EcommerceBytes-Update, Number 106 - November 02, 2003 - ISSN 1528-6703     2 of 8

Auction Drop-Off Stores Offer Consignment Services to Non-eBayers

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In a twist on the Trading Assistants concept, brick-and-mortar auction drop-off shops are springing up, promising to help consumers sell their goods on eBay. These walk-in retail outlets will take care of all the drudgery of listing on eBay - for commission and fees, of course.

Auction sellers have long helped out friends and acquaintances by selling their items on eBay. Indeed, consignment selling existed long before eBay introduced in 2002 its Trading Assistant program, designed to help sellers find consignors and market their businesses.

Several companies are battling for a presence in the auction consignment drop-off space: AuctionDrop, QuikDrop, Dropitoff and Picture It Sold. Consumers drop off items at one of their shops, and the service takes care of the rest, including listing, customer service and shipping. The service will then send a check for the selling price, less fees and commission, to the client. The services usually offer a one-time relisting if the item doesn't sell the first time. If it still doesn't sell, they offer the client a choice of picking up the item or allowing the service to donate it to charity.

AuctionDrop plans to open stores in many major markets by the end of 2004. "We are going to have 10 stores in the San Francisco Bay area by year-end. We will have 10 stores in LA by April of next year, with about 1 store a week opening after that in New York, Boston, Washington, DC, Chicago, Dallas, Seattle and more," said Randy Adams, CEO of AuctionDrop Inc. "We will be offering franchises, but because we feel that a franchise is much more valuable after we have built our brand, we are delaying that program until the third quarter of next year."

Picture It Sold opened its lone store in Berkeley, California, on August 11, and it too plans to expand. "We are presently in negotiations for another site here in the East Bay and one in the North Bay," said Kevin McGinnis, owner of Picture It Sold. "We will likely begin looking to franchise this concept in the second quarter of 2004."

Meanwhile, QuikDrop has already franchised its operation and has locations in 5 states with an aggressive expansion program. Daryl Wade has been running a QuikDrop franchise in Oxford, Alabama, for 2 months. He had never sold anything on eBay before jumping in with both feet, but said the training and support he receives from QuikDrop has been "fantastic."

Wade already had experience with operating a franchise. QuikDrop's parent company operates Quik Internet, a worldwide franchise of Internet Service Providers (ISPs). Wade owns a Quik Internet franchise and has known the franchisers for a year and a half. "Any time I need advice, I pick up the phone. I can contact Quik 24/7 by phone, cell, Instant Messenger or email," Wade said. They helped him with many decisions, Wade said, including where he should locate his QuikDrop business.

Wade received 5 days of training at Andale, a provider of software and research tools for eBay users. Staff from Andale and QuikDrop ran the training sessions, and Wade said some eBay employees even stopped in.

After 2 months, Wade is confident in his QuikDrop business. "If I can get clients in rural Alabama, this is a model that will work," he said.

The company reports that the cost of opening a QuikDrop store varies, depending upon size and location of the store. "An applicant needs a minimum of available cash in the amount of $35,000 to open an average QuikDrop store." That includes a one-time franchise fee of $10,000 and a QuikFlow software license fee of $1,995. http://www.quikdrop.com/franchise

While going the franchise route is one option, eBay sellers can simply rent their own retail space if they want a physical storefront. The choice between franchise versus independent is one that should be considered carefully, and the advice of an accountant and a lawyer might help you assess your own situation.

As many experienced eBay sellers know, having a retail shop where consumers can drop off items is optional. Many online sellers have used family, friends and business connections to run a thriving consignment business from home. Skip McGrath, author of "How to Start & Run an eBay Consignment Business," said setting up a consignment storefront is a very big step that should be undertaken only when sellers have proven their ability to be successful and generate a steady stream of cash flow. However, the advantages are many. "The primary advantage is visibility and having a place where consignors can bring things to you, so you are not running around looking for merchandise to sell."

Jane Magee, a part-time eBay seller (User ID: Ottomom), relies on consignment sales for over 40% of her eBay sales. She has one client she regularly sells for, and has a couple of other occasional clients. When asked if she would ever consider opening a retail shop, Magee said probably not. "I don't have the money or the energy, although I sometimes dream of having a used bookstore." Magee said her biggest challenges in consignment selling are coming to an agreement on the amount of her commission, and keeping track of the finances.

There is no single formula to selling online, and eBay sellers are a diverse bunch. Many sellers are attracted to eBay so they can work from home and have low overhead. Some are parents of young children or caretakers for family members, others enjoy the flexibility of setting their own hours.

As for consumers, it's early in the game to predict whether they will find auction drop-offs an attractive alternative to yard sales or selling on eBay themselves.

One thing seems certain: each drop-off service hopes to take advantage of first-market-mover and strong brand, like eBay itself.

Auction Drop-Off Services

AuctionDrop
http://www.auctiondrop.com

QuikDrop
http://www.quikdrop.com

Picture It Sold
http://www.picitsold.com

Dropitoff
http://www.dropitoff.com

Fees for Drop-Off Services:
http://www.auctionbytes.com/cab/pages/consign

Resources:

"Commission - Impossible? Brokering Items for Profit," by David Steiner
An AuctionBytes article dating back to 2000 that still contains useful advice on consignment selling: http://www.auctionbytes.com/cab/abu/y200/m06/abu0015/s04

"How to Start & Run an eBay Consignment Business," by Skip McGrath
A 200 page, step-by-step, printed instruction manual that shows you how to set up and profitably run a professional eBay consignment business.
http://digbig.com/3drj

eBay Trading Assistants Program Tools and tips for consignees.
http://www.ebay.com/tatoolkit

Estates On-Line Consignment Software
Offers auction management with consignment sales-tracking features.
http://www.estates-on-line.com

International Franchise Association
Membership organization of franchisors, franchisees and suppliers.
http://www.franchise.org

AuctionBytes Bookshelf
Find books about eBay and online auctions
http://www.auctionbytes.com/cab/pages/bookstore

Finding a Consignee

Drop-Off Services
You can find the locations of auction drop-off stores on their Web sites:
http://www.auctionbytes.com/cab/pages/consign

eBay Trading Assistants
Find members by zip code
http://www.ebay.com/tradingassistants

Estates On-Line
Find members by zip code
http://www.estates-on-line.com

Related Stories

"myEZsale Consignment Service"
This is one consumer's story about using a consignment service from 2000. Note: MyEZsale went out of business and AuctionBytes.com picked up the domain. http://www.auctionbytes.com/cab/abu/y200/m11/abu0025/s02


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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