eBay To Expand With Stores

Retailers already concerned that the growth of online auction site eBay spells problems for the traditional retail model will take no comfort from the news that a US retailer is bringing eBay to stores. Auction Mills plans a chain of franchised stores at which consumers can drop off goods to be auctioned, eliminating the hassle of listing, dealing with potential buyers queries, and packaging and shipping items. Auction Mills takes a commission on each sale and hands over the rest of the cash to the seller. Despite this additional cost, Auction Mills believes that its experienced eBay sellers can maximise the potential of the goods to be auctioned.

Having gone public with the business model earlier this month, Auction Mills has already received enough requests for more information from potential franchisees, both single-store and multiple operators, to set up more than 2,700 stores worldwide. The drop-off store model has the full support of eBay, which believes it will open up business from potential sellers currently unwilling or unable to sell online themselves. eBay chief executive Meg Whitman said recently: "We're excited about this. Clearly they are getting an incremental customer that would never have come to eBay on their own."

With other companies, both independents and retail groups, also considering drop-off stores, one industry estimate has forecast that the model could generate and additional USD10bn in total sales in the first year - which would mean an additional USD700m in revenue for eBay. eBay sold more than USD24bn worth of goods last year, a figure expected to rise significantly in 2004, and has more than 100m active users, more than 40 per cent of whom are active at any time. However, only about 8 per cent currently sell on eBay.