Groupon says its focus is on the bottom line, rather than top-line growth.
With a new deal that lets customers earn either cash or store credit for items they drop off for sale on eBay, CompUSA is trying to succeed in a market that rival Circuit City Stores aborted last year for lack of profits.
A year ago electronic retail chain giant Circuit City Stores Inc. tried cracking the eBay drop-off market, serving customers who want to sell on eBay but don’t want to deal with the details. It dropped out of the drop-off business after eight months, saying customer acceptance was good but the profits weren’t.
Now rival CompUSA is taking a stab at the eBay drop-off market with a service it calls Easy to eBay. A rival of Circuit City’s, CompUSA, with 240 stores, has launched an eBay drop-off, auction listing and fulfillment service at stores in Las Vegas and nearby Henderson, Nev. CompUSA will compete with the 20 or so national franchise chains that offer stand-alone eBay drop-off services.
In addition to offering the usual menu of listing, packaging and delivery services for a cut of the final eBay selling price, CompUSA is offering something its rivals don’t: the option to receive credit toward purchases in CompUSA stores, in lieu of cash as payment for goods sold on eBay. “We’re in a unique position to simplify this for our customers and at the same time extend their buying power at local CompUSA stores,” says Larry Mondry, president and CEO.
If customers choose cash, CompUSA hands over 70% of the first $500 of the eBay sale and 80% of any additional value. If they choose store credit instead, the retailer provides 80% of the total eBay sale value in CompUSA gift cards. The commission is all inclusive of listing and other fees.
By comparison, QuikDrop International, a franchised chain, charges 42% of the first $200, 34% of $201-$500, and 25% of anything over $500. So a consumer selling a $600 item through CompUSA and opting for cash would get $430 for a total commission of 28%; choosing CompUSA credit would net him $480. At QuikDrop, that consumer would receive $387.59. In addition, the seller at QuikDrop pays listing and payment processing fees.
Like Circuit City and other consumer electronics retailers, CompUSA likes to emphasize the expert help it offers customers in finding the right technology products. “We are always trying to help our customers unleash the power of technology, and while eBay is a great technology solution for businesses and consumers alike, it’s often a hassle when it comes to effectively managing the selling process,” Mondry says.
If it can extend that expertise into helping customers sell their own products, it just may succeed at becoming the first established retail chain to win with eBay drop-off services.