Infoworld.com is reporting that eBay is shaking up its policies, and attempting to crack down on disreputable sellers. The changes are coming in response to warnings to eBay investors that 2008 profits may fall well below expectations.

With Wall Street already a bit jumpy lately, eBay Inc. is attempting to take a pro-active stance against flat earnings in 2008 by lowering their seller fees to increase the overall volume of sales on the mega-successful online auction site. The goal is to make eBay shopping safer for the consumer, and less expensive for sellers.

After raising their seller fees in 2006, eBay was roundly criticized by sellers, including some of their biggest “power sellers,” who saw their profit margins shrink under the weight of increased competition and higher eBay marketplace fees. eBay is now attempting to “roll back” fees to encourage greater volume of overall sales on the site, and hopefully, increase profits.

Specifically, eBay is reducing their “insertion fee” by 25% beginning February 20. This is a measure to reduce the risk incurred by sellers, particularly when items don’t sell. eBay’s current policy makes it very difficult for sellers to “take a chance” on an item that they are unsure will sell quickly. By lowering the fees eBay hopes that sellers will list a greater number of products. The company is also eliminating the fees associated with including photos on an auction listing.

But the news isn’t all good; while eBay is reducing the risk to merchants who list items that don’t sell, they are actually increasing the “final value” fee charged to a merchant when an item is sold. The bottom line is, eBay will still be making roughly the same amount of profit from sellers, they just won’t make as much from items that go unsold.

At the same time, eBay is attempting to improve their reputation among consumers by cracking down on “less than reputable” sellers. One long overdue policy change is in the way eBay handles search queries for items on its site. Sellers who have higher customer satisfaction rates will rank higher on the search results, while those with lower overall customer feedback scores will receive much less exposure.

This improvement alone should help crack down on unreliable or disreputable sellers, as merchants with lower customer satisfaction ratings will see their web traffic dwindle, while those who provide quality service will see an increase in the number of visitors to their auctions. This “nice guys finished first (on search results)” strategy should drastically improve both the safety and quality of customer service when buying on eBay.

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