Trash into treasure

By DON SHILLING
VINDICATOR BUSINESS EDITOR
Larry Diedrick recalls a woman who couldn't get $10 for an old egg beater she was selling at garage sales. She eventually brought it to Diedrick, who listed it on eBay.
It sold for $571.
Stories like that abound these days as entrepreneurs rush to join the latest retail trend -- selling items for others on eBay.
The sales pitch from the business owners is the same -- your trash could be someone's treasure. Millions of people around the world log onto eBay's online auctions looking for all sorts of items.
"We know a woman in Australia who will buy just about every vintage corset she can find," said Diedrick, who operates YourOnlineAuctionPlace in Columbiana. The Australian woman has paid as much as $130 for a corset.
Store handles it all
Businesses such as Dietrick's are called eBay drop-off stores because customers simply drop off their items, and the store handles all that's needed to sell it through the online auction giant.
Items are listed with catchy descriptions and photos. The business handles e-mail from interested bidders, arranging payment and shipping the items.
For their work, the businesses charge commissions of 20 percent to 30 percent, though lower percentages are charged for expensive items. Some stores charge listing fees of a few dollars; others don't.
In the past few months, several drop-off stores have opened in the Mahoning Valley, including Diedrick's and two in Boardman.
Howland store
EAuctionBlock already has shown that the idea can work in the Mahoning Valley, said Christina Savage, co-owner of the store at 8246 E. Market St. in Howland. It opened a year ago, and sales have grown consistently.
"We think a lot of stores are popping up because of us," she said.
The store has done so well that owners are planning to open a location in Mahoning County next year.
Chain interested
Business owners are well aware that national and regional chains also may enter the area. One of them, California-based QuikDrop, plans to open 34 stores in Northeast Ohio and western Pennsylvania.
Chris Maragos, one of three partners who has development rights for the region, said he is talking to potential franchisees and expects deals to be completed next year for stores in Ohio, including multiple stores in the Youngstown area.
Savage said she isn't worried about the competition. Weaker operators will be weeded out over time, but those that excel at customer service will survive, she said.
That's exactly what's happening nationwide, said Ina Steiner, who edits AuctionBytes.com, a newsletter for those involved with online auctions.
She has counted 100 companies that are operating about 200 drop-off stores. Some are succeeding, but others have already failed.
Labor intensive
Some operators are surprised by how labor-intensive the business is and how tight the profit margins are, she said. Also, dealing with overhead costs such as rent and employee salaries is new for many people who are used to selling items themselves from home, she said.
"It's not an easy business to get into, and it's not a guaranteed home run," she said.
She said businesses that succeed are good at marketing themselves, not just waiting for items to come in the door. Some stores work with local retailers to sell clearance items or run fund-raising programs for charities and schools, she said.
Interest in drop-off stores took off last year after AuctionDrop, a California company, received venture capital funding to create a nationwide network of stores. Creating such a chain proved difficult, however, so the company partnered with UPS so that items could be dropped off at the shipping company's UPS Stores, Steiner said.
Diedrick thinks his business can survive challenges from competitors because of his experience. He has been selling items on eBay for more than five years. He and his wife, Shirley, first started it as a home-based business for her to work on.
At first, they bought items at auctions and resold them. Eventually, however, they developed so many contacts with people here and in other states that they started selling items for them as well. Their living room and bedrooms became storerooms.
"We lost our house to eBay," said Diedrick, a Columbiana resident who also works as chief financial officer for New Life Academy of Information Technology in East Liverpool.
The eBay business at 112 S. Main St. has two full-time employees besides his wife, and he expects to add several more next year. He also is looking at locations for stores in Canton, Alliance and East Liverpool.
Boardman store
John Redlich, owner of Redlich Transmissions in Youngstown and Boardman, entered the eBay business by a different route.
The transmission business had collected a number of service manuals that it no longer needed, so he placed them on eBay, where they sold for between $20 and $50 per manual. The demand for the manuals made him think he could succeed with a drop-off store, said Tyler Spey, who works at the store.
ETraderJohn opened in the front of the Boardman transmission shop at 8091 Market St.
Spey said the business has sold smaller items such as dolls and a 1937 Look magazine, but he has been surprised at the number of people who have stopped in to ask about listing cars on eBay.
Necessity
Bill Stiles started his eBay business out of necessity.
The Youngstown resident lost his job in the construction industry, so he decided this was the time to make his hobby his job.
"I thought about doing this for quite a while, but I was afraid," he said.
To open ePro Auctions at 5318 Market St., he took on a partner, Bill DiRenzo, who also runs a computer repair business there.
Stiles said he started with eBay by selling items from his house that he no longer wanted. When he told friends about the prices he was getting, they started giving him things to sell.
For example, he bought a world map made of gold foil at a store for $19. When he tired of it, he sold it on eBay for $49.
Stiles said he is concerned about the increasing number of individuals and companies looking to open drop-off stores. He thinks, however, that he's getting in early enough to establish a reputation in the area.
Here to stay
Steiner, who runs the newsletter, said local retailers stand a good chance of succeeding because chain operators will have a harder time hiring employees who understand eBay and want to provide good customer service. Also, companies that only collect items at a drop-off store and send them to a central point for processing will face higher shipping costs, she said.
While retailers battle to prove their business model is best, one thing is for sure, she said. "Drop-off stores are not going to go away."
shilling@vindy.com