Question:
The article today about iSoldIt, a leading national eBay drop-off chain, announced its year-to-date 2005 gross sales exceeded $20 million. Interesting. I wonder how they are doing…really doing? 140 stores doing $150,000 in sales would put them at $21,000,000 for the year. $150K is not very much and tens of thousands of ebay sellers do more than that out of their house. After the franchise fees per sale (not to mention the huge startup fees), paying overhead, paying employees, paying ebay, paying the customer, advertising…there is not much left. No one ever talks about profitability. Even the commercials on TV offering an eBay Selling program by Dave Whatever, they always state "This guy made $6000 a month in sales" or "This lady made "20,000 a month in sales". OK fine…but how much did you make? PROFIT, please. It reminds me of Peg Bundy in the TV Show Married With Children…she became a cosmetic salesperson from home and she bought all her own cosmetics, so she would make commission. Al had to pay. One thing I have learned is to be wary of press releases. Most are camouflaged advertisements. You will find little press about AuctionDrop as they have all but fallen of the map. They were never able to make the concept profitable. I am pretty sure none of the QuikDrop founders were ever powersellers. Instead the were franchise experts. iSoldIT bring the Wetzel Pretzel franchise power and money to sell their franchises. If these franchises are making money then it must not be much, and that is alot of work for that low of a sales number. If the franchises are not profitable, how long can they last before it all implodes? If they are not profitable, how long can these franchises continue to be sold to inexperienced sellers (any good ebay seller would not need a franchisor), before they start claiming they were sold something that did not exist. Time will tell. I just kind of shook my head in disbelief when I read what that one person paid for a franchise. http://seattlepi.nwsource.com/business/244947_ebay18.html The words "A fool and his money are soon parted" came to mind. These franchise entities may not be making a penny by selling other peoples stuff but they are making a fortune in selling "blue sky". If anyone wants to do this for a living they have but to sit down and start the process from their home. If it works for them, great! If not, it did not take 20 years to pay off the loan they assumed by becoming a franchise of this silly company. Notice the franchise companies feedback is AWFUL http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback&userid=isoldit and thus the company does not get as many bids on consignors items. This means final selling price will not go as high as it would if these drop off stores acted with some integrity. This in turn affects the consignors check by (I suspect) at least 20%. Additionally the franchise charges a HUGE shipping fee which again impacts the amount people will bid on something. The amount the drop off store is charging the consignor is a huge percentage of the final selling price but the consignor also pays all of the ebay fees. http://www.i-soldit.com/fees.asp If Isoldit treated their customers better (meaning both consignors and those who purchased consigned goods) I might have a higher opinion of this company. As you can see though I don’t (and for very good reason). I am also amazed at how little they often get for QUALITY items because of all of these "stunts". I just feel so bad for the consignors in general as they more than any other are being materially damaged by these outrageous actions of the drop off stores. It is no wonder state governments want to start poking their noses into these types of business entities. The government will succeed in doing so if for only consumer (consignor) protection. For those who want to learn how to be in the business you can do so without spending hundreds of thousands of dollars. Simply spend a month or two on this forum reading posts by me and other dealers and you will learn far more for free than what you would ever get in education and customer support of a franchise that obviously can’t take care of a significant percentage of their customers. The meaning behind my Peg Bundy analogy was…"Great Sales, though no profits". John…thanks for your comments. I went back and looked at the fee, both franchise and fees charged. How do they do it? We had many eBay Drop-Off stores in our state. All "stand-alone" ebay Drop-Off stores have closed their doors. And these were experienced ebay sellers who had great traffic and still could not make it work. Are these franchisors selling "blue sky" as John mentioned? Why are all experienced ebay sellers that opened drop-off stores a year or two ago shutting down and at the same time franchisors keep selling franchises? Many of the eBay sellers that shut down their drop-off stores are educated, experienced, and even have access to inventory. How is a novice going to do it? Please explain it to me. If anyone there is anyone that has a franchise, we would love to hear from you. I would bet money that they (franchisors) would ever show you the P&L’s (profit and loss statements) from their individual franchisee’s stores before another franchise was bought. Also, are the franchise fees paid, just to become a "franchisee" part of sales? If that is so, then WOW…that would even lower the average store sales number. Is the Emperor wearing clothes? Personally I think they are "in the buff". Here are the biggest problems with drop off stores as I see them. 1. Getting people to give you their inventory. If a local drop off store (not a franchise) opened near me and had the same or similar terms and conditions as isoldit AND feedback to match (and yes I would be checking) I can assure you they would not be getting my prized possessions. 2. High cost of doing business on ebay. Ebay fees are outrageous and even if you start the bidding at $9.99 on a $100.00 item you are looking at 70 cents for listing and picture or $1.10 if you run it for 10 days. That is a HUGE chunk of change and a real gamble. 3. With a low starting price bargains abound for the ebay community but if I was to give a company a $100.00 item and it sells for $15.00 how often do you think I would come back with more of my treasures, especially if I know they padded shipping by 200% for THEIR profit (and not mine)? The BIGGEST failure of most of these drop off stores is their lack of effort in protecting the consignor. 