Since its debut in 1995, the eBay marketplace has continually evolved to meet the needs of the eBay Community. For the most part, the behaviour of buyers and sellers has naturally adapted to changing conditions - over time, we've learned to allow the marketplace to direct itself as much as possible. On some occasions, though - in the interest of the eBay marketplace's long-term vitality - we've had to step in and implement new policies, introduce new formats, or make changes to our fee structure to create needed incentives for eBay members.

Put simply, we at eBay have two basic roles: to deliver the best overall value for buyers, and to maximize cash flow for sellers. As eBay has grown over the years, we've added various enhancements and tools to the site - but in essence, our "products" are two types of listings:

• Core listings (auction-style, auction-style with Buy It Now, and Fixed Price) deliver the signature eBay buying experience. For sellers, they're the fastest way to sell inventory on the Internet - the only place where items typically sell within about two weeks.
• Store Inventory listings were introduced in 2001 and intended as a low-risk way for sellers to display large amounts of product in their eBay Store. This format employs low insertion fees and higher final value fees to encourage an abundance of inventory on the site.

Amid all this change, one thing that's remained constant: auction-style listings are the foundation of eBay. Auction-style and other core listings made eBay what it is today - and they'll always be front and centre on eBay.ca and eBay.com. They account for about 91% of the gross merchandise value sold on eBay.ca and eBay.com. But recently, we've been wrestling with some troubling facts:

• Store Inventory listings now comprise about 83% of active eBay.ca and eBay.com listings on average.
• While eBay.ca and eBay.com core listings typically sell in about two weeks, Store Inventory listings on average take 14 times longer to sell. In some media categories, Store Inventory listings take more than 40 times longer to sell than core listings.
• And, when you compare our operations costs for an average Store Inventory listing and an average core listing - factoring in the duration of each - our cost to host a Store Inventory listing is more than 50% higher than for a core listing. In fact, current Store Inventory insertion fees don't cover eBay's cost of hosting them.

It's vitally important - to your business and ours -- that we maintain a healthy balance between listing formats on the eBay marketplace, and ensure inventory conversion across the site remains strong. So we're taking action.

Today, I want to inform you of changes we're making to eBay.ca and eBay.com - changes intended to rebalance the overall eBay marketplace by further distinguishing the roles of core listing formats and our Store Inventory format. In short, we're improving the advantages of selling in core listing formats -- and taking action to manage the proportion of Store Inventory listings - to ensure that the buying experience on eBay stays true to shoppers' expectations.

Core Listings

All US dollar core listing fees on eBay.com will remain unchanged and all but two of US dollar core listing fees on eBay.ca will remain unchanged. So, for the vast majority of eBay sellers who use only these formats, their fees are not increasing. The two US dollar core listing fees that are changing on eBay.ca are Motors feature fees: Picture Show (US$0.75 to US$1.00) and Pocket Bike Picture Pack (US$1.50 to US$2.00).

Also, in response to the requests of many large sellers, we're raising the 10-item multiple listings limit to 15, effective August 22.

Store Inventory Listings

For those of you who operate an eBay Store, we're making changes to Store Inventory listing fees, as well as to the on-site exposure we provide for this listing format.

We'll begin charging variable insertion fees for Store Inventory listings, as we do for core listings. Beginning August 22, eBay.ca and eBay.com Store Inventory format insertion fees will be tiered with an item's starting price.

These Store Inventory format insertion fees take effect August 22, 2006:

Some Store Inventory format final value fees also will increase, effective August 22, 2006:

Please note that for current listings, the new final value fees will apply only after these listings are renewed.

For more detailed information on these fee changes, please see our fee changes overview.

For some time, we've been working to identify the best way to display Store Inventory listings on the site. In the spring, we pledged to sellers that we would test a variety of ways to mingle their Store Inventory listings with core listings on eBay.ca and eBay.com. We've tested several alternatives and these tests showed the ideal approach is how we're doing it today - that is, when a buyer's search returns 30 or less core listings, we display up to 30 Store Inventory listings. This is what we'll stick with going forward.

However, starting in about one month, we'll include an unlimited number of Store Inventory listings after all matching core listings when the buyer clicks the Buy It Now listings tab at the top of every search results page. When the buyer hasn't selected this option, eBay.ca and eBay.com will display Store Inventory listings along with core listings as described above.

How These Changes Affect You

I'm confident the actions we're taking are the right thing to do for the overall eBay Community. We'll more effectively deliver on our buyers' needs and expectations. And for sellers, these changes will ensure that eBay remains a differentiated and distinct e-commerce channel with fast inventory turnover.

I know there's a lot to digest here, and that you're probably most interested in quickly determining if and how these changes will impact your business.

A typical eBay Stores seller who uses Store Inventory Format - making no adjustments to his or her selling strategy following these changes - will experience an overall fee increase of less than six percent, based on our analysis of June selling activity. Of course, you need to clearly understand the impact on your business - which could be greater or less than six percent. To get started, please visit the seller resources page or consult the Frequently Asked Questions we've prepared. Also, use your seller support resources in Customer Support. Our CS teams are fully prepared to help you understand the effect on your business, and discuss your options for adjusting your eBay selling strategy to minimize impact to your bottom line.

In addition - to help eBay Stores sellers make informed decisions about any changes to their selling strategies - we're making eBay Marketplace Research Basic available to them at no cost for eight weeks, starting today. Through September 19, eBay Stores sellers can use this data to compare selling formats or determine how best to price inventory on eBay. You can access eBay Marketplace Research here.

Additional Adjustments to Listing Fees on eBay.ca

Lastly, although US dollar core listing fees on eBay.com will remain unchanged, there are additional adjustments to listing fees on eBay.ca.

1. We will be lowering many of the Canadian dollar fees to reflect recent changes in currency exchange rates.
2. Our US dollar fees on eBay.ca are aligned with the pricing on eBay.com. Over time, six of the US dollar fees on eBay.ca have become out of synch with eBay.com and these optional feature fees will now be realigned. These fees are:
   
   a) Core Listings:
   Motors Picture Show (US$0.75 to US$1.00)
   Pocket Bike Picture Pack (US$1.50 to US$2.00)
   
   b) Store Inventory format fees for 30-day listings:
   Listing Designer (US$0.05 to US$0.10)
   Bold (US$0.35 to US$1.00)
   Highlight (US$0.70 to US$5.00)
   Featured Plus! (US$1.75 to US$19.95)

For more information, please click here.

I'll be hosting a Community Town Hall discussion Thursday, July 20 at 7:00 p.m. Eastern time, where I'll answer your questions. Please click here for more details on the Town Hall, or to submit a question in advance.

Thank you for your business.

Sincerely,

Bill Cobb
President, eBay North America