AuctionDrop closes most of its eBay stores to focus on growth through UPS

AuctionDrop Inc., a pioneer among the flock of eBay drop-off store chains that have cropped up over the past year, has abandoned its original business model of operating its own stores to focus on serving customers through 3,700 UPS Stores, CEO Randy Adams says.

“Our sales are steadily increasing and the traffic through the UPS system is increasing exponentially,” Adams tells InternetRetailer.com. “Financially, we are in the best shape since our inception.”

AuctionDrop, based in San Carlos, CA, had originally planned to open several hundred stores, including company-owned and franchise locations. A year ago, Adams said he expected to open 500 to 1,000 AuctionDrop stores.

But last June, Adams landed a deal with UPS to be the exclusive provider of eBay drop-off services throughout the 3,700-store chain of UPS Stores. Because that proved to be a more efficient means of serving customers, AuctionDrop closed four of its five stores in October, keeping open only its flagship AuctionDrop store in San Carlos.

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. Circuit City Stores Inc. last year abandoned its strategy of operating eBay drop-off locations in Circuit City stores.

The eBay services let customers drop off items to be photographed, listed and sold on consignment through eBay. AuctionDrop handles all fulfillment if an item sells on eBay, then sends the seller a check for the final selling price minus a commission and eBay listing fees.