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EcommerceBytes-NewsFlash, Number 1194 - January 13, 2006 - ISSN 1539-5065    1 of 8

Oldest eBay Drop-Off Store Goes Out of Business

By Ina Steiner
January 13, 2006

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The oldest eBay drop-off store has gone out of business. Sellers Market began operations on January 2, 2003 in Danbury, Connecticut, 60 miles north of New York City. Owner Andy Balbus said the store never took in enough items to cover the cost of overhead, labor and marketing. After 3 years of running his store, he is pessimistic about the viability of the drop-off store model.

The eBay drop-off store phenomenon gained national attention when competitor AuctionDrop came on the scene in 2003, opening its first store in March and receiving over $6.5 million in VC funding by the end of that year. But 6 months later, AuctionDrop CEO Randy Adams told the Wall Street Journal he realized the company couldn't profitably build and operate a large network of its own retail stores. Instead, AuctionDrop partnered with UPS to allow consumers to drop off items at the 3,400 locations of The UPS Store around the nation.

In the meantime, franchisers have continued to expand nationally and internationally, and iSold It recently raised $7.25 million in venture capital funding.

AuctionBytes had surveyed drop-off storeowners in January 2005. The majority of stores responded that they served between 1 and 30 customers per week, and each customer, on average, brought in between 1 and 10 items to be listed. The average selling price (ASP) per item varied a bit between franchises and independents. The weighted ASP for independents was $75/item. For franchises, it was higher at $91. The average sell-through rate (again, weighted avg.) for these stores was 73 percent for independents and 77 percent for franchises.

Drop-off storeowners are also struggling with regulatory issues as some states consider requiring that stores comply with second-hand goods laws, and other states requiring storeowners obtain auctioneers' licenses.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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