eBay Drop-Off Stores Begin Rethinking Business Model

As Franchisees Struggle, Franchisors Begin Rethinking Model

MONROVIA, Calif. (Blue MauMau) - eBay drop off franchisors seem to be rethinking their business models in greater numbers. iSoldIt is considering possible liquidation. Its CEO announced in the short-term the immediate cessation of selling new franchises. Meanwhile, another franchisor, QuikDrop has begun limiting franchise sales to full-time owner-operators. And there are other franchise systems who are now coming to the forefront with problems.

Karen McGinn,an ex-iSold It franchisee and co-founder of AmITheOnlyOne.org, a consumer advocacy site for drop off store owners, estimates that the iSoldIt franchise chain closed more stores than they opened last year.

She also estimates that of 465 eBay drop-off stores that AmITheOnlyOne tracks in iSoldIt, Quikdrop, Snappy and other drop-off chains, "only 205 have remained open, with many closing before we started to track them"

She explains her numbers. "145 have closed and more than 27 transferred (sold to someone else)." And there are some "111 getting ready to close or that were sold but never opened."

Evidence of growing franchisee disatisfaction in the industry grows. In an article released today on auctionbytes.com, 101 drop-off stores participated in a survey on whether the drop-off business met the owner's original expectations. Only 27% of franchisees answered yes, compared to 50% of independent owners.

Teresa Lindeman of the Pittsburgh Post-Gazette states that one of the problems with the business model is that it is too labor intensive. "A survey by trade publication AuctionBytes last year found it took an average of more than 20 minutes to research, caption, photograph and list just one item on eBay."

The Post-Gazette continues:

"Pilar Meyer stopped accepting goods at the Murrysville ezbay stores location she bought last year from the original operator, but not because she's getting out of the business. "There's no lack of interest from customers hoping to convert their unwanted items into cash," she said. "In the beginning, I was just ecstatic that stuff was selling." She has since learned to turn away items that won't make it worth her while."

"From our observations, it takes more like 45 minutes on a good day to process the average item, and costs $15 or more to process," observes Gene Bowen, the other co-founder of AmItheOnlyOne.

One Quikdrop owner commented, "There is a high amount of labor in processing each item and not everything sells. Every item is unique. There are a lot of very distraught franchise owners out there. The ones that are happy have had to be very creative in expanding on the original model. I know that our head office is re-thinking the model. eBay drop-off stores are a tough model. I don't care if you are iSoldIt, Quikdrop, Snappy or whoever. Market acceptance is a problem. I don't think anyone has the holy grail of software either. Future software needs to cut labor costs."

According to Ms. McGinn, the high rates of store closures have taken a tough psychological toll on some franchisees.

"I have received emails and phone calls that sound exactly like the suicide note posted on Blue MauMau. They were from more than one iSoldIt or QuikDrop franchisee. Usually I talk them thru the worst of it by phone, but I know one franchisee who was in the hospital from bleeding ulcers. Another had a heart attack. Two have had mental break downs. And rumor is that one attempted and did not succeed in suicide."