Auction 'stores' take eBay appeal to offline shopper

DSN Retailing Today, July 5, 2004 by Mike Duff

NEW YORK -- Ebay offered its second annual showhouse of home furnishings last month in New York City, but the effort to make the service an everyday alternative to traditional retailing may be more substantially advanced by a host of private entrepreneurs who are making Ebay more convenient for consumers.

The showhouse is meant to demonstrate how consumers can use Ebay as a decorating resource by putting designers on a budget with a mandate to purchase the bulk of furniture, decor and, especially this year, electronics products on the service.

But two announcements by private companies working through the Ebay system may be more immediately effective in drawing more consumers to the auction marketplace.

In the first case, DropShop Midwest, a Minnetonka, Minn., retail concept designed to open the online selling to everyone announced on June 2 that it would open five locations throughout the Minneapolis/St. Paul area in mid-June and July. Golden Valley and Edina locations opened on June 20 while Eden Prairie, Bloomington and Highland Park stores will debut open on July 15. The company plans to open eight to 10 more Minnesota locations over the course of the next 12 months, and has the rights to operate stores in 10 midwestern states. DropShop president and ceo Yale Dolginow, former ceo of Paper Warehouse, bought the rights to use the name from DropShop, another Ebay-based retailer that opened its first store in Greenwich, Conn., in March. Michael Sheldon, former ceo of Party City, heads the Connecticut-based DropShop operation, which is developing a second store in Larchmont, N.Y.

The strategy behind DropShop Midwest is clear. "Ebay is an incredibly effective vehicle for selling those items we no longer want or need, but it can also be both time-consuming and intimidating," said Dolginow.

At DropShop, consumers hand over what they want to sell, and they get paid, less a price-based commission, when the product is auctioned off. Dolginow said the company is trying to hire mature workers with retail experience. Not only do they know how to deal with the older consumers--Dolginow expects to serve primarily older folks without the computer dexterity young people have today--but they've developed a degree of expertise in specific areas that will help them work with customers to appraise and set prices for products. The employees, or auction managers, get three weeks of training to help them serve the customers and can use colleagues and Ebay itself, to help appropriately value items.

In late June, AuctionDrop, a similar service, announced an initiative to extend its operation across the United States through 3,400 locations of The UPS Store, making the first Ebay-associated selling service to achieve national penetration. The UPS deal puts AuctionDrop and DropShop in competition, but Dolginow said he was confident he and his partners in Connecticut would prevail.

"The real issue is not the question of who gets there first but who is going to be able to operate the back room in an efficient manner," he said. "We retailers know how to do that."

Ebay is looking to develop marketing and other systems to support companies like DropShop and AuctionDrop even though they are completely independent companies, said an Ebay spokesman. He added that Ebay sees the independent retailers as an offshoot of the 34,000 registered auction assistants available to help wary sellers offer their products on line. In developing its auction assistants program and the New York showhouse, Ebay is striving to expand its role in everyday retailing. This year's showhouse emphasized electronics such as plasma televisions. Going forward, the company is looking to the day when an auction is as good as a sale in just about any category and to all consumers.