eBay sellers have long understood the benefits of consignment sales, enabling them to get inventory without the risk being saddled with unsellable merchandise. Consignors maintain ownership of the items, and if items don't sell, eBay consignees return them to the owners.

eBay has 30,000 members signed up for its formal "Trading Assistant" program, created in February 2002. A page on eBay offers resources for sellers as well as a searchable directory for those looking for eBayers to sell their goods (http://www.ebay.com/ta). Commissions and terms vary and are set by the Trading Assistants themselves, who must meet minimum feedback requirements to participate in eBay's program.

Many of the 30,000 eBay Trading Assistants operate from homes or warehouses. Now eBay is helping storefronts who want to get in on consignment selling. Last year saw a dramatic increase in storefronts trying to capitalize on eBay consignment selling, including AuctionDrop, a start-up that has received millions of dollars in VC funding.

eBay has created a marketing program called Trading Posts and is allowing two storefront services to use the name in their business: AuctionDrop and Postnet.

Postnet offers a host of copying- and shipping-related services in its stores. Under an agreement with eBay, Postnet is allowed to set up "eBay Trading Posts" in its franchise retail centers. eBay is giving Postnet a head start, promising it will be the only "mailing services" (or pack-and-ship) business allowed to use the Trading Post for eBay branding. The exclusive deal expires after the first two quarters of 2004, after which eBay may bring in other pack-and-ship services to the program.

eBay also has an agreement with AuctionDrop, whose storefronts offer eBay consignment services. While many other eBay drop-off stores exist (see chart), AuctionDrop appears to be the only one enrolled in eBay's Trading Post program. AuctionDrop uses the Trading Post branding in its drop-off stores and print advertising and will be adding it to its eBay store in March.

Many are skeptical about the feasibility of a retail consignment service for eBay, citing the overhead of operating a storefront and the difficulty of attracting the right merchandise. Trading Assistants themselves seem wary of eBay's support of the retail businesses, wondering if it will shrink their pool of possible inventory.

eBay said it sees a strong potential in offering a variety of ways for people to offload items on eBay, including those who don't want to sell the items themselves, and said the Trading Post program does not change anything for its Trading Assistants.

Postnet stores had participated in an eBay consignment service several years ago under an agreement with MyEZsale. Steve Greenbaum, CEO of Postnet, said he learned lessons from that venture. MyEZsale had provided computers and training to pack-and-ship stores, which sold items on eBay on consignment basis under the MyEZsale moniker. Greenbaum believes MyEZsale failed because they put a financial burden on the stores with large upfront costs. Greenbaum said Postnet already has computers and Internet connections since they provide Internet services to their customers. There are 850 Postnet locations in 44 states and abroad, and Postnet has an aggressive expansion plan.

Postnet charges a $2.99 listing fees to consignors ($14.99 if they want to set a minimum bid). Postnet takes a 40% commission for items under $500, and 25% of the price for items that sell for $500 and up. Postnet store employees create the auction descriptions and take the photographs of the item. Postnet headquarters does the actual listing and customer service for the auctions, although the item stays at the store location.

Postnet stores share the 40% commission with Postnet headquarters. The stores also benefit by charging for packing services when they ship the item. And they benefit from volume discounts from UPS and other shipping companies.

AuctionDrop stores were created solely for selling on eBay for consignors and has five stores in California with six more opening soon. The company has received $6.5 million in funding and hopes to get an additional $25 million to fuel its East Coast expansion. The stores have a basic free listing plan and a premium service for $19.99. It charges a 38% commission on the first $200, 30% on the next $300, and 20% of the remaining amount. AuctionDrop's methodology differs greatly from Postnet; stores send items to a central processing warehouse where items are photographed, listed, and packaged and shipped.

eBay has been tight-lipped about the Trading Post program. If it determines the program is a success, it's possible it would license the Trading Post brand to additional services. Many others are testing the waters, including AuctionWagon, Drop N Run, DropSmart, I-SoldIt, Picture It Sold, and QuikDrop.

The 30,000 Trading Assistants aren't holding their breath. They are too busy running their own businesses and learning what works best for them. With the ability to apply specialized knowledge and custom services, including item pick-up, they hope they can hold their own against the brick-and mortar Trading Posts.