I find myself in The Wall Street Journal “Small Business” Section and low and behold a headline jumps out screaming at me like deja vu all over again, to paraphrase Yogi Berra.

EBay Aligns With Sellers in New Fee Structure

In 2005 eBay aligned with shareholders after a week 4th Quarter showing from 2004 to provide their own stock correction by raising seller fees. I said to myself, self, it’s time to use your technology background and build your own web site.

Build it and they will come! Now it’s 2008 and they do, indeed, come. They are visitors and customers to the tune of 8,500 hundred on my last rolling 30 day average. My store is 100% virtual and what it really needs is loads of inventory, which is now the goal to meet up with demand. Stock it and they will buy!

I never dreamed I would hit search engine bliss but I worked at it, revised, tweaked and wrote content, content and more content. I slowly stocked but realized I needed to quickly stock now that the traffic is established. Patience is a virtue and I have been surrounded by support, patience, encouragement and frequent smiles.

Now the news flash:

The San Jose, Calif., Internet auctioneer said it will reduce fees that sellers on its Web site pay to post items for sale. Instead, eBay will increase the amount it collects once the item is sold, better aligning its interests with those of sellers. The company said it will also start holding sellers to higher customer-service standards by discounting fees and highlighting listings of the best merchants.

eBay is admitting it hasn’t aligned its interests with sellers, the folks who actually make eBay. Yes, you need buyers but you need the hard work of seller’s who supply, photograph, list and manage auctions and stores while footing the bill. eBay is now figuring this out? Not quite.

Improve customer service? When you put your eggs with the buyers and punish the seller’s customer service goes down with the sour sellers you helped create who decided to leave. In fact, after 2005, many of eBay’s largest sellers left.

The Real Story

eBay last week offered lackluster 2008 revenue forecasts that were below analysts’ estimates, because the company expects to bring in less revenue after the fee changes are implemented.

Yes, in 2005 when estimates weren’t met you simply raised the fees and punished the sellers for poor management. However, we will continue to hear what a wonderful CEO Meg Whitman was. From a bulletin more to a powerful force on the Internet. EBay supplied the infrastructure but failed to realized the sellers built the whole concept.

Beginning Feb. 20, eBay will discount fees to list products for sale by 25% to 50%. It will also eliminate so-called gallery fees — the fees sellers pay to post pictures with their listings — in the U.S. to spur merchants to include more photos, which appeal to shoppers.

Caveat, Sellers Still Pay and Pay Dearly

eBay also plans to increase the amount it collects when items sell because its merchants prefer that structure as it lowers their risk. “We will make more of our money when sellers are successful,” Mr. Donahoe said in a speech yesterday. The new pricing structure resembles that of Amazon.com Inc., which also allows third-party merchants to sell on its site.

(NOTE: Amazon charges upwards of a 30% commission and dictates the shipping fee). OUCH! This type street tax would make Tony Soprano proud.

As soon as eBay missies its mark on Wall Street the sellers will be punished with fee increases. There is no other way out for eBay to increase revenue; it’s taken them years to admit they haven’t been so kind to sellers and now it’s smoke and mirrors to convince them otherwise.

eBay also said it will give advantages to sellers who deliver high-quality customer service. Last year, eBay launched “detailed seller ratings,” which give sellers feedback on how well they describe the sale item and how fast they ship it, among other things. Merchants who sell large volumes will receive discounts on the final transaction fees they pay based on those ratings. The higher their detailed seller ratings, the bigger the discount they receive when sales close. The discounts range from 5% to 15% off the final transaction fees.

I was a Power Seller with 100% positive ratings on three different EBay ID’s over several years and now they pass out the awards. Too late but whose complaining?

Slow Learning Curve

eBay said it will also decrease exposure or raise visibility of sellers based on customer ratings. EBay is changing its search technology so that shoppers choosing “best match,” the default search option, will see listings of highly rated sellers.

Smart buyers don’t buy from low rated sellers, they read the feedback and go elsewhere.

LC Is Not the Only Skeptic

John Wieber, who sells laptops on eBay and has been moving more sales to his own Web site, said eBay merely “sugarcoated a [fee] increase” since the company is raising back-end transaction fees but not eliminating listing fees.

He adds that the standards eBay is setting to attain discounts based on customer service are “unattainable,” particularly for high-volume sellers who have to maintain service levels even with many more customers than smaller merchants.

We’re glad to see Ms. Whitman go and it seems the new eBay Chief Executive John Donahoe has seen the light but not quite as brightly as I did some years ago.

eBay is FEEBay anyway you slice it. The real test for Meg Whitman would be to strike out on her own and become a small business owner. Without the leverage provided inside the halls of eBay we doubt she would survive as long.

One last thought, if eBay management would like to really align with its sellers they would think about implementing a “buyers premium” similar to live auction houses. One could argue buyers would go elsewhere but if sellers are listing goods that are in demand a small buyers premium would take some burden off the sellers so they could improve their margins and be more successful.

That is “aligning” with the sellers, indeed!