Corri McFadden, founder and CEO of eDrop-Off, brings her Yorkies, Emma and Harley, to work every day.
Rarely does a successful business stem from a school assignment. For Corri McFadden, a tall brunette who effortlessly moves about her office in 6-inch Christian Louboutin stilettos, that’s what happened. She isn’t a socialite or a born-and-bred rich girl; She’s a hard-working Midwesterner who today sits atop a multimillion-dollar consignment empire.
McFadden started eDrop-Off Inc. eight years ago as a one-woman operation. The premise is simple: customers give their items to eDrop-Off and it sells them on eBay and ships them to the buyer. The company takes its cut and sends the consigner a check. McFadden says eDrop-Off eliminates the hassle of having to do it yourself and learning to navigate eBay.
EDrop-Off’s sales have increased year-over-year since she opened the doors in 2004. In 2010, eDrop-Off racked up $3 million in revenue. In 2012, McFadden’s power-selling business brought in $4.5 million. This year, it is on track for nearly $8 million in sales.
Nevertheless, some argue that as eBay becomes more user friendly, this middleman in Internet sales may not be sustainable long-term.
Laura Tofson, an eBay shopper who is not a client of eDrop-Off, says she understands the appeal of the stress-free experience eDrop-Off offers but she isn’t a customer. “I have the time to sell it myself,” Tofson said. “I don’t think eBay is too complicated to figure out and 40 percent seems a little steep.”
One issue with eBay franchises and stores like eDrop-Off is that they won’t take just anything. They only accept stuff that is worth their while. That leaves customers with items they have to sell on their own anyway, says Ivan Feinseth, an analyst with Tigress Financial Partners. Once shoppers master the technology, there is little reason for them not to sell their more expensive items directly.
While eDrop-Off has always been a brick-and-mortar store, it originally looked a like a franchise of eBay, complete with green walls and a bright blue awning. EBay did sell retail franchises in the mid 2000s, but many of the failed because of high franchise fees and overhead costs.
EDrop-Off, however, has been more fortunate thanks to a series of strategic turns on McFadden’s part.
As a young girl growing up in a middle-class family, McFadden dreamed of being a police officer. Obsessed with crime, McFadden enrolled in Kansas State University as a criminal justice major with hopes of one day becoming an FBI agent. An outside course in fashion design led McFadden to a sharp career turn in 2002. She left Kansas and headed to Chicago to study fashion design at a school McFadden will not disclose.
In her final quarter, McFadden created eDrop-Off as a business plan for her senior thesis. With the help of an equity investment from a friend, and later a line of credit and a Small Business Administration loan, her company became a reality in 2004 as a traditional eBay store. McFadden was so serious about creating a profitable business that she missed her college graduation to attend eBay Live!, a conference that teaches attendees how to operate an eBay-based business.
In the early days, consigners could go to McFadden’s Clark Street store, drop off their items and she would take care of the rest. Back then, McFadden would sell anything that came in. “I bit the bullet and did what I had to do to pay my overhead,” she said. She sold electronics, coins, musical equipment and even rollerblades, but her passion was always clothing and accessories.
McFadden hired her first full-time employee in 2006. Now, eDrop-Off has more than 45 employees and operates solely in the clothing, shoes and accessories category on eBay. It offers free nationwide pick-up and has two store locations, one on North Halsted Street in Lincoln Park and the other on State Street in the Gold Coast.
One of McFadden’s primary goals in creating her business was to debunk the myths that surround consignment. “Why should you be dropping off Chanel in a store that’s not equivalent to Chanel?” she asked. Most consignment stores are “dark and dingy” but hers looks more like a lobby to a personal shopping business.
“You don’t feel shameful about dropping your stuff off here,” she said of her Lincoln Park location that she designed herself.
Intended to make clients feel comfortable running into each other, McFadden’s North Halsted location is a modernist brick building with floor to ceiling windows on the ground level. Sheer drapes and neutral paint colors are juxtaposed with the black and white vertical stripes of McFadden’s office walls, which are visible from the lobby’s front desk. Tying the two together is a giant sun-shaped mirror in McFadden’s office and a mirrored wall behind the front desk.
“We basically do everything for you. Anything you need to get rid of: clothing, shoes, handbags, jewelry, accessories. Whatever it might be, we facilitate that sale and take care of all the legwork,” said McFadden, 31.
The legwork includes taking photos of an item, writing a description and posting it on eBay. If the item sells, eDrop-Off packages and ships it for its clients.. It also takes a 40 percent commission. The remaining 60 percent left over is sent to the seller.
Forty percent may seem like a hefty take, but plenty of people appear willing to pay it. “It’s a lot of work to list on eBay,” McFadden says. “You probably have your own hobbies, day job. You don’t want to come home and take care of listing your own merchandise. We take all of the headache out of it and we make it a priority.”
There may be another reason to use eDrop-Off as well.
According to eBay’s website, a feedback score is one of the most important pieces of a seller’s profile. Sellers with lower ratings are penalized by eBay in its search ranking system, meaning that many prospective buyers will never see their listings at all. EDrop-Off has a rating of 99.4 percent with 3,033 positive ratings and 22 negative ratings in just the last month.
As for the most expensive items ever sold, McFadden says she can’t remember them all. “We sold a [Hermes] Birkin bag for $14,000 and a Cartier necklace for $50,000 recently,” she said.
Five years ago, McFadden decided the best way to draw more traffic to her business was to give it a face – hers. The rebranding, she said, “was equivalent to starting a new business.” McFadden put everything she had back into the business and changed everything: the logo, the location, the look. “The only things I kept were my clientele and my integrity,” she said.
The transformation worked. McFadden’s company became profitable in 2009, and in 2011, McFadden and her business caught the eye of reality TV producers from VH1. “House of Consignment” aired in the winter of 2011. The show focused on McFadden, covering both her personal and business life. After the show aired, McFadden became a local celebrity, making weekly appearances on the Chicago society scene.
The day after the first episode aired, traffic to McFadden’s website, shopedropoff.com, skyrocketed nearly 10 fold. The average number of bidders per item jumped from 13 to 22. McFadden also personally added 400 new Twitter followers in one night.
Unlike a lot of businesses that suffered, the recession actually helped McFadden’s business. “It triggered a mindset in a lot of people that really didn’t exist before and that was to be smart with what you have. Excess isn’t in style. It’s not cool to have six of something.”
EDrop-Off has been offering “closet consultations” since 2006. A staff member will go to customers’ homes and help them clean out their closets. Then eDrop-Off sells the discarded items for the customer.
McFadden says her goal for the business “is to keep doing what we’re doing and introduce it to as many new markets as possible.” And she hopes that once people hear about it, they will think about what they have to sell. “We’re just going to keep on the path of growth and being innovative.