KNOXVILLE, Tenn. -- When Russ Grove bought a car on eBay seven years ago, it struck him that buying was much easier than selling on the online auction site.
That gave him the idea for NuMarkets, a company that helps people sell their stuff on eBay. Customers drop off their items, and NuMarkets does the rest: taking digital pictures, posting descriptions on eBay and shipping the items. In exchange, it takes a 30 percent cut of the selling price.
NuMarkets opened its first store in 2002 in Chattanooga. Now it has three other stores in Tennessee, with plans to open more in North Carolina and Georgia.
But NuMarkets faces tough competition from similar eBay-related businesses. Some analysts expect there to be 5,000 eBay drop-off stores open by the end of next year.
"I truly believe these are going to be in every city and town," said Grove, president and CEO of NuMarkets, who has sold 19 franchises this year and plans to open 2,000 stores by 2008.
Major U.S. companies have already entered the market.
Package delivery giant UPS recently announced a deal with San Carlos, Calif.-based AuctionDrop to let people bring items for sale on eBay to all 3,400 branches of The UPS Store.
Circuit City Stores opened its own drop-off store in Atlanta in May and will go nationwide if it's successful.
Auctionbytes.com, a publication devoted to the online auction industry, said there are at least 60 drop-off companies. But it's hard to know the exact number, and there could be as many as 150.
"I don't think we're anywhere close to having saturation because they're opening up in every city and every little town across the country," said Auctionbytes.com editor and publisher Ina Steiner.
The industry is concentrated in California, but there are stores from Oregon to Florida and overseas in Australia, Germany and England.
More drop-off stores are sure to open, but some experts are guarded about how successful they will be.
Bruce Weinberg, associate professor of marketing and e-commerce at Bentley College in Waltham, Mass., worries that people cleaning out attics can't bring enough business to make drop-off stores profitable over the long haul.
"I could really be way off on this only because eBay itself still continues to amaze me with its growth," Weinberg said. "On average, I can't see a lot of them making it."
Some have compared drop-off businesses to neighborhood video stores that opened when people first started to have VCRs in their homes. Large franchises like Blockbuster eventually took over.
Small business experts and brothers Jeff and Rich Sloan, who host the nationally-syndicated radio program StartupNation, believe the drop-off industry will follow a similar path.
"You're going to have a shakeout. The ones providing the best service at the best price with the most convenience are those that ultimately will win," Jeff Sloan said.
eBay has 105 million registered members, but doesn't keep track of the drop-off businesses, which would no doubt boost its earnings.
"We're happy to see entrepreneurs out there trying to leverage the existing eBay marketplace to build business. That's what eBay is all about," said eBay spokesman Hani Durzy.
While most drop-off companies deal with individuals, NuMarkets is reaching out to businesses with Super Centers, which can handle tractor-trailer loads of returned merchandise or surplus items companies want to get rid of by selling on eBay.
An 8,500-square-foot operation that can handle 800 items a day is slated to open in Resaca, Ga., just off Interstate 75.
In the NuMarkets store in Knoxville, the main operation is what customers don't see when they leave their items at the counter.
A photographer takes pictures of items in front of a curtain, getting close-ups of brand names or small details. Other employees write descriptions and post the items with the digital photos on eBay using software developed by NuMarkets.
Giving a tour of the store, Grove scrolled through 10 pictures of a toy fire truck NuMarkets had just posted on eBay.
"You know exactly what you're buying," he said.
Danny Shelby started selling antique cash registers, barbershop poles and old apothecary items through NuMarkets last summer. He closed his store in Etowah in January because of all the business he was getting on eBay.
"I would sit there all day long - my wife or myself would - and there would be very little traffic and sales," Shelby said. "The Internet was the logical place to go, and NuMarkets provided me with the avenue to do that."
Grove has also found good use for his own company.
The building NuMarkets bought for its headquarters used to be a J.C. Penney store and a Masonic lodge. Desks, chairs and old merchandise like bed rails were still in the building. Grove sold it all on eBay and made $17,000.
"If I didn't have NuMarkets," he said, "I'd fill up 1,000 gallons of trash."
On the Net:
NuMarkets: http://www.numarkets.com
The Augusta Chronicle ©2012 Morris Communications, LLC. All Rights Reserved.
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