The Last (trading) Post

CATEGORY: News

Are eBay Drop-Off franchises sound business models?
(Part II)

Three months ago I asked the same question, the replies were mixed with some in favour and some against. Now it’s revealed that the last major franchisee, Auctioning4u is to close it’s stores.

The company will be closing not only their stores and franchises, but also according to auctionbytes, close the drop off locations sited in third company locations such as those in self storage depots. Interestingly, having acquired the failed iSold It business from the administrators in May, this year it’s now revealed that only one iSold It franchise remains to be closed.

Auctioning4u has always insisted a central processing hub was essential to running a drop off store successfully. They’re now moving to a home collection model with a DHL option. Home collection is limited however, it will be interesting to see how long this service lasts, especially as to date it’s only been offered in London and Brighton. The DHL option allows buyers from across the country to send goods in to be sold but both these services do nothing to support drop off shops as a viable business.

It’s no secret that Auctioning4u is hugely successful, nor that most of their profits comes from business transactions. Consumer business is profitable, but closing the drop off shops gets rid a problem they just don’t need. Closing drop off shops changes them from a Trading Post to simply a large Trading Assistant.

So if Auctioning4u can’t make drop off shops a viable proposition the question has to be asked again, is this the death knell for the drop off shop?

6 Responses

  1. They never bought the assets of iSold It only a database of leads and a few chairs.

    They would be called the spin doctor in most parts.

    The centralized model is not the answer due to the high costs of touching the item by so many people cuts the margins again and again (to many layers)

    The model that works is when all functions take place at one location. There are many stores in the USA that are making this work so do not believe all the Internet posts.

    120 people on the payroll is a formula for failure. Can someone send them a copy of Excel so they can create a spreadsheet and see the numbers.

    Lets see 120 people paying them only $3,000 per month would be $360,000 in monthly payroll. If the margins were 36% and the average selling price was $100 dollars then they would earn $36.00 per transaction. They means they would need to take in at least 10,000 items per month and sell 100% of the items to just meet the payroll. Or 13,000 items with a 70% sell thru rate. Plus rent, trucks, gas etc.

    They must be burning thru somebodys capital pretty fast it appears.

  2. This is yet another example of these eBay Franchise “Drop Shops” selling concept without being able to deliver the goods. Why do they push so hard to sell their model when it just doesn’t work? MONEY…but not for the poor person who bought the concept and store. Retail-only eBay Trading Posts are dropping like flies, yet people still buy into them. Not doing your homework in any business is surely doomed to fail.

  3. The concept does not work! This is just further proof! So why is it that these franchisors are still selling the concept when they are fully aware that it does not work? Perhaps it is greed and ego!

    Keep on top of the tumbling drop shops at AmITheOnlyOne.org and Franchise pick

  4. Hi Gerry, welcome to the internet, I have one piece of advice for you;

    Never, ever, ever, even if the Devil himself orders you too, get involved with an internet-multi-platform Drop-shop Clearance sell-through eBay-trading partner, nor anything that looks, sounds or smell (they smell fishy!) like one, nor anything that describes itself as being one or has Christian Braun listed as CEO, Director or ‘colleague’

Comments are closed.

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