eBay Drop-off Stores

By

This article was published by ComputorEdge, issue #2301, 2005-01-07, as the cover article, in both their print edition (on pages 19-20) and their website.

Ages ago, during the period of time known as "B.I." (Before Internet), selling unwanted items was typically an unpleasant endeavor. Back then, the hopeful seller would schlep the item from one pawnshop to another, and hope for the best. Usually that "best" was terribly disappointing — at least to the seller, not to the pawnshop owners. I vividly recall one incident, during which a shop assistant showed a musical instrument to the proprietor, so that he could determine the item's value. After disdainfully glancing at the $200 item, the owner proclaimed loudly and tactlessly, "Sell it for $100. Stick it to him for $80." The "him" in this case was yours truly, which perhaps explains the vividness of the event.

Things certainly have changed since then. The set of potential buyers is no longer limited to Stingy Al's Loans and, across the street, Pawn It & Weep. The combination of two (low) bids back then never seemed to reflect the spirit of the free market. But the advent of the Internet — specifically auction websites such as eBay — dramatically changed the marketplace, making available millions of potential buyers all over the world. This has not only made it much easier for sellers to get more bids and better prices, but buyers benefit as well, being able to cherry-pick the auctions that most appeal to them.

One might think that this tremendous improvement would be enough to satisfy the most demanding sellers. But not in this age of fast-forward living and maximum convenience. We not only take for granted being able to sell to every Internet-connected human on the planet, but we sellers also want to spend the minimum amount of time auctioning each item. No doubt this thought has occurred to countless sellers, while they stood in long lines at the post office, to mail off items that might net only a few dollars each, especially after subtracting the costs of packing, driving, and shipping. For highly paid professionals, the lost time alone can be the greatest expense.

A similar experience happened to San Francisco resident Randy Adams, when he began auctioning off a large number of items. He found the experience time-consuming and frustrating, and wished that there were a service that could do all of the tedious work for him. Thus was born AuctionDrop, which he co-founded in 2002. AuctionDrop, like its competitors, accepts items that are sellable, creates the auction listing (including photograph), manages the auction from start to finish, and sends (part of) the auction proceeds to the seller. They also take care of customer service, payment processing, item shipping, and, if need be, returning any unsold items to their owners.

AuctionDrop is perhaps the largest, but certainly not the only such eBay store. During the past couple of years, similar operations have sprung up all over the U.S., most often as a single location, competing for local business against the nationwide chains. iSold It is another chain of such stores. Just how well are they all doing? Naturally it varies from one enterprise to another; but if AuctionDrop is any indication (having paid out about $2 million to sellers), they are doing a noteworthy amount of business.

It Doesn't Get Easier

There are several advantages to utilizing an eBay drop-off store for auctioning off unwanted items — in a sense, subcontracting one's selling. Firstly, it is quite convenient, having someone else do the labor of creating and following through on an auction. Secondly, it can save the busy individual an appreciable amount of time, particularly if he or she is not skilled at writing auction descriptions. Thirdly, having professionals create the listing can greatly improve the odds of selling the item. According to Adams, only 43 percent of the average auctions on eBay end with at least one bidder, in stark contrast to the 92 percent success rate of AuctionDrop's listings.

Moreover, people who do not have computers or Internet access, but still have lots of sellable stuff in the attic and garage, will find these auction services to be a real boon. While it is true that computer-less people are increasingly able to get on the Web at their local public libraries and Internet cafes, usually these computers are set up to not allow the user to load files, thus making it impossible for the seller to upload any auction image as part of their item's listing.

In an era of increasing identity theft and concerns over personal safety, many people are more than happy to pay any reasonable fee to sell their goods without revealing their name and address to complete strangers. This benefit of preserving personal privacy does not appear to be recognized by any of the major eBay drop-off chains, at least those whose sites I have visited. Nonetheless, prospective sellers who value the confidentiality of their home information, will probably appreciate this advantage.

It Doesn't Come Cheap

On the downside, none of these services are free, to put it mildly. The average eBay seller may not be thrilled with eBay's listing fees, in addition to the "final value fee" of a minimum of 5.25 percent of the final bid. But those fees are insignificant compared to the cut taken by the average drop-off service. For instance, AuctionDrop charges 38 percent of the first $200 of the final bid, 30 percent of the next $300, and 20 percent of anything over that. That's in addition to a flat 2.9 percent charge. Even for auctions that only garner $20 or so, the customer is still charged a minimum commission of $19.99. In some cases, that may be just enough to pay the eBay fees, which apparently are passed along to the customer.

Most if not all of the eBay drop-off services will only accept items that they believe will fetch a large enough bid to make it worthwhile. For example, AuctionDrop does not accept items that will probably sell for less than $75. This might not seem like a disadvantage to the seller who has mostly big-ticket items to unload. But for individuals who have a large number of smaller items, these minimum values could limit how much they are able to use the services. In fact, the seller who ends up having to run all of their smaller auctions themselves, may quickly get the hang of it, and decide to do their own auctioning for the more valuable items.

For individuals experienced in selling on eBay, it's arguably better to invest in a digital camera, learn to write compelling listings, and probably end up with a lot more money. If your eBay rating is triple-digit or more, you are likely best off doing all of your own auctions yourself. But, for the majority of people who have more junk than free time, the advantages of utilizing an eBay drop-off service could prove irresistible and worthwhile.

Copyright © 2004 Michael J. Ross. All rights reserved.

Content topics: