eBay Trims Some User Fees

Updated from 11:11 a.m. EST

Weeks after a move to raise listing fees on its auction site created an uproar, eBay(EBAY Quote) offered an olive branch to sellers in the form of lowering some fees and improving customer service.

But if the moves patch up some of the damage done to its customers, some worry that it may come at the expense of operating margins.

In a letter to sellers on its site Sunday, Bill Cobb, president of eBay North America, said that all sellers operating "eBay Stores" would be credited their April subscription fee of $15.95 in May. eBay is also cutting its minimum insertion fees for auction-style listings, fixed price, motors non-vehicle and non-capital equipment categories from 30 cents to 25 cents in the U.S. Canadian fees would fall to 30 Canadian cents from 35 cents.

Cobb also vowed to offer free phone support to all sellers, not just those in premium programs, and to make sure that a human would be there to answer most emails. "We haven't invested enough in giving our [customer support] reps the flexibility and tools they need to really take care of you," Cobb's note said. "So, to start, within the next 90 days, we'll shut down most of our automated email responses. Our users will get a 'real' email response to their questions."

Derek Brown, an analyst at Pacific Growth Equities, welcomed Cobb's letter as "clearly a step in the right direction and far more than we had expected from the company." In a Monday research note, Brown said that "the company's near- and medium-term margins may come down, with more significant support costs, and incrementally less revenue per transaction."

eBay moved in January to increase fees for selling goods on its site. The fee hikes range from a 60% jump in the subscription for sellers who run eBay Stores (from $9.95 to $15.95 a month) to a doubling of the cost of listing items for 10 days (to 40 cents an item from 20 cents). Many sellers protested, and rivals like Overstock.com(OSTK Quote) and Amazon.com's(AMZN Quote) zShops reported an increase in items listed for sale on their auction sites.

Cobb said eBay would host an online meeting to hear direct input from its sellers and other customers. Whether anger has cooled -- and whether Sunday's announcement will help calm agitated sellers -- will be clearer then. "One of the great things about eBay is the candor and passion of our Community," Cobb wrote. "Your input keeps this company focused on what's right and important."

Brown at Pacific Growth agreed, noting that the letter "suggests to us that the platform and seller issues about which we have been commenting -- and management/the Street have been essentially ignoring -- for several months/quarters are, in fact, very real and very serious."

Shares of eBay were recently down 25 cents to $75.63.