uBid to charge listing fees to sellers

Taking the same step that undermined Yahoo's auction site, the online auction destination plans to introduce a listing fee later this week.

3 min read
Taking the same step that undermined Yahoo's auction site, online auction site uBid will introduce a listing fee later this week.

The listing fee, which uBid will put in place Friday morning, will range from 5 cents to 75 cents, depending on the starting price for the item listed. uBid is initiating the fee not to raise revenue but to weed out some of the listings in the consumer area of its site, said Mark McWeeny, director of the uBid marketplace.

"We thought we had an overabundance of listings that were gratuitous in nature," McWeeny said. "We think this will bring a better balance of listings that are attractive to buyers and sellers."

uBid's move to tack on a listing fee to its consumer auctions comes 18 months after Yahoo initiated its own listing fee on its auctions. Like uBid, Yahoo expected the fee to cut the clutter from its auction site. Many sellers had taken to listing items on Yahoo as an alternative to eBay, because of the lack of fees. But while Yahoo's total listings had begun to rival eBay's, a much smaller portion of its listings actually sold.

However, instead of just clearing up the clutter, the listing fee essentially decimated Yahoo's auction site. Listings dropped by more than 80 percent and never recovered. Although the company has since tinkered with both the site and its fees, Yahoo has ceased being a credible competitor to eBay in auctions.

uBid isn't worried about following in Yahoo's footsteps, McWeeny said. Although the company expects the new listing fees to reduce the number of listings in the consumer area of its site, it believes the drop will be good for the overall marketplace, he said. McWeeny declined to say how many listings uBid has on it site in general or on in its consumer exchange area.

"We think this will bring forward a better set of listings for buyers and sellers," he said.

uBid will charge a 5 cent listing fee on items with a starting or reserve price of up to $9.99. The company will charge a 15 cent fee on items with a starting or reserve price of between $10 and $24.99.

On items between $25 and $49.99, the company will charge a 35 cent fee. Sellers will have to pay 75 cents to list items with a starting or reserve price of $50 or more.

That fee structure for listing fees is the same as Yahoo's and is considerably less than the fees charged by eBay. eBay charges between 30 cents and $3.30 to list items on its site, depending on items' opening or starting bids.

In addition to initiating listing fees, uBid will also revamp its closing fees. Currently, sellers pay a flat 5 percent commission on the closing price of their auctions. But under a new fee structure that will also go into place on Friday, the commission will range from 1.25 percent to 5 percent of the closing price.

For items with a closing price of $25 or less, uBid will charge a 5 percent transaction fee. For items with a closing price of $25 to $1,000, uBid will charge a 5 percent fee on the first $25 and a 2.5 percent fee on the next $975. On items that close above $1,000, uBid will charge an additional a 1.25 percent commission on the amount over $1,000.

The new closing fees will place uBid's fee structure between that of eBay and Yahoo. eBay's transaction fees range from 1.5 percent to 5.25 percent and are applied similarly. Yahoo's range from 0.5 percent to 2 percent.

Unlike eBay, uBid tells bidders that they are not legally obligated to complete a sale and warns them not to send money to sellers if they are not comfortable with the auction. uBid will not change that policy despite the new listing fees, company spokeswoman Denise Mancini said. The company does promise to credit fees to sellers if a bidder backs out of a transaction, she said.

Primarily known as a business-to-consumer auction site that sells computers and consumer-electronics items from its own inventory, uBid opened its consumer exchange in December 2000. The site functions much like eBay and Yahoo Auctions, allowing consumers to sell items to each other and to rate each other based on their transactions.