Sunday, May 27, 2007

It's Not the Software ... It's the "Where's The Business Model?"

Auctioning4U, a UK eBay Dropoff buys iSoldit UK

A comment left on FixYourThinking from Christian Braun CEO of Auctioning4U:

We definetely agree that the eBay drop-off business is not for the faint-hearted, it requires large scale operations and signifcant investment in software. Read more on our thinking here:

Christian Braun

Auctiong4U has apparently purchased iSoldit assets in the UK. First, I say shame on this company for providing ANY capital to these guys - especially after the the CEO of iSoldit, Ken Sully, openly claimed that the eBay Dropoff business was not a viable buiness model and apologized to the hundreds of franchisee operators for taking their money.

The software IS NOT the problem. The business model is severely flawed. It can work, but only in high traffic markets with a niche focus (IE Star Wars collectibles, Tiffany Lamps, Apple Computer) The model is NOT franchise-able, accounting is only 1% of a successful business - 99% is repeat customers - of which the ebay dropoff has none (or less)


Ken Sully, CEO of iSold It, has acknowledged publicly that there are serious flaws with the iSold It franchise concept. In an open letter published on Franchise Pick ( An Open Letter to iSold It Franchisees from CEO Ken Sully), Sully admits that 60 stores have closed and many more are struggling to survive. States Sully:

"Tragically, many individuals who believed passionately in the potential for the category have lost sizable investments, including homes and retirement savings….We personally find this unacceptable and, despite continued interest in this category, we do not feel comfortable selling any new franchises until we get the failure rate lower."

* From The AuctionPost Founder:

The conclusion after a years trading, refining and redefining the business model is that the retail drop-off store as a stand alone concept simply does not work.

* AuctionPost was a UK eBay Dropoff chain

Follow up stories:

Is eBay becoming the pawn shop of the 21st Century?

I used ISOLDIT but they bought it


Armando Filoteo said...

I have been following up with the eBay drop off industry for almost 3 years and I own my own called Vendelo. I also think the model is flawed when the sellers claim "we can sell anything on ebay". After a while, anything becomes harder and harder because you never have control of what you are selling. That is crucial for marketing, sales, and all aspects of the business including what you say when people ask what you do.

Did you check out the survey AuctionBytes did on eBay drop off stores?

FYT said...

And the thing is ... if the seller has a "seasonal" or "commodity (price fluctuating)" niche - there's problems there too. You have to be able to sell one thing and one thing well. With the occasional stray IF YOU CAN GET ABOVE AVERAGE for it. I can list almost anything electronic on eBay and get above average for it. My best friend can list the same item and get below average for it and may even have to relist it.

I couldn't find the auctionbytes poll you referred to.

Armando Filoteo said...

Here is the link to the poll: