Venture capitalist Bob Kagle, an eBay board member, once confided to me that most people--even some inside eBay--still don't understand what the online marketplace is all about. Its future isn't just getting retailers and liquidators to sell more mainstream merchandise on the site, as many analysts believe. Instead, he said, the key is making it brain-dead easy for millions more people to clean out their attic and sell that unique stuff on eBay. That's why the little-noticed news that AuctionDrop has closed four of its five eBay drop-off stores and laid off 20 people is a worrisome sign for eBay.
AuctionDrop, you may remember, ran five stores where you can drop off your old computers or exercise bikes and they do all the listing and shipping for you. Last May, the company switched course and inked a deal with UPS so people can drop off items at any of 3,700 UPS outlets--making AuctionDrop's own stores unnecessary. Chief Executive Randy Adams told me yesterday that the company aims to earn a profit by year-end, partly through planned deals for suppliers of retail overstock and returns to sell through AuctionDrop.
The problem for eBay? If Kagle's right, that's not the kind of merchandise eBay needs to keep growing. To their credit, folks at eBay seem to know it. That's why they're putting their money on other opportunities, like investing in booming online classified-ad sites such as Craigslist. But it's too bad nobody has yet nailed the formula for fulfilling eBay founder Pierre Omidyar's original goal: Make it easier to sell something on eBay than to throw it out.