eBay to increase fees, remove buyer feedback

The giant online auction company, eBay, has announced a policy change to increase the trader fee (commission) charged during a transaction between buyer and seller. Beginning in May, 2008, the company will also introduce a new feedback policy that no longer allows sellers to offer feedback of its customers. eBay reported that some sellers were retaliating against customers who gave them a bad rating, resulting in rater manipulation and sometimes extortion. Critics argue that by removing seller-feedback makes the system asymmetric and give too much power to buyers. Some sellers have organized a week-long boycott of eBay and have organized themselves on social networking sites like MySpace and YouTube.

The effect of increasing trader fees can result in reduced profits for the seller and/or increased prices to the buyer depending on the changes to the buyer-seller graph. In a closed network, a boycott of sellers would result in driving up prices to buyers by reducing competition between sellers. In reality, buyers and sellers are not confined to a single online auction site and may simply take their business elsewhere.

Posted in Topics: Technology

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