The San Carlos-based company, which offers a drop-off and listing service for people who want to sell items on eBay, has four existing stores, all with positive cash flow.

One new store, in San Jose at 5379 Prospect Road, is set to open in January. The company also is negotiating leases at five sites in Los Angeles, which should be open in the first quarter, says Bill Rollinson, chief marketing officer and co-founder of AuctionDrop.

In nine months of operation, AuctionDrop has sold more than 10,000 items for people unwilling or unable to sell their unwanted belongings on eBay. That translates into more than $1.3 million in sales -- 20 percent to 38 percent of which is AuctionDrop's take, Mr. Rollinson says.

The company also has named several retailing veterans to its board, including: Jerry Gramaglia, former president and chief operating officer of E-Trade; Ron Johnson, senior vice president of retail at Apple Computer who launched the new Apple stores; and Phil Schlein, partner at U.S. Venture Partners and former CEO of Macy's West. The idea is to get expertise from people who've developed retail branch networks, Mr. Rollinson says. Investors Tim Draper of Draper Fisher Jurvetson and Draper Associates, and Heidi Roizen of Mobius Venture Capital already are board members.

The company is anxious to see how the idea plays in a different market. In the Bay Area, most everyone has heard of eBay even if they don't have computer access or know how to use it. Los Angeles offers the promise of a much bigger market, but a potentially more challenging one to tap. The company plans to open 20 stores in the greater New York City area, which includes portions of New Jersey and Connecticut.

So far the only two investors are Draper Associates and Mobius Venture Capital, but the company will likely raise a new round in the first half of 2004. How big that round is will depend on how fast the company decides to roll out nationally, Mr. Rollinson says. So far AuctionDrop has raised only $6.5 million.

The company is the first to admit the idea is simple -- even obvious. Although it has filed a patent, if AuctionDrop is a success it will be because of execution, not technology.

Competitors have been springing up across the Bay Area. One is Picture it Sold in Berkeley, where AuctionDrop doesn't have a store. 

"Some have literally copied our Web site and changed the name," Mr. Rollinson says. "But the execution of this is extremely hard to do on a large scale. We're executing on average 600 auctions a day."

EBay, itself, is aiding competitors. Around the time AuctionDrop was started, eBay launched a "trading assistants" section of its Web site, says Chris Donlay, spokesman for eBay. Users who've completed at least 50 auctions with a 98 percent positive feedback rating can offer their services to help others in their cities list items on eBay. In the Bay Area alone there are 162 such trading assistants. There are more than 20,000 nationwide.

In some parts of the country these trading assistants have been so successful they've been able to open their own storefront operations, which may mean that AuctionDrop will meet existing competition as it expands nationally. But so far no one has been as big as AuctionDrop as far as eBay knows, Mr. Donlay says.

"From what I've seen they seem to be the biggest and most organized," he says.

AuctionDrop also plans to step up its advertising early next year, allocating more money for print ads and billboards in both the Los Angeles and Bay Area markets.

Source:auctiondrop.com