Afraid to eBay? Hire an online auction service

Re-Printed from Bankrate.com
Afraid to eBay? Hire an online auction service
Wednesday December 15, 6:00 am ET
Jay MacDonald

Love those dancing eBay commercials but don't feel Net-savvy enough to sell your unwanted items online? Let an auction drop-off service do it for you.

Storefront drop-off centers are springing up from coast to coast. These "brick-to-click" locations are betting that you have neither the time nor the interest to effectively post a strong digital photo and description of your item, answer e-mail inquiries from interested buyers in a timely manner, close the sale, secure the payment, and pack and ship the item so it arrives at the other end undamaged.

For about a 30 percent commission, the drop-off service does it all for you, and chances are you will still walk away with more than you would have at a garage sale.

So far, two drop-off business models exist:

1. Stand-alone drop-off centers, such as AuctionDrop, QuikDrop and Auction Wagon, that specialize exclusively in online selling.

2. Pack-and-ship business centers, such as PostNet, that offer selling as a low-cost add-on to their menus of office-related services.

Any of these operations can help sellers make some Internet auction cash, but the real winner is eBay, the dominant player in online auctions. The auction giant gets most of the business from the drop-off startups and views them as the next phase of the trading assistant program it launched three years ago that now includes more than 34,000 sellers worldwide.

"We are thrilled that there are individuals and groups out there that have figured out different ways to bring the eBay marketplace to the physical world," says eBay spokesman Hani Durzy. "Because let's face it, there is a segment of the population that for whatever reason will never go on eBay to sell. Physical drop-off locations enable more people to access eBay."

There may not be an online auction drop-off in your hometown just yet, but here's what they look like, how they work, what they will and won't sell for you and where they're likely to spring up next.

The worldwide garage sale
Had eBay remained primarily a marketplace for collectibles, it is unlikely that drop-off centers would be taking off today. In fact, just before the tech crash, two early eBay consignment centers, including MyEZsale, burned up their first-round venture capital before liftoff.

But eBay has been consciously moving toward general merchandise (or "practicals") and away from collectibles, in part because online auctions themselves have contributed to a precipitous drop in collectible prices by making available large inventories of items previously considered rare.

"Four years ago, 60 percent of our gross merchandise sales (GMS) could be attributed to collectibles and 40 percent to what we call practicals. In 2003, it was estimated that more than 85 percent of our GMS was attributed to practicals and less than 15 percent to collectibles," says Durzy. "It doesn't mean we are moving away from the collectibles business. It just means that eBay is expanding as a destination for people to get anything."

That means eBay can bring in top dollar for your old ski boots, last year's digital camera, leftover inventory from your brother's business -- practicals.

While most collectors of Beanie Babies are likely to know an eBay trading assistant, Jane and Joe Average probably don't. Neither are they comfortable simply finding one nearby by plugging in their ZIP codes on the eBay trading assistants site.

That's where a neighborhood drop-off center comes in handy, according to Jack Reynolds, co-founder of QuikDrop.

"Selling is hard because you have to take a digital picture, post it, give them your bank account and credit card information, answer e-mail, then pack it. And as soon as you sell it, by the way, the bidder knows your name, address and telephone number. So now you've had to give up your personal information to the guy who bought the product. It's just not worth it," he says.

A drop-off on every corner
QuikDrop, based in Costa Mesa, Calif., opened eight franchise locations last year in California, Texas, Montana, Alabama, Virginia and South Carolina. This year, it has signed agreements to open 24 stores in Southern California and 97 throughout the Southwest over the next three years. Its franchisees tend to already be eBay power sellers.

As a stand-alone drop-off, a QuikDrop center resembles an airline baggage check-in desk: small customer service area upfront, large holding area in back.

When you bring in an item, the employee takes a digital photograph, writes a detailed description and does an initial online search for approximate market value. Most drop-offs won't accept items worth less than $50. The whole process takes about five minutes.

