EBay adjusts pricing to encourage low-cost sellers

By Eric Auchard

SAN FRANCISCO (Reuters) - Online auction leader eBay Inc on Tuesday introduced price changes and tighter sales standards in a bid to retain quality sellers, improve customer service and revive flagging growth.

In a speech to eBay's top store operators and market makers in Washington D.C., CEO-in-waiting John Donahoe will set out a plan to reward the company's best sellers with sales incentives and priority ranking in search results for auction items.

Key changes involve lowering fees for listing items within auctions or for independently operated stores run on eBay. It also involves raising some of the fees sellers pay once sales transactions are successfully completed. And eBay plans to raise minimum standards to discourage abusive sales practices.

"Sellers that describe items accurately, ship on time, and ship at a fair price will enjoy preferential pricing and discounts on eBay," Donahoe said in prepared remarks. "We're serious about making eBay easier and safer to shop."

EBay is seeking to reverse slowing revenue growth in its marketplaces business, which is roughly half the level of three years ago. The company telegraphed that changes were in store last week when it reported its 2007 year-end results.

The moves initially take effect February 20 in the United States across both auction bidding and fixed price markets. In coming weeks, similar changes will be introduced in Germany and Britain, eBay's No. 2 and No. 3 markets. Eventually, the pricing and other rules changes will take effect worldwide.

In the United States, eBay plans to reduce insertion fees -- the cost of listing new items -- by 25 percent on most auction items and by 50 percent on most store items.

The fee changes, which vary by country, are intended to encourage sellers to list more items and use more pictures to illustrate listings, moves designed to encourage shopping.