By Mark W. Vigoroso E-Commerce Times
12/07/01 1:59 PM PT
Many e-commerce firms are watching buyers turn a cold shoulder when the companies attempt
to add fees on services that were once offered for free.
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Most e-commerce sellers and go-betweens have but one wish this holiday season: revenue.
In a sheepish effort to fulfill that craving, many e-commerce go-betweens -- as in online
marketplaces and payment service providers -- are starting to squeeze buyers for cash.
Now, that's naughty, not nice. Moreover, the timing is all wrong.
Online buyers have been pampered with Web freebies for years, with good reason: Web
sellers need Web buyers more than the other way around. And with the economy diving
like a sick reindeer, buyers aren't about to cough up extra fees now.
My advice to e-commerce providers: keep wishing for
revenue, because you're not getting it from buyers.
Yahoo! Attempts Tap
Yahoo! (Nasdaq: YHOO) is one of the latest companies to tap buyers for much-needed funds.
After December 17th, its PayDirect
online payment service will no longer be free.
The new pricing for Yahoo! PayDirect will be based on
2.5 percent of the transaction amount, plus 30 cents.
Granted, either the buyer or the seller can take the
hit, but the mere mention of it will turn many buyers
on their heels.
Indeed, a recent online forum posting reads, "Bye-bye,
Yahoo! I refuse to pay a dime for any of these free
services that they've now decided to charge for! That
is a greedy bait-and-switch."
Don't worry, Yahoo! because PayPal and EBay
(Nasdaq: EBAY) Payments -- both of which still charge
the seller -- will be glad to look after your disgruntled former buyers.
Seller's Dilemma
Here's the problem. Historically, the seller's need to sell online has been greater than
the buyer's needs to buy online, so e-commerce companies have aptly tapped
sellers to pay for services that feed their needs.
The Web is a valuable distribution channel for most
sellers, with unprecedented reach and reward. So
sellers can justify paying to list items in an auction
or to receive online payments. Fact is, the Web has
become indispensable for many sellers.
Not so for buyers. Before the Web came along, they
were happily thumbing through catalogs and strolling
down aisles. The Web has brought them convenience,
selection, and personalization, but it's by no means
indispensable.
Shipping charges are hard enough for many buyers to
stomach. Tack on arbitrary usage fees, and buyers
won't shed a tear on their way to visit old friends at
Walmart.
Fee-dom Will Fail
E-commerce companies can spin tales of value and experience, but for buyers, it's still
about price. According to Jupiter Media Metrix, 74 percent of consumers said better
prices would motivate them to buy more online.
From consumers' mouths to Orbitz's ears. Since June, the travel site has competed with
powerhouses Travelocity (Nasdaq: TVLY) and Expedia (Nasdaq: EXPE) by offering basement
fares. But Orbitz's bottom line has been doubly slammed by an anemic advertising market
and a crumbling airline industry.
So, where does it turn for new revenue? Buyers. The company recently announced a US$5
service fee on all electronic tickets. Not enough to break you, but
just enough to wipe that smile off your face.
Again, a recent online forum posting captures one
popular sentiment: "Although I used to use Orbitz, I
will never use it again! I will never pay a fee, and I
hope this greedy, arrogant venture fails miserably!"
Changing Tunes
Never underestimate the power of habit. Online
buyers simply are not used to paying extra. Adding
fees to a service that has been free, without
measurably improving the service, is a doomed proposition.
In that vein, Citibank's C2it
service may have an edge in the online payment space.
The 1 percent transaction fee for buyers was recently waived,
and C2it is now free to both buyers and sellers.
Now, that's a bait-and-switch I can live with.
What do you think? Let's talk about it.
Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.