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Amazon changes its fee rules for zShops

The e-tail giant quietly discontinues its 10-cents-per-item listing fee for its zShops sellers, meaning that merchants must pay a new, higher flat rate.

E-tail giant has hit small-time merchants with a one-two punch.

First, Amazon quadrupled its base fee for sellers in its zShops area, which is for smaller merchants. The flat-rate fee for listing thousands of items jumped from $9.99 to $39.99 earlier this month. Now, the company has quietly discontinued an optional fee, 10-cents-per-item, for the zShops sellers.

Together, the changes mean that merchants who want to pay a fixed price for items they sell on Amazon must pay the new, higher flat rate.

On message boards at Amazon and AuctionWatch, a number of sellers who use zShops protested the fee increase. Arlen Miller, who previously paid the $9.99 flat rate, said he canceled his Amazon account last night in response to the new rates.

"I don't need to see a rate increase of $30 every month," said Miller, of Poinciana, Fla. "My business isn't going to increase. All I'd be doing on Amazon is decreasing my profits."

Miller, who sells Disney collectibles, said he will shift his business over to Yahoo's auction area, where he already lists most of his items. Yahoo, unlike Amazon or eBay, does not charge listing fees in its auctions area.

Miller and other zShops sellers now have another free option. Beginning today, Excite@Home is offering a new, free store-hosting service. The service, called Freetailer, provides merchants with 25MB of storage space and 1GB of bandwidth per month for free. However, Freetailer merchants will have to pay a $19.95 monthly fee to be able to accept credit cards online.

Excite@Home's Freetailer follows similar offerings such as Network Commerce's service.

"We believe there's a market out there that traditional offerings aren't addressing," said Dan Odette, vice president of marketing for Excite@Home's Business Applications division.

With an estimated 72 percent of small businesses lacking a Web presence, a growing number of companies are jumping into the game to help them get online. Federal Express plans to debut a store-hosting service later this summer. Portal giant Yahoo says some 10,500 merchants are now a part of its Yahoo Stores network.

But many services charge hefty fees.

Although Yahoo's auctions are free, their least expensive storefront costs $100 to list just 50 items. On top of that, Yahoo charges a fee to promote stores in its Yahoo Shopping area, and its partner, Bank One, charges a transaction fee to merchants who accept credit cards.

Amazon's low cost and large amounts of customer traffic drew many merchants to its zShops service. When the Seattle-based company debuted zShops last fall, it touted the service as a way for "anyone" to sell goods online.

zShops general manager Anthony Rodio said the new rates are still "very competitive" with other, similar services. The rates came out of discussions with the company's merchants and customers. However, there will also be several site enhancements, including the ability for merchants to design their own storefronts in zShops for the first time.

But Rodio did say zShops could lose some of its smaller merchants because of the rate increase. "A very small percentage of our listings or sales will be at risk," he said.