eBay Inc (NASDAQ:EBAY) has recently taken the step of lowering the charges on their take rate from tickets sold through StubHub, a move they felt was necessary after their competitors did so during the second quarter this year. As Market Realist wrote in an article on Yahoo! Finance, the move will lead to lower margins and presumably lower revenue (in lieu of unaccounted for higher sales) for the ticket reseller, which eBay Inc (NASDAQ:EBAY) purchased for $310 million in 2007.
eBay Inc (NASDAQ:EBAY) has also made the move to a new, more transparent pricing model for StubHub this year, called All-In Pricing. The new model presents the final price up front, inclusive of all charges, rather than presenting a smaller price and then adding on the charges at checkout, including the aforementioned take rate from eBay Inc (NASDAQ:EBAY). The charges are still present and accounted for, they are simply shown up front to make it less jarring to the consumer at checkout and streamline the purchasing process, and it seems to be having the intended effect at long last.
It was reported earlier this year that the model was leading to a large decline in sales over the first three months since it had been implemented, with some ticket brokers at the time reporting StubHub sales declines of 15% to 50%. However, the model was first tested out on MLB ticket sales last year, and this year those sales are up, which StubHub is attributing solely to the changes in pricing structure from last year now being accepted.
Still, even if sales increase, the lower margins are doing nothing to help eBay Inc (NASDAQ:EBAY)’s tumbling company-wide operating margins, which have fallen nearly 4.5% in the last two quarters, to 18.2% in this year’s second quarter.