within the marketplace," said eBay spokesman Hani Durzy.
Durzy declined to say how the promotion has gone so far, but Wingo said few of his clients seemed to be taking advantage of the fee break.

"The larger sellers aren’t going to be swayed by that because they have a lot to lose," he said. Indeed, they are increasingly starting auctions at higher prices in an effort to reduce the risk of selling items at a loss or at poor margins.

Sellers who will take advantage, he said, are those selling inexpensive items. The test here will be whether images of these cheaper items drives additional sales.

Reaction to the promotion on eBay’s discussion boards wasn’t too favorable.