4. Time consuming. Every item I list online represents a half hour of my life so it BETTER pay for itself. Even if a drop off store picks and chooses what it wants to accept (items over $50.00 in value is a normal starting point) there is no guarantee it will even sell for half of that. Employees are very expensive to hire and if you do it yourself you will spend all of your time listing and no time going out and getting more merchandise. If I was a drop off store I would not use ebay auctions but would instead use other options that would keep the fees down. It would take longer to sell the items but at least I could sleep with a clear conscience knowing I was protecting a consignors goods and trying to get them a fair price for their items. The PROBLEM with this plan is you need to have A LOT of space available for storage and have several employees doing nothing but listing all day. In short, done right it can be a real cash cow. Done wrong (which is how 99.9% of these drop off stores do it) the writing is already on the wall. Your business has failed before you even opened the doors or listed your first item. I completely stopped selling on eBay a while ago, at first it was worth it even if the item didn’t sell because you could use the listing to drive traffic to an existing site. But as eBay’s fees increased and profits dropped I started seeking alternatives. With all the associated costs of maintaing a storefront and the costs associated with the eBay listings themselves I don’t see how any such arrangement would benefit anyone (besides eBay!). I could perhaps see this working for existing offline consignment based shops as an "addon" feature for consignors but as a stand-alone enterprise…I have my doubts John, your estimate of 3000 items being sold a month at $50, will achieve a revenue of $150,000. That would mean 100 people would have to bring something in each day worth $50. What if only 1 of 2 actually had something worth $50? That would be 200 people a day and that is conservative. What eBay drop-off store gets 200 people each day? Please let me know, and I will contact the news stations as that would be big news. Even a 100. It is not a realistic forecast, and if a franchisor sold them on that, then that in my opinion is dishonest. sun818 says he know of someone selling returns for a local Costco. I believe that. It is still labor intensive, though that can work. Overstock.com is proof of it. Anyone with that type of connection will find it most cost effective not allowing "walk-in" traffic, that is, if they have enough inventory. Having an exclusive with a manufacturer, distributor, retailer, etc is the only way to succeed that I have seen thus far. And it does not have to be completely exclusive, just limited on who your source sells to or consigns to. In my opinion, the ebay drop-off stores are a house of cards, and the ones selling the franchises are the ones making all the money, and the ones buying the franchises will not be the one making money, if any at all. Any i-soldit.com or Quikdrop franchisees out there that can reflect some light? Other … read more »
Response:
It’s sooo much better than quoting his whole damn letter. ef
Response:
Give us all something to be thankful for! A
Response:
- Hide quoted text — Show quoted text – The article today about iSoldIt, a leading national eBay drop-off chain, announced its year-to-date 2005 gross sales exceeded $20 million. Interesting. I wonder how they are doing…really doing? 140 stores doing $150,000 in sales would put them at $21,000,000 for the year. $150K is not very much and tens of thousands of ebay sellers do more than that out of their house. After the franchise fees per sale (not to mention the huge startup fees), paying overhead, paying employees, paying ebay, paying the customer, advertising…there is not much left. No one ever talks about profitability. Even the commercials on TV offering an eBay Selling program by Dave Whatever, they always state "This guy made $6000 a month in sales" or "This lady made "20,000 a month in sales". OK fine…but how much did you make? PROFIT, please. It reminds me of Peg Bundy in the TV Show Married With Children…she became a cosmetic salesperson from home and she bought all her own cosmetics, so she would make commission. Al had to pay. One thing I have learned is to be wary of press releases. Most are camouflaged advertisements. You will find little press about AuctionDrop as they have all but fallen of the map. They were never able to make the concept profitable. I am pretty sure none of the QuikDrop founders were ever powersellers. Instead the were franchise experts. iSoldIT bring the Wetzel Pretzel franchise power and money to sell their franchises. If these franchises are making money then it must not be much, and that is alot of work for that low of a sales number. If the franchises are not profitable, how long can they last before it all implodes? If they are not profitable, how long can these franchises continue to be sold to inexperienced sellers (any good ebay seller would not need a franchisor), before they start claiming they were sold something that did not exist. Time will tell. I just kind of shook my head in disbelief when I read what that one person paid for a franchise. http://seattlepi.nwsource.com/business/244947_ebay18.html The words "A fool and his money are soon parted" came to mind. These franchise entities may not be making a penny by selling other peoples stuff but they are making a fortune in selling "blue sky". If anyone wants to do this for a living they have but to sit down and start the process from their home. If it works for them, great! If not, it did not take 20 years to pay off the loan they assumed by becoming a franchise of this silly company. Notice the franchise companies feedback is AWFUL http://feedback.ebay.com/ws/eBayISAPI.dll?ViewFeedback&userid=isoldit and thus the company does not get as many bids on consignors items. This means final selling price will not go as high as it would if these drop off stores acted with some integrity. This in turn affects the consignors check by (I suspect) at least 20%. Additionally the franchise charges a HUGE shipping fee which again