With tens of thousands of independent online stores on eBay, more than 35 million active users and over $20 billion in annual gross merchandise sales, the goldmine of eBay is only partly tapped by sellers willing to post their products for sale on the famous web site. There's a whole new market to be had among sellers who'd rather just drop their products off at a physical store to be listed on eBay by someone else.
At least that's the basic idea behind the thousands of eBay drop-off stores that have appeared over the past year. But the model of the eBay drop-off store continues to undergo adjustment.
In recent months, AuctionDrop Inc. and Circuit City Stores Inc. have closed their own eBay drop-off locations. Circuit City said its eBay drop-off locations within several Circuit City stores weren't producing the expected return. It shut them down last year. AuctionDrop, which a year ago said it expected to operate 500 to 1,000 owned or franchised stores, has closed 4 of its 5 stores and shifted its business model. Instead of running its own chain, it's focusing on its contract with UPS to provide eBay drop-off services in 3,700 UPS Stores.
"Our sales are steadily increasing and the traffic through the UPS system is increasing exponentially," says CEO Randy Adams.
AuctionDrop, which has a 3-year renewable contract with UPS, also provides eBay services through five Best Buy stores in California. Adams declines to say how well AuctionDrop's services are selling in Best Buy. "We're still evaluating this arrangement," he says.
Like other eBay drop-off stores, AuctionDrop lets customers drop off items to be photographed, listed and sold on consignment through eBay. UPS ships items accepted at its stores to a 105,000-square-foot processing center AuctionDrop recently opened in California, then also handles the final shipment to eBay buyers. Once a sale is completed, AuctionDrop sends the seller a check for the final selling price minus a commission and eBay listing fees.
With eBay's critical mass of buyers and sellers, combined with UPS's strong brand recognition and broadly based network of stores, Adams figures he's developed a golden on-ramp into eBay's wealth of e- commerce. "Financially, we are in the best shape since our inception," Adams says.
