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eBay's Popularity Spurs Growth of Drop-Off Stores

Posted on: Monday, 22 August 2005, 18:00 CDT

When outer space started cramping storage space, Krista Gentry decided it was time to sell her collection of Star Trek and Star Wars memorabilia. So one recent afternoon found the 31-year-old dropping off her intergalactic loot -- including her prized Starship Enterprise touch-tone telephone -- to QuikDrop, one of the growing number of real-world companies that help people like Gentry sell merchandise on eBay, the world's largest online auction site.

"I have a job and a child and things I have to do," she said, talking from a conventional -- rather boring -- phone at the newly opened QuikDrop in Plantation. "I don't have time to take care of all this. [Here] you just drop your stuff off and they take care of the rest. . . . It's a great idea."

And one that seems to be catching on. Entrepreneur Magazine called drop-off stores -- as they're known -- one of the hottest small businesses of 2005. Just a year ago, there was just one active drop-off store in South Florida.

Today there are a handful, including national chains such as AuctionDrop, which operates out of 3,800 UPS locations; Snappy Auctions; iSold It, which has 500 sites, including one to open soon in Boca Raton; and QuikDrop, which has 80 locations.

It's no surprise that the off-line world is trying to tap into online profits. Last year, eBay sold 1.4 billion items worth $34.2 billion. If sales were GDP, eBay would be the hemisphere's 10th largest nation -- just behind Peru and ahead of Ecuador.

For Jeffrey Rubinoff and his wife Tamara, who opened the QuikDrop franchise in Plantation in early August, the store offers solutions to a number of eBay problems.

Not only is it tailor-made for those who don't have the time or the tech savvy to play on eBay, but with online fraud still scaring people out of the virtual marketplace, QuikDrop shields sellers from divulging credit card numbers and other personal information.

"We're the ones taking the risk for the customer," said Jeffrey Rubinoff.

SIMPLE PROCESS

Here's how QuikDrop works: When items are brought in, the store does a quick search on eBay to make reasonably sure it will sell for $50 or more. If so, the QuikDrop staff photographs the item and markets it on eBay for seven days free of charge. If it sells, QuikDrop ships the item, takes its fee -- which ranges from 20 percent to 38 percent -- and mails out a check to the client. If the item doesn't find a buyer, customers can either donate it to charity or pay a fee to keep it listed.

This fusion of e-commerce and consignment shop is already luring individuals into Rubinoff's store, but he's also hoping to mine untapped markets.

"There are a lot of mom-and-pop stores out there with overstock [merchandise] or equipment that is just sitting around, and [eBay] is a tremendous market for that," he said. "But listing on eBay is a time-consuming process, and it can be a very difficult prospect to get top dollar for your item."

QuikDrop has tricks to squeeze the most out of sales. The company's software lets shoppers zoom in on detailed photographs -- a huge advantage on eBay, where pictures can make or break a deal. The company's research also shows that items listed on Sunday and Wednesday often fetch higher prices.

Drop-off sites for eBay aren't new, but traditionally the field has been dominated by smaller, independent operators and the more than 30,000 registered eBay trading assistants -- individuals who provide similar services.

LIKE VIDEO RENTAL INDUSTRY

According to QuikDrop International President Michael Banks, the industry is analogous to the early years of the video rental industry.

"What we're doing is professionalizing all the independent drop-off stores and putting them into a single global brand like Blockbuster did years ago," he said. And as that happens, the store will be seen as an outlet for businesses to "create sales and fulfill orders," he said.

QuikDrop hopes to have 120 franchises by year's end and 700 by 2008.

TRADITIONAL BUSINESS

But not everybody thinks it's a growth industry. By putting a brick-and-mortar store on the end of an online sales pipeline, the drop-off outlet is saddled with all the overhead and headaches of a traditional business, said David Steiner, the president of Auction Bytes.com, an online e-commerce newsletter that has some 27,000 subscribers.

"When you think about how eBay works, one of its beauties is that it's a person-to-person transaction without any middlemen, and [drop-off stores] essentially stick a person back in," he said. "I think we'll see contraction in this market, and it's probably going to happen over the next year or two."

While Rubinoff's store is doing a brisk trade helping people "upgrade their lives" by turning old mobile phones, iPods and golf clubs into cash, he knows he's just one bizarre item away from becoming an eBay sensation.

For the QuikDrop outlet in Orlando, it was a piece of propeller from the 1937 Hindenburg zeppelin disaster. For the franchise in Livonia, Mich., it was a door with burn marks in the form of the Virgin Mary.

The propeller never sold, and the door netted just $102, but both items generated a torrent of free publicity.

"I know there is stuff out there that will be odd, but we haven't been open for very long," said Rubinoff. "When it comes in, I'll give you a call."

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