In the wake of iSold-it US cancelling expansion plans and iSold-it UK shutting up shop, Trevor Ginn has some interesting comments on eBay drop-off stores. Ginn is largely not in favour of them which is surprising seeing as he’s the Head of Consulting for an eBay drop-off store. However his argument is that “the only way to make money out of this industry is with central processing, as the low margins require economies of scales”. This makes an awful lot of sense, the set up costs for a drop off store are prohibitive, if you decide to purchase a franchise drop-off shop from a national chain set up costs rise further but in addition you’ll be handing over a slice of your profits.
I’m unconvinced by the business model of franchised Drop-Off shops, and unsure just how much brand recognition a national chain of Drop-off shops attract. Often they are known locally as “The eBay shop” rather than by the franchise name.
Drop-off shops appear to fly in the face of traditional eBay businesses. Generally on eBay an unknown local business gains a national or international audience. National or International chains of drop off stores attempt to trade off their brand to attract local business – the exact opposite to that which eBay excels at. Attempting to create a brand to profit from another brand appears an uncertain way to do business.