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Two local drop-off sites have closed
Sam LaGrone, Staff Writer
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CORRECTION
A report in last Friday's North Raleigh News section gave incomplete information about ShipOnSite. John Brewer is the founder and president of that company. Also, ShipOnSite's marketing materials indicate that the business opportunities they sell are not franchises.
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Two years ago, two stores in North Raleigh that served online auction businesses were talking about expansion.
NuMarkets, a Tennessee-based company that had a franchise in North Raleigh, had plans to open stores in Cary and Durham where customers could drop off items to be sold on eBay.
Auction Storehouse, a similar independent concept, had plans to open locations beyond North Raleigh.
Now those stores are shuttered and empty.
Local businesses that rushed to take advantage of eBay's popularity two years ago are finding that it was not as easy to make a profit as they had hoped.
Last year, 160 million people spent $44 billion on the online auction site. Drop-off stores were billed as an easier way to use eBay.
The stores worked like a consignment shop. Customers brought in items for sale and let the store handle the photographing, the listing and the sales part of the auction. Once the item moved, the store would take a commission, usually about 30 percent.
Franchises and independent operations popped up quickly with the promise of profits.
In the past year, online auction drop-off stores have closed all over the country, including several others in the Triangle besides the two in North Raleigh.
"It's really a challenge to get enough interest in a consumer-based model," said Will Kidd, the operations manager for NuMarkets.
NuMarkets, at its height, had 15 stores, but in the past few months closed all of them save for three near its corporate headquarters in Knoxville, Kidd said.
Now instead of trying to get individuals to use the stores, NuMarkets has expanded its warehouse space to accommodate corporate level clients that specialize in large scale liquidation.
"[We've] developed technology for large scale manufactures to sell with us that's just stupid easy," Kidd said.
Auction Storehouse, an independent business run by Charles Pugh, opened in Raleigh in March of 2004. Like NuMarkets, Pugh pushed for an expansion in early 2005. But by May of that year he had closed his store. Pugh could not be reached for comment.
In the August issue of Franchise Times, franchise owners griped at length about the difficulty in maintaining a profit with a drop-off store. Some created a Web site, www.amitheonlyone.org, to complain about the drop-off business.
The site states that even with a 30 percent commission fee for $10,000 in sales a month, the royalties, rent and other costs actually cause the business owner to lose money.
With all the concept's problems, there are some successes.The local exception has been ShipOnSite, a Wake Forest company that combined shipping with online sales and a small retail space.
ShipOnSite does more than just eBay sales. The company offers postings on Craigslist and local classified ads through classification software that determines the best place for an item to sell. In addition to the multiple types of listings, ShipOnSite also functions as a shipping store, offering FedEx, UPS and DHL delivery services.
"There is a bunch of money to be made in the packaging and shipping side," NuMarket's Kidd said.
For ShipOnSite, diversity is the mantra. Brewer encourages franchises to set up rooms to rent for conference spaces.
And if someone comes in the store and sees something that's listed that they want to buy it, they can do that, too.
Brewer remembers laughing at a scene in the film "The 40-year-old Virgin," when a customer comes into an eBay store and sees a pair boots with goldfish in the heels and complains that he could only buy a pair of boots like that online.
"That would never happen in one of our stores," Brewer said.
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