September 12, 2006
Drop-off in e-Bay Drop-off Franchises
Check out this article for an interesting look at the history of eBay drop-off store franchising, from its humble beginnings in 2003, to apparently raging success in 2005 with approximately 7,000 locations across the country, to today, when, according to the author, serious questions are arising as to the strength of the concept, which is plagued by low profit margins, high operating costs, and weak inventory flow, among other issues. The author offers the example of iSoldit, the largest U.S. and Canadian franchisor, which claims to have over 900 stores "under contract" and to project expansion to 3,000 stores in 50 states. In fact, the system has only 182 stores currently operating, and acknowledges that it is still "conducting studies" to determine the feasibility of expanding to even a 1,000-store range. The author concludes that "Not all is gloom and doom. Many eBay drop-off stores continue to prosper. But given the initial outlay, the tight profit margins and overhead in the brick-and-mortar model, the drop-off store business is not for eBay or business neophytes. ... Those inexperienced on eBay who plop down a pile of money and think they will live off the eBay name-sizzle are in for a disappointment."