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eBay made easy

To the uneducated eye, the silver tea service on Snappy Auction's photo table looked like any old set of silver plate -- something you could walk by at a garage sale without a second look.

But Brian Sun, manager of Snappy Auctions in Sarasota, researched the maker's marks on the bottom of each piece in the elaborate set.

He found that his consignor had brought him a Colonial-era tea service, made by Gerardus Boyce of New York in sterling silver sometime between 1814 and 1854.

Most of the stuff Boyce made is in museums. Some pitchers recently sold for $10,000 each in Palm Beach.

Say Sun lands a $15,000 high bid for the tea service.

His store would generate more than $3,000 in commissions, just for posting a seven-day auction that could be seen by millions of eBay bidders around the world.

"It's like that every day," said Sun, manager of eBay drop-off stores on Stickney Point Road and on Main Street in Sarasota. "You never know what you're going to be getting next."

There is no doubt that the multibillion-dollar Internet auction house is a great venue for a quick sale of unwanted stuff. But most people don't have time for the work involved: researching, photographing, writing the description that will appear online, keeping track of payments, answering questions, packing and shipping.

Because of that, helping others sell their stuff online has been around ever since eBay sellers started shipping Pez dispensers and used stereo speakers back in 1995.

In the last few years, it has become a more visible phenomenon, as stores have popped up. These drop-offs -- independent from eBay itself -- allow consumers to unload unwanted possessions and then just wait for a check in the mail.

Specialized home-based eBay trading assistants will always have their place, but right now the real competition is between two kinds of storefront businesses: franchises and independents.

It is not unlike the ongoing tug-of-war for consumer votes between franchised copying centers and independent printers, or between mom-and-pop sandwich shops and sandwich chains like Subway.

Already, Sarasota has 13 eBay drop-off stores registered with the company's voluntary "Trading Assistant Program."

Some, like Snappy with its two Sarasota stores and iSOLDIt with one, are franchise deals. Others, including Snorp, SpeedeSale, and Sellit4U, are independent operators.

"It really is in its infancy," said Roy Rodriguez, who bought the existing SpeedeSale drop-off store at University Parkway and Lockwood Ridge Road from its founder in November. "It will eventually work like the Subway chain. You're going to see one in just about every location."

So what do you pay?

Fees for the service vary widely.

Generally speaking, though, stores charge 30 to 35 percent on the first few hundred dollars of each successful sale, then scale down to smaller percentages on higher-ticket items.

Each store has its own policy about whether it charges an up-front fee or not. Snappy lists for free if the seller allows the bidding to start at 99 cents, but charges extra if the seller insists on a reserve price or a higher starting bid.

Most of the drop-off stores turn away most items that they feel won't sell, or that won't generate at least a $50 bid.

"You're dealing in small percentages," said Rodriguez, who charges 32 percent on the first $500 in value. "Someone comes in and gives us a $50 camera, that is $15 you've made in commission. You've got to sell a lot of $50 cameras to make overhead."

With a couple of employees, Rodriguez estimated that his little store needs to make $12,000 to $13,000 a month just to break even. Helping him out is the fact that he is selling a lot of his own merchandise, tools and imported electronics, using the SpeedeSale log-on name to eBay. Also, he is an authorized UPS and FedEx shipper.

The mortality rate in general is high, as the trading assistants struggle to pay rent on a storefront while trying to find the right balance: what business should they go after, what should they refuse and how much should they charge?

One of Sarasota's first drop-off stores, 1StopAuctions, has closed its doors. Its Web site, which still shows up high on search engines, is up for sale on the Net.

Its owners did not return a call for comment.

In South Florida, where more auction drop-off stores have existed for a longer time, Rodriguez guesstimates that the failure rate is 80 percent or more.

"Of the 20 stores that used to be around two three years ago, only five are still in business," he said.

All those involved in the drop-off game now realize that to succeed, they must do more than sit in their shops and wait for valuable objects to arrive.

