Monday, November 01, 2004
Copyright © Las Vegas Review-Journal

INTERNET COMMERCE: Plotting an easy way to eBay

Ztradingindustries system helps evaluate items up for bid

ZTrading Industries CEO Bryan Waters on Oct. 15 demonstrates software designed to help businesses sell products on eBay. Photo by John Gurzinski.

EBay became an Internet giant by creating an online flea market for do-it-yourself sellers.

Now, Las Vegas-based ztradingindustries believes it has found a way to profit by helping people who aren't technically oriented sell used goods through eBay.

A spinoff of SuperPawn, ztradingindustries licenses software that enables postal and shipping services and other businesses to evaluate the value of customers' used goods, post those goods on eBay for sale and then send a check to the seller.

The company announced two agreements last week for its software system. Postal Annex+ agreed to install its zdrop software at all its 275 franchised mail service stores in 30 states. Postal Annex+ has been testing the zdrop software at two of its stores since April.

PC Synergy agreed to incorporate the zdrop service into the 2,500 mail service stores it serves around the nation. By spring, PC Synergy will incorporate zdrop into its PostalMate service, an automated, Internet mail service system that is approved by FedEx and DHL. The store owner shares a percentage of its sales revenue with PC Synergy and ztradingindustries.

For individuals, ztradingindustries' services provide an easy way to sell used goods on eBay, according to ztradingindustries. For companies that offer the service, it represents another channel of revenue.

The ztrading system works much like sales at a consignment store. In this case, though, an individual who has a used or antique item that he wants to sell on eBay but doesn't want the hassle of doing it himself can take the item to a so-called drop store.

After a clerk gathers and enters information about the product, such as a model number, into the ztrading computer database, the ztrading database provides an estimate of the market value, based on SuperPawn's experience selling products at its pawnshops.

The product is then posted for sale on eBay's online auction site. When it sells, the store collects the money and then boxes and ships the item to the buyer. Ztrading mails a check to the seller and store owner. The drop store pockets a commission from the sale price and revenue from packaging and shipping the product.

The types of goods ztradingindustries handles are as varied as those offered on eBay. In a trial program, one participating drop store operator handled the sale of a grandfather clock; another sold a $30,000 mechanic's tool kit.

"We hopefully will become the Blue Book of the preowned product market," ztradingindustries Chief Executive Officer Bryan Waters said.

The eBay software product was born out of necessity at SuperPawn, Waters said.

SuperPawn owner Steve Mack found it harder to operate his Las Vegas-based pawnshop chain as it grew, Waters said.

"When you are trying to grow to 40-plus stores, you can't find enough people that have a little knowledge about a lot of stuff," Waters said.

Pawnshop workers need to know how much they can lend on a piece of merchandise and how much they should sell it for.

So Mack directed his management information systems experts to develop a computer database of products and their value.

"We have valued $600 million worth of preowned merchandise over the last 15 years," Waters said. Through the computer database, SuperPawn valued 50 million items.

"(Also) the company had a glut of inventory, which is the operational problem a lot pawn companies would have," Waters said.

To help reduce its inventory, SuperPawn started selling goods over eBay. To ease that selling, it improved the software.

"That allowed a seamless process to post items into eBay," Waters said, explaining ztradingindustries signed an agreement in November 2002 to integrate its software system into the eBay system.

Posting an item for sale on eBay typically was taking about 20 minutes, about $23 in employee time, at SuperPawn before it developed the software, ztradingindustries said.

"If it's costing you $23 to sell anything on eBay in time, your profits can go upside-down in a hurry," Waters said.

The zdrop software cut the time to post an item on eBay to about five minutes.

Within three months, SuperPawn was making $150,000 in monthly sales with a 98 percent satisfaction level, a record for an eBay Titanium Power Seller. SuperPawn was the fifth-largest seller on eBay last year, Waters said.

Ztradingindustries began to offer its software to other pawnshops and other businesses that sell on eBay.

Mack was planning to spin off the software company. Instead, Cash America International agreed to buy it in September for $125 million in cash and stock.

"This will now allow us to focus 100 percent of our energy on this new business," Waters said, saying ztradingindustries kept 25 employees.

Waters sees a large market that ztradingindustries can serve, because he said no other company offers a complete software product, including pricing information.

"There are 165 companies doing that business today. It's a surprising number, but they're bubbling up all over the place," he said. "We believe the market is $15 (billion) to $20 billion of gross merchandise sales to these drop off locations.

"Just think of all the stuff in your garage."