New Kind Of Retail Sprouts To Help eBay Sellers
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Competition is heating up big time for the nation's garage sale goods. Circuit City Stores Inc., a consumer electronics nerd, is attempting to elbow its way to the best stuff from the nation's attics. This week the retailer will open counters at four of its Pittsburgh-area locations to help people sell their wares at online flea market eBay.com. And if Pittsburghers prove willing to lug in their used digital cameras, antique Christmas ornaments or whatever else is hidden in the attic in exchange for help with the eBay process, they'll soon have more than one option. San Carlos, Calif.-based AuctionDrop is scheduled this week to officially unveil a setup in which 3,400 UPS Stores -- including 16 in the Pittsburgh region -- will serve as a drop-off point for items that consumers want to sell on eBay. Versions of eBay drop-off stores have opened elsewhere under names such as Snappy Auctions, Picture It Sold and NuMarkets. Franchisor QuikDrop International has 10 stores, expects nine more to open in the next several months and claims to have signed contracts with franchisees that call for building more than 400 over several years. "The online stuff that eBay does has spawned a whole new class of retail," said Jack Reynolds, co-founder of Nevada-based QuikDrop, which hasn't yet sold franchise rights for southwestern Pennsylvania but has for sites in Michigan, Ohio and Kentucky. Whether Americans are desperate for help auctioning their back-of-the-closet discoveries online, there's plenty stuffed into those closets. The nation's garages have long fed a steady supply of goods into yard sales, estate sales, consignment shops and Goodwill stores for reacquisition by a second, or even third, round of consumers. And eBay, which had 105 million registered users and 328 million listings in its most recent quarter, has helped bring this market together on one Internet street corner. The opportunity that the various drop-off stores hope to exploit has to do with buyers vs. sellers. Buying is pretty easy -- just click and pay. Selling Aunt Millie's bowling ball requires taking pictures, posting them on the Web and writing up a description. Then there's answering customer questions, collecting the money and shipping a hefty round object. Creating a business model that feeds into eBay's selling potential hasn't been easy. Best Buy Co., for example, has been doing some sales there as it explores the possibilities. Despite questions over the drop-off concept, those making the attempt believe the Web service's continued growth will make it worth being an early entrant. AuctionDrop brings the goods into one location in California, where a team of photographers poses the goods while a team of merchandise experts figure out what things are worth. To weed out the best stuff, the company has set a minimum worth of about $75 and compiled a list of items such as digital cameras and musical instruments that do well. Circuit City's test began last month with a single so-called Trading Circuit store in Atlanta. This week the company will tuck the small shops inside stores in North Fayette, West Mifflin, Wilkins and Ross. In a Trading Circuit outlet, sellers can bring just about anything worth at least $50 to the counter and an employee uses a two-sided computer screen to research what similar pieces are going for. Someone may think their skis are worth $300, but online buyers have been paying $200. If the customer thinks the market is right, the employee will record the seller's information and take the piece to the back room. Photos will be shot, a description written and the auction started. After a sale closes, the staff there handles the packing and shipping. The process takes about 28 days. All the helpful service doesn't come cheap. Trading Circuit charges a 35 percent commission on the first $500, dropping to 25 percent for anything above that. QuikDrop charges 38 percent of the first $200, 30 percent of the next $300 and 20 percent for anything over $500. AuctionDrop charges between 20 and 38 percent on a sliding scale. Sellers also will pay eBay fees. While operators argue that's still less than many consignment stores take, they expect to make a profit. Those in the industry say the service is worth it because they help people get more for what they're selling and close the deal more often. Richmond, Va.-based Circuit City got in on this in February when a couple of businessmen asked about buying excess goods to sell online. Pretty soon, they'd been hired, moved to Richmond and a small team created to develop the concept. "We got real excited," said Franz Gilbert, general manager of new retail formats. For Circuit City, the drop-off stores could fill some holes. The company had leftover warehouse space when it abandoned the appliance business a while ago. More space has been freed up as its main stores become more self-serve. Small TVs or DVD players that once required a trip to the customer pick-up window can now be grabbed by the shopper. Those former pickup areas can become Trading Circuit locations. Though the new operations have separate entrances, Trading Circuit's system will allow sellers to take their proceeds through a check, a Circuit City gift card worth 10 percent more or donated to a charity. If the test does well, the chain is in a position to quickly roll out sites to about 330 stores. Circuit City officials plan to take time to figure out the quirky climate of the online community while keeping their e-ratings high. Unhappy eBay customers can quickly post negative comments that bring down a seller's score. Parker/Hunter analyst Steven Baumgarten said the Trading Circuit was an interesting concept. He doesn't expect it to evolve into a major generator of revenue and profits for the retailer, which has been struggling in the face of tough competition from chains such as Best Buy and Wal-Mart.
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