eBay Drop-Off Stores Put New Kids on the Block

By April's end, the area developer for Carson City, NV-based QuikDrop International Inc. will open the first store in 1,700 sf at a prime shopping center in North Dallas. The five-year lease, with a five-year option, is within days of a signing, Mel Bratman, area developer for four counties, tells GlobeSt.com.

Bratman is partnering with longtime business associate, Debbie Long, to bring 35 QuikDrop stores to Collin, Dallas, Denton and Tarrant counties. He says they started with a two-year plan for 25, but quickly added another 10 in a 36-month restructured pact to include Tarrant County. "We're anxious to get the first one in the metroplex to make this a pivotal launch," says Bratman, with three decades of retail experience. "This is the start of a whole new industry and it will create hundreds of jobs." The Christon Co. in Dallas is assisting in the site search.

QuikDrop has pulled ahead in the franchise game for the quick-growing industry, but competitor AuctionDrop Inc., headquartered in San Carlos, CA, isn't far behind. "We will be in Texas in the next few months. You can be certain of that," says Andrea Roesch with AuctionDrop, adding the firm's already fielded several inquiries from Texans looking to get in on the ground floor of a quickly growing industry. The chain is nearing the finish line for a franchise program and soon will be shopping not just Texas, but New York, Boston, Washington, DC, Seattle, Chicago and adding more locations in its homeport.

At least 30 other eBay drop-off hucksters have sprouted up in the past year, many with roots in California, as the on-line swap meet evolves into the Wal-Mart of the Internet. Last year, eBay logged 41.2 million users, an increase of 49% from the prior year. The shopping guru had 292 million listings, also reflecting a 49% increase in the bottom line. The year ended with $7.1 billion in sales, up 53% from 2002, and $532.9 million in gross profit.

It appears Texas is fertile ground, with research showing just three shops--one a mom and pop operation at 6505 S. Rice Blvd. in Houston and another QuikDrop franchisee with locations in Wichita Falls and Mount Vernon. The Houston store, EzBayer, opened about two weeks ago in 2,000 sf in a neighborhood shopping center. As QuikDrop and AuctionDrop start staking claims in Texas, the California-based iSoldIt is looking to add 15 stores in its home state and has mapped out a plan to add 500 stores nationwide by the end of 2005. Other chains undoubtedly are etching similar growth strategies.

AuctionDrop claims it originated the concept, but it was QuikDrop that just yesterday got clearance from New York, its 39th state to OK franchise sales. A QuikDrop spokesman says the chain's 2004 plan calls for 300 franchised sites in the US and 75 in Australia. "We expect to be sold out in the US in six months," he says, confiding that talks have begun with franchise prospects in Germany, France, Canada. South America, Mexico and the UK. Right now, there are two stores each in California and Texas and one each in Alabama, Virginia and South Carolina.

The companies' varied strategies for mining eBay's record-setting activity carry commissions ranging from 20% to 40% to bundle the sale start to finish, including the photograph and shipping. AuctionDrop, with five stores in California and a 15,000-sf processing center, is fine-tuning a national branding to open locations averaging 1,000 sf with larger regional centers for processing drop-offs. QuikDrop leans toward 1,800-sf to 2,000-sf stores with on-site packaging and shipping.

The target locations are neighborhood centers, right alongside nail salons and dollar stores. In the Dallas/Fort Worth metroplex, the category is 86.8% occupied or three points below the region's average in an inventory of 147 million sf, according to Dallas-based Weitzman Group's research department, which pegs the average per sf at $14.46.

What is the franchise cost? Fees, as always, vary, but QuikDrop's website says its franchise can be had for $15,000 with another $1,995 for a software license. The suggested startup is $50,000 of available cash and $100,000 for area developers looking to open 16 stores or more.