This article takes a look at the competing independents and franchise eBay dropoffs.
With a couple of employees, Rodriguez estimated that his little store needs to make $12,000 to $13,000 a month just to break even. Helping him out is the fact that he is selling a lot of his own merchandise, tools and imported electronics, using the SpeedeSale log-on name to eBay. Also, he is an authorized UPS and FedEx shipper.
…this is exactly what we mentioned before at Franchise Pundit – this business should be coupled with other offerings that can bring traffic in the door.
now onto mortality rates…
The mortality rate in general is high, as the trading assistants struggle to pay rent on a storefront while trying to find the right balance: what business should they go after, what should they refuse and how much should they charge?
One of Sarasota’s first drop-off stores, 1StopAuctions, has closed its doors. Its Web site, which still shows up high on search engines, is up for sale on the Net.
Its owners did not return a call for comment.
In South Florida, where more auction drop-off stores have existed for a longer time, Rodriguez guesstimates that the failure rate is 80 percent or more.
“Of the 20 stores that used to be around two three years ago, only five are still in business,” he said.
An 80% failure rate is higher than I would have guessed. But there is NO WAY a town can sustain more than a couple of eBay drop-offs, let alone 20+.
All those involved in the drop-off game now realize that to succeed, they must do more than sit in their shops and wait for valuable objects to arrive.
“The reason we are on Main Street is to go after business-to-business deals,” said Sun, the Snappy Auctions manager in Sarasota.
Exactly. The “big and steady accounts” that will sustain you can only come from liquidating business assets. Franchises that have historically thrived consignment sales, such as Grow Biz’s…I mean Winmark’s Play it Again Sports and Plato’s Closet, stand in an excellent position because they already have the established source of inventory from the public, and now they can increase the speed of sale by coupling the in-store sales channel with an eBay auction channel. eBay drops-offs should also try to cater to wealthy customers who must always have the “new” clothes, accessories, or electronics. Those customers will regularly drop off their “old” items to you for a resale.
A Snorp franchisee says…
However, Baum plans to keep his day job. The store, run by two employees during the week, is “barely profitable. I couldn’t support a family on it, that is for sure.”
The article concludes with a franchisee’s perspective on why eBay drop-offs are here to stay:
- people and businesses will always have stuff that they don’t need anymore
- the Internet is the vastest and largest marketplace
- some of those people are going to be willing to pay for a service that offers value
Check out my previous post “If Students Can Do it” about students running their on-campus eBay drop-off.