impacts the amount people will bid on something. The amount the drop off store is charging the consignor is a huge percentage of the final selling price but the consignor also pays all of the ebay fees. http://www.i-soldit.com/fees.asp If Isoldit treated their customers better (meaning both consignors and those who purchased consigned goods) I might have a higher opinion of this company. As you can see though I don’t (and for very good reason). I am also amazed at how little they often get for QUALITY items because of all of these "stunts". I just feel so bad for the consignors in general as they more than any other are being materially damaged by these outrageous actions of the drop off stores. It is no wonder state governments want to start poking their noses into these types of business entities. The government will succeed in doing so if for only consumer (consignor) protection. For those who want to learn how to be in the business you can do so without spending hundreds of thousands of dollars. Simply spend a month or two on this forum reading posts by me and other dealers and you will learn far more for free than what you would ever get in education and customer support of a franchise that obviously can’t take care of a significant percentage of their customers. The meaning behind my Peg Bundy analogy was…"Great Sales, though no profits". John…thanks for your comments. I went back and looked at the fee, both franchise and fees charged. How do they do it? We had many eBay Drop-Off stores in our state. All "stand-alone" ebay Drop-Off stores have closed their doors. And these were experienced ebay sellers who had great traffic and still could not make it work. Are these franchisors selling "blue sky" as John mentioned? Why are all experienced ebay sellers that opened drop-off stores a year or two ago shutting down and at the same time franchisors keep selling franchises? Many of the eBay sellers that shut down their drop-off stores are educated, experienced, and even have access to inventory. How is a novice going to do it? Please explain it to me. If anyone there is anyone that has a franchise, we would love to hear from you. I would bet money that they (franchisors) would ever show you the P&L’s (profit and loss statements) from their individual franchisee’s stores before another franchise was bought. Also, are the franchise fees paid, just to become a "franchisee" part of sales? If that is so, then WOW…that would even lower the average store sales number. Is the Emperor wearing clothes? Personally I think they are "in the buff". Here are the biggest problems with drop off stores as I see them. 1. Getting people to give you their inventory. If a local drop off store (not a franchise) opened near me and had the same or similar terms and conditions as isoldit AND feedback to match (and yes I would be checking) I can assure you they would not be getting my prized possessions. 2. High cost of doing business on ebay. Ebay fees are outrageous and even if you start the bidding at $9.99 on a $100.00 item you are looking at 70 cents for listing and picture or $1.10 if you run it for 10 days. That is a HUGE chunk of change and a real gamble. 3. With a low starting price bargains abound for the ebay community but if I was to give a company a $100.00 item and it sells for $15.00 how often do you think I would come back with more of my treasures, especially if I know they padded shipping by 200% for THEIR profit (and not mine)? The BIGGEST failure of most of these drop off stores is their lack of effort in protecting the consignor. 4. Time consuming. Every item I list online represents a half hour of my life so it BETTER pay for itself. Even if a drop off store picks and chooses what it wants to accept (items over $50.00 in value is a normal starting point) there is no guarantee it will even sell for half of that. Employees are very expensive to hire and if you do it yourself you will spend all of your time listing and no time going out and getting more merchandise. If I was a drop off store I would not use ebay auctions but would instead use other options that would keep the fees down. It would take longer to sell the items but at least I could sleep with a clear conscience knowing I was protecting a consignors goods and trying to get them a fair price for their items. The PROBLEM with this plan is you need to have A LOT of space available for storage and have several employees doing nothing but listing all day. In short, done right it can be a real cash cow. Done wrong (which is how 99.9% of these drop off stores do it) the writing is already on the wall. Your business has failed before you even opened the doors or listed your first item. I completely stopped selling on eBay a while ago, at first it was worth it even if the item didn’t sell because you could use the listing to drive traffic to an existing site. But as eBay’s fees increased and profits dropped I started seeking alternatives. With all the associated costs of maintaing a storefront and the costs associated with the eBay listings themselves I don’t see how any such arrangement would benefit anyone (besides eBay!). I could perhaps see this working for existing offline consignment based shops as an "addon" feature for consignors but as a stand-alone enterprise…I have my doubts John, your estimate of 3000 items being sold a month at $50, will achieve a revenue of $150,000. That would mean 100 people would have to bring something in each day worth $50. What if only 1 of 2 actually had something worth $50? That would be 200 people a day and that is conservative. What eBay drop-off store gets 200 people each day? Please let me know, and I will contact the news stations as that would be big news. Even a 100. It is not a realistic forecast, and if a franchisor sold them on that, then that in my opinion is dishonest. sun818 says he know of someone selling returns for a local Costco. I believe that. It is still labor intensive, though that can work. Overstock.com is proof of it. Anyone with that type of connection will find it most cost effective not allowing "walk-in" traffic, that is, if they have enough inventory. Having an exclusive with a manufacturer, distributor, retailer, etc is the only way to succeed that I have seen thus far. And it does not have to be completely exclusive, just limited on
… read more »
Posted in