Seattle-based Amazon will soon require its auction sellers to offer the company's proprietary person-to-person payment service, Amazon Payments, to bidders, company representatives said. Previously just an option for sellers, the use of Payments is only available to sellers with U.S. bank accounts, effectively barring many sellers who live in other countries.
Sellers will be required to offer the service, but can also offer other payment methods such as checks, money orders or money-transfer service PayPal, Amazon said. Buyers can choose which payment method they want to use.
Montreal resident Jamie Gilcig, who sells videotapes and DVDs through Amazon Auctions, said he set up a couple of bank accounts in the United States in order to use Payments. Gilcig said setting up the accounts was easy for him because he lives close to the border between the United States and Canada, but said it may not be so easy for other sellers.
"I can understand why a lot of people are frustrated," he said.
Amazon representatives declined to say when the company will begin requiring sellers to offer Payments, but said the change will happen "soon."
Additionally, Amazon began charging sellers who use the Payments service a closing value fee on their auctions last week. Amazon had previously exempted sellers who offered Payments from paying the final value fees, which are based on winning bids. Amazon charges an additional fee for transactions that are completed using Payments.
Amazon's latest actions indicate that auctions are no longer a priority for the company, said Rosalinda Baldwin, editor of The Auction Guild, an online newsletter.
"There was a time when they thought they could take on eBay," Baldwin said. But she added that Amazon has "willfully destroyed its own auction business."
Amazon spokeswoman Lizzie Allen said the company made the change in response to customer requests. Amazon offers bidders $2,500 worth of insurance for auction items bought using its Payments service, but only $250 worth of insurance for items bought without Payments, she said.
"Amazon Payments provides an efficient method to pay for items and receive payment from buyers, so this change makes sense," Allen said.
The new fees and restrictions at Amazon come as the company's two biggest auction competitors have introduced new fees and restrictions of their own. Earlier this month, Yahoo began charging sellers for listing their items on its auction service and prohibited the sale of hate material such as Nazi and Ku Klux Klan memorabilia. And at the end of this month, eBay will increase its listing fees for sellers.
On the block
Last summer, Amazon quadrupled listing fees for its auctions and zShops areas and eliminated a lower-cost listing option for zShops sellers. Many sellers have also been unhappy with a recent redesign of Amazon's Web site that deleted the permanent "store tabs" for the auctions and zShops areas.
Amazon's Payments service--which is similar to PayPal, eBay's Billpoint service and Yahoo's PayDirect--allows sellers to accept credit cards and debit cards online. Amazon charges sellers 25 cents per item sold using Payments, plus 2.5 percent of the transaction amount. Unlike Amazon, eBay and Yahoo do not require their sellers to offer their proprietary payment options.
In addition to the fees for Payments, Amazon charges closing value fees on a sliding scale. They range from 5 percent of the winning bid price for bids under $25, to more than $25 for winning bids over $1,000.
Requiring sellers to offer Payments to bidders could be a way for Amazon to jump-start the service, said Mike May, digital commerce analyst with Jupiter Media Metrix. Unlike eBay, which dominates the auction market and constantly has to fear losing market share, Amazon can afford to take chances with its auction service, May said.
"Amazon has a little more license to try to create its auction initiative into something other than a driver of auction revenues," May said, noting that banks are very interested in the potential of person-to-person payment solutions. "If they drive enough penetration of Amazon Payments, it could become attractive to banks that are looking to get into that space."
But on the message boards at AuctionWatch.com and on Amazon itself, several sellers protested the new moves.
"I can't believe a site as dead as Amazon has the audacity to start forcing sellers to use their Payment system and also start charging completion fees too, when their buyer base is almost empty. eBay must be celebrating at all this stupidity!" one seller wrote.
But Gilcig, who said he likes the uniformity of requiring sellers to offer the service, said Amazon Auctions faces other problems beyond the new changes. Amazon has decreased its level of customer support for sellers, he said, and in recent months, his sales have fallen precipitously, he said. Last spring, some 16 percent of his auctions ended in a winning bid; now, only about 2 percent do, he said.
"I think Amazon is frankly incompetent at this point," Gilcig said. "I'm losing a lot of faith in them."