eBay and Taxes

• August 27, 2006

Hundreds of eBay Inc. merchandisers say they have closed their online storefronts, and some took their listings elsewhere, in the wake of a controversial [6%] fee increase eBay began charging earlier in the week.
This is of interest because the same phenomena occurs when government raises taxes. Substitute ‘government’ for eBay and ‘businesses’ for ‘online storefronts’ and it becomes more apparent how economic disaster occurs. What types of businesses are most hurt when government raises taxes?
A list of more than 700 eBay stores that have closed so far can be found on a Web site created by Melinda Burnett, an eBay seller living in Atlanta. The majority of eBay stores closing appear to be the smaller ones, just as eBay had hoped.
“A lot seem to be small, mom-and-pop type places.” said David Yaskulka, the president of Harris Michael Inc. of Valley Stream, N.Y., and chairman of a committee of the Professional EBay Sellers Alliance, the main association of eBay sellers. “These are the less successful ones that see that eBay as no longer profitable because of the rate hikes.”

Read the whole thing.

Tags: Brian Kalk, Cultural Marxism, Doug Goehring, Merle Boucher

http://Array Len

Rob, most of the businesses that have left are smaller sellers because most of ebay is comprised of smaller sellers.

This raise has, in fact, hurt the big boys as well, particularly in the media category (DVDs, Books, Magazines, CDs) where sell-through is traditionally low.

Last week Ebays largest media seller, Movie Marz, announced they will be pulling up their ebay stakes and moving on. With 1.2 million items, they cannot sustain a 350% fee increase.

Many other large (200k+ items) have also voiced similar intentions, and others who’ve remained silent are quietly reducing their inventory.

Ebay will no longer be the place to buy movies, music or books. Those that remain will be priced more unattractively to compensate for fees.

Amazon took much of Ebay’s media business, now they’ll have nearly all of it.
http://www.thedumbdog.com/ Keith

Rob, the quote you gave on the fee increase [6%] is inaccurate. While this figure was quoted by Bill Cobb (President eBay North America Sales), in truth, the actual figure jumps from 10%-40% depending on the volume of the ebay store seller. While eBay consumes 10%-15% of gross sales on every item sold, by squeezing more fees from sellers, they are now making more profit than the sellers themselves. It is more than just ‘Mom and Pop’ sellers who no longer can afford to list on eBay, a lot of elderly citizens who make a limited income from ebay to suppliment their already small fixed income are pushed out the door too.

Bottom line? Consumers will have less choices and higher prices for the upcomming Christmas season.
robert108

eBay should go out of business, if market forces are in operation.

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eBay and Taxes

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