Within 10 days, you receive your check, less the QuikDrop commission, on a sliding scale of 38 percent on the first $200 to 20 percent over $500, plus an eBay fee ranging from 5.25 percent on the first $25 to 1.5 percent of sales over $1,000. Buyers usually pay shipping, handling and insurance.

If your item doesn't sell, it is returned to you, no charge. If you don't pick it up within 15 days, it is donated to charity.

QuikDrop limits its service to items that ship within the UPS 150-pound limit. That said, they do make exceptions. They recently sold a 200-pound polished African rock. They also sold Arnold Schwarzenegger's original Hummer for $70,000 as a drive-away proposition to a West Coast buyer. But in general, bulky items such as sofas, TVs, washers or dryers don't make for viable consignments.

Reynolds estimates a franchise should be able to sell 600 to 800 items a month, or roughly 20 to 30 per day, with ease.

"Right now, retailing is basically a one-way proposition where products come from a manufacturer and go to an end-user," says Reynolds. "This is the first retail idea that brings items the other way. I think you're going to see eBay drop-off stores on every corner."

The eBay trading post
Brian Spindel has less lofty goals for the eBay drop-offs at PostNet, who along with AuctionDrop has embarked in a pilot program as an official eBay Trading Post. The CFO who co-founded the 850-store franchise in 1993 is shooting to see one to two items per day through each of the 12 pilot drop-off stores by the end of the first quarter.

The reason? PostNet relies on its list of business services, from copying and computer rental to passport photos, shipping, signs and banners, to keep the lights on.

"The good news is, we don't have to sell 40 items a day to make a business out of it. If we do two or three items a day at each of our locations, we would be very pleased," Spindel says.

PostNet partnered with MyEZsale in a 1999 pilot program at its stores in Phoenix and Denver.

"Even back then, when eBay wasn't nearly as popular as it is now, we got some good traction with customers," he says. "They liked the fact that they could come into the store and drop an item off and receive a check 30 days later."

Unlike AuctionDrop, which sends its consigned items to a central location for listing onto eBay, PostNet's franchises photograph and hold the item, but forward the description electronically to PostNet headquarters in Henderson, Nev. From there, its eBay experts create and launch listings once a day and handle all customer service during the auction.

Spindel thinks the eBay Trading Post designation, which allows PostNet to trade under a single seller account, will give it a boost on the street.

"I think ultimately once this program grows, it will mean something to the consumer, too, that the item was taken in by a third party, that what you're looking at is actually the item you will end up getting, and that it's in secured, safe storage and will be packed and shipped professionally. All of those things, long term, will end up meaning something to the consumer."

PostNet already has plans to expand its eBay Trading Post service beyond its pilot stores in California, Nevada, Arizona and Georgia. AuctionDrop, based in San Carlos, Calif., with five stores in northern California, plans to expand into the New York tri-state area.

The fundraiser factor
Ina Steiner, editor and publisher of the online auction newsletter AuctionBytes, says it is too soon to tell if either drop-off model will catch fire with a populace that is far more focused on acquiring new stuff than disposing of used.

"It really gets down to the right kind of inventory. You really want to shoot for items that are in the hundreds of dollars. It really is a time-consuming business," she says.

"The advantage to the storefront is they are there, they're convenient if they're located next to a bank or a business where people might be coming anyway. The question is, if one suddenly popped up in my hometown, would there be enough people interested to drop things off there? I don't know. I think it helps that eBay has become more mainstream so people are more familiar with the whole concept, but we're not convinced that the whole storefront model will work."

What could lend the burgeoning drop-off industry a helping hand is its natural fit with community fundraising of all sorts. Bake sales, car washes and door-to-door candy sales could become passé if schools, churches and charities seek the greater returns that their donated items might bring when auctioned online, says Reynolds.

"A giant part of our business is charity fundraising, where people bring in an item to raise money for a school or something of that nature. We get a lot more money for stuff on eBay than most people. If you're an amateur, you're not going to get near what you're going to get if you're experienced in doing this."