"The reason we are on Main Street is to go after business-to-business deals," said Sun, the Snappy Auctions manager in Sarasota.

He recently liquidated a large collection of leftover women's clothing for a Sarasota boutique eager to make room for fresher fashions.

Rodriquez applauded his competitor's liquidation move. A boutique might pay $20 per item in hopes of selling it for $100.

"If he can sell it for anything north of $20, he is a hero," Rodriguez said. "The beauty of eBay is it takes you away from that little boutique store, and now you have the whole world buying for you."

"There are people in small towns who don't have access to that boutique, and see that dress and say, 'That is a cool dress.'"

The takeoff

Auction newsletter writer Ina Steiner says the drop-off auction store really got its start in 2003, when a newly formed company called AuctionDrop.com received venture capital funding to set up a chain.

"All of a sudden, everybody jumped on the bandwagon," Steiner said.

But there were plenty of growing pains in trying to figure out the right formula.

AuctionDrop's original concept was to own a chain of drop-off stores that would screen goods for value, then ship them to one central site, which would handle the auctions and shipping.

"They were going to open a chain of drop-off stores by the end of 2004, and now they are not offering any drop-off stores," Steiner said. "The idea was that rather than have each store have to have all these skills they would have one person who was great at photos, one person who was an expert on antiques."

The problem: the goods required too much handling. AuctionDrop still exists, but it has morphed into an eBay seller dishing out "luxury goods at incredible prices."

A glance at the site shows an emphasis on brand new, in-the-box watches, jewelry and electronics.

AuctionDrop "didn't have a franchise model," Steiner maintains. "They owned everything. They didn't have those stores for long. They quickly realized it wasn't going to work."

Snappy Auctions looks like one of the survivors, having recently moved into second place for the number of franchised stores bearing its name. Numero Uno is iSOLDIt. No. 3 is QuikDrop.

An iSOLDIt franchisee from St. Petersburg opened a store on Beneva Road in Sarasota in August.

David Crocker, iSOLDIt's senior vice president, has great hopes "for the whole concept of people selling their things which have value, in addition to just buying."

If you add together the sales of the 180 iSOLDIt stores in the U.S., plus others in Ireland, Australia and the United Kingdom, iSOLDIt is the largest eBay seller of them all.

"We are by far the largest, but you know what?" Crocker said. "I want to see the whole category succeed and there is room for more than one player."

EBay: Playing dumb?

With 222 million members worldwide, eBay has become a global power.

The public relations staff at the original Internet auction house likes to throw around the idea that if eBay were a country it would be the fifth largest nation in the world.

EBay is equally glib at handing out other tidbits to fill in the blanks in features like this.

"At any given time we have 105 million items listed and on average 6 million new items get listed each day," said spokeswoman Catherine England.

But the Silicon Valley-based company is not so eager to share data on the percentage of its revenues that comes from eBay trading assistants, or from the drop-off stores, which are a subset of the assistant universe.

England would say that there are now nearly 1,000 online auction drop-off stores in the nation.

"We don't actually have any data," England said. "Anecdotally, I can tell you it is something we think is growing."

"One of the things these drop-off stores do is they help inventory that might otherwise sit in someone's attic and get it listed," England said. "So we see them as a good thing for our community of buyers and sellers."

"It is just a very growing number, and significant to eBay's bottom line to where they are taking note," maintains Debbie Wilson, founder of Snappy Auctions, from her headquarters in Nashville, Tenn.

Indeed, some industry observers predict that eBay will simply let the franchises duke it out amongst themselves for a few years and then take over the best brand, using it to springboard into a new business.

Going it alone

When Rodriguez bought SpeedeSale in November, he already had become a heavy eBay seller by selling equipment like leaf blowers and other power tools through the site.

More recently, he has begun handling consumer electronics items imported from China. For him, buying into the existing Sarasota store was a way to add a better software system and a retail presence.

