Headquartered in San Carlos, California, AuctionDrop serves the eBay market by eliminating the key hassle that keeps many potential sellers from posting items: it posts the items for them.
AuctionDrop has a partnership with United Parcel Service, so sellers can drop off their items at one of the 3,700 UPS Stores across the country. At that point, the item is shipped to AuctionDrop, where it is inspected, tested, photographed, priced and posted on eBay with a written description.
Sellers, in exchange for having AuctionDrop do all the dirty work, pay a commission that ranges from 20 to 38 percent, depending on the item's price the more expensive the item, the lower the commission. (AuctionDrop won't take any item that costs less than $75.)
No doubt some sellers feel that a 38 percent commission is rather hefty. But, points out AuctionDrop CEO Randy Adams, "You can compare it with a consignment operation: you can put it on eBay in front of 115 million people, or put it in your local consignment shop, where it might be seen by a thousand people and they take about 50 percent."
Higher Sales Percentage
According to Adams, AuctionDrop offers an advantage other than convenience. Based on his figures, when people post their items on eBay themselves, they complete the sale 40 percent of the time; AuctionDrop, in contrast, sells 92 percent of its items posted on eBay.
Why the discrepancy? Partially, it's AuctionDrop's reputation, Adams says. The business has garnered 20,000 positive feedback comments on eBay, earning a 99.9 percent positive rating.
Over the course of conducting approximately 50,000 auctions, AuctionDrop has developed listing expertise. "We know the right way to list items, the right terminology to use in the titling it's kind of an art," he says.
|AuctionDrop claims higher-than-average success on eBay thanks to its overwhelmingly positive seller rating.|
Additionally, "We recommend that people don't put minimum prices on items. It helps increase total bids," Adams says. "We use a whole bunch of counter-intuitive tricks."
Assembly Line Auctioning
AuctionDrop maintains a 100,000 square-foot warehouse in which to store items. The physical plant is fully automated, and the company can list 5,000 items a day on eBay, Adams says.
"We have banks of photographers, and we have banks of writers who are experts in various categories," he says. "And we have a huge shipping department."
To bulk up its auction offerings, AuctionDrop is widening its drop-off network. In addition to UPS, it's currently experimenting with allowing sellers drop off their goods at select Best Buy stores, in exchange for gift cards.
Developing this level of infrastructure took substantial financial backing, which AuctionDrop raised with the help of venture funding from Mobius Venture Capital and Draper Associates. Although Adams declines to state the company's revenue, he says that the company's goal is "to be lean and mean and continue to increase our revenues until we hit that that magic break-even point."
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