The previous owner invested at least $100,000 in building out the store, even though it is not a franchise. He spent the money not just on the look of the store, but on building a brand image, on computer equipment, and on software.

As the new owner, Rodriguez plans to build on that. His first goal is making Sarasota profitable, and his second is to open a SpeedeSale closer to where he lives, in Boca Raton. After that he is thinking of becoming a franchiser himself.

Doug Baum opened his own Sarasota eBay drop-off store, called Snorp, more than two years ago at Lockwood Ridge and University.

However, Baum plans to keep his day job.

The store, run by two employees during the week, is "barely profitable. I couldn't support a family on it, that is for sure."

"On paper it looks so perfect," he said. "You get free inventory. You sell a few things. You don't have to do much."

The reality is that running a drop-off store is "a lot more work than I thought it was," Baum says.

"You've got the stuff coming in, the packing, the shipping, the questions you get from people, and just the general nastiness of people on the other end of e-mails, which is surprising. More so than you'd expect."

Before deciding to go it alone, Baum flew out to California to research the iSOLDIt franchise.

Franchises cost in the ballpark of $25,000, and then take 3 percent to 5 percent off the top every month after that in return for providing sellers with ongoing training and software support.

"There is not a big margin in this to begin with and then to have to fork over a chunk like that," Baum said. "For the most part what I get from the franchises is they are out to sell franchise."

Perfect drop-off customer

Snappy Auctions might have found its perfect customer in Mark Zeitler, a Sarasota software executive who feels he simply must own the latest electronics.

Zeitler is perfectly capable of putting his own stuff on eBay, and in fact, he has sold plenty on his own.

But he finds it a bit tedious, especially the packing part. So now, he just drops off his 2004 Denon receiver, the powerful Windows computers he has decided to replace with Apples, and the $3,000 Paradigm speakers that he found too large for a family that now includes a toddler.

"I've done eBay before many times," Zeitler said. "The problem is it's just a hassle."

After turning over a few items to the Snappy store on Stickney Point Road a year ago, Zeitler has become addicted.

"Maybe I shouldn't say this, but I see it as kind of a garbage dump and then I get a check in the mail."

Affluent consumers like Zeitler are exactly the reason why Snappy Sarasota franchise owners Tom Gallagher and his partner, Mark Gill, were trying to find a Sarasota business involved in reselling valuable goods.

They spend eight to 10 months of each year on the open seas, running art auctions for Princess Cruises.

As the Herald-Tribune interviewed Gallagher by phone last week, he was aboard the new Crown Princess docked at St. Lucia in the eastern Caribbean.

"We were looking for a land-based business that we could tie into our passion for buying and selling on eBay," Gallagher said.

"Our first store was open 11 months and we started seeing a profit, which is pretty impressive. The second store we hope will be profitable by the end of this year as well."

With Brian Sun -- the partners' manager -- incentivized by a piece of the action and the potential for opening his own store later on, Gallagher and Gill hope to open no less than three and as many as five stores between Bradenton and Naples.

"The Lakewood Ranch location would have the young upwardly mobile disposable income people always wanting the new gadget and wondering what to do with the old one," Gallagher said.

"In Venice, it is an older demographic group and you have people who might be downsizing, might be moving from a house to a condo."

By the time he and Gill are ready to give up their life at sea a few years from now, they expect the Snappy stores to have developed into a business that will support them in style.

For now, Gallagher feels empowered by Snappy's online software system, which allows him in effect to look over Sun's shoulder anytime.

"I can do everything that my store can do from my laptop."

Up in Nashville, Snappy founder Debbie Gordon says the 65 stores that now fly her flag are just the beginning.

"We just sold a license in Japan, and the first store in Tokyo will be open in April," she said.

The business is based on three fundamentals, Gordon says.

"First, that people and businesses will always have stuff that they don't need anymore.

"Second is that the Internet is the vastest and largest marketplace."

Third is that some of those people are going to be "willing to pay for a service that offers value."

"Those three things are why we are going to continue to grow, and it is not going to go away."