eBay Drop-off Stores: Survey Results Are In!

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AuctionBytes Blog
News and insight focusing on
ecommerce and the online auction industry
by Ina Steiner, Editor of AuctionBytes.com

May 05, 2007

eBay Drop-off Stores: Survey Results Are In!

By: Ina Steiner

Sat May 5 2007 22:12:31

AuctionBytes conducted a survey of eBay drop-off stores last month, and the results are in. The data is fascinating, and I'm eager to hear what people think. There's a lot of information to mull over.

A big thanks to all of the storeowners who took time out of their busy day to respond, it was a long survey, and I hope you will find the results helpful.

Comments (14) | Permalink

Readers Comments

eBay Drop-off Stores: Survey Results Are In!

by: Nikki

Sun May 6 15:03:34 2007

It would be interesting to compare the actual dollar amounts of the salaries the owners are paying themselves. (I know, not information likely to be forthcoming.) Are the people who are making a profit after paying salaries taking smaller cuts of the pie in order to return their profits into building their stores (deferring returns in expectation of greater profitability down the road)? Do the owners of those stores NOT making a profit after paying themselves have unrealistic expectations about the revenue their businesses should be generating (did they preset a dollar amount for salary)? How many of the drop-off store owners had experience running a franchise business? Experience running any type of a small business? How many are relying on the drop-off business as their sole source of income? How has profitability risen in those stores which have run longer than one year? I'd also be curious if the self-owned items which are auctioned are the make or break point for some of the franchise owners, how much time they spend sourcing these items, and what categories they fall into.

I noticed this past Friday a Quik-Drop store has opened near me, but I haven't seen any advertising for it yet. Doesn't mean they haven't done any, just means the first I became aware of the store was when it appeared, Isher-like, in a strip mall. I also have to wonder how closely profitability is tied to how much revenue is put into marketing efforts.

eBay Drop-off Stores: Survey Results Are In!

by: Ina

Mon May 7 21:20:35 2007

I received a response to last week's Vendor Monday article about eBay drop-off stores, and it's also online:

http://www.amitheonlyone.org/Editorial.html

I also received a letter from a drop-off storeowner who had seen that some of the survey respondents reported they were profitable - and she was desperate for ideas on how to make her store profitable.

I'd love to see more discussion about the survey and these issues as they have such a direct impact on so many people.

eBay Drop-off Stores: Survey Results Are In!

by: Carol

Tue May 8 08:56:09 2007

Apologies in advance for the length of this post. I'm a drop-off store owner, and one of the responders to the survey. The results are fascinating - clearly I am not alone in the struggle to get my store to profitability! We now have the beginnings of data that could be incredibly helpful in honing the business model for store owners trying to make it work. My challenge to the 24% who said their stores were profitable *including paying the owner a salary*: are you willing to share some more detailed information about your business? I don't mean sharing specific financial information, but perhaps more on the order of demographics and %s:

what are the demographics of the population w/in 5 miles of their store? at minimum, population size & median income would be most helpful.
what is their population penetration? In other words, how many customers do they have as a % of the population?
how much competition do they have w/in 5 miles? (further than that really doesn''t seem to be a big factor - most people consider using our service an ''errand'', much like the dry cleaner, and won't travel very far unless they are *very* motivated).
how many sq. feet are their stores, and how much rent do they pay?
how many hours a week is their store open?
how many hours does the owner put in doing the main business of the store (i.e . research/check-in, photo, listing, shipping) every week? how many hours above that for working ''on'' the business, vs. in it, i.e. networking, sales calls, etc.
how many additional staff hours beyond the owner? Full-time or part-time? What's the average rate of pay? Are they offering any benefits, such as health insurance?
how many auctions do they typically have on eBay at any one time?
how many of those are drop-off items on consignment, vs. items they have bought themselves to re-sell?
what is the minimum value of an item they will accept on consignment?
what do you charge, in terms of % of selling price, and at what price thresholds? (33% $500, plus eBay/Paypal fees, e.g.)
are you making a profit on shipping? If so, what is the typical %?
what kind of marketing are you doing, and how much are you spending on it? what works best besides word of mouth?
what do you consider the 1-3 critical success factors that have allowed you to be successful?

I could go on, but you get the idea. With many stores now open 2-3 years, we should have enough hard data to be really useful.
While the business model issues that have been raised are certainly real, succesful consignment stores have existed for years, and I don't see why ours can't be as well. Every day I have multiple people in the store who love our service and think we do a great job. And our buyers love our stuff! So we're on to something here, but it's still very early in the game, and we need to pool brains to hone the model.

Would other store owners be interested in a private forum where we can discuss these things in a positive, supportive way (i.e. no franchise-bashing)?

eBay Drop-off Stores: Survey Results Are In!

by: Carol

Tue May 8 08:57:18 2007

Well, bummer - all my nice formatting went away when this was posted. Sorry - I know the bullet items are hard to read. --Carol

eBay Drop-off Stores: Survey Results Are In!

by: John

Tue May 8 11:01:22 2007

Carol:

As a drop off store owner who has been open for nearly two years and is on the verge of profitability, I would welcome the opportunity to talk regularly to other success-minded store owners. I have tried in vain to find a group of like-minded individuals but seem to continue to find groups who either consistently bash the industry while making no positive progress or find groups of folks looking to join the industry and lack the perspective to add value to the conversation.

eBay Drop-off Stores: Survey Results Are In!

by: Carol

Tue May 8 20:32:42 2007

My experience mirrors yours, John - lots of reluctance to share, and a lot of negative industry and franchise bashing. It seems that store owners are reluctant to share their winning strategies for fear of informing the competition on how to beat them. A somewhat valid, although I believe overblown, fear. Those who provide excellent service to both their sellers and buyers have little to fear from competition. Does anything in eBay's continued rapid growth indicate that the buyers will not continue to buy? Yes, there will be some depression in value as more items become available, but will it be significant? Only time will tell.
In the meantime, we have dozens of stores closing, which does not help the remaining stores in terms of PR. Wouldn't it be better to all help each other, on the premise that a rising tide will float all boats?
I'd prefer to take the positive approach and think we can all pitch in to make this work. But we need real data from successful stores who are willing to share. To do this, we have to create a place that requires qualification for entry (e.g. store owners only), who agree to a code of ethics on keeping whatever is revealed in the discussions private. Moderation might be required, but would need to be by someone who is not a store owner, to avoid that conflict of interest.
So, if there is interest, how do we get started? Perhaps a kick-off at eBay Live? I'm happy to help organize something. How do others feel about some sort of ''professional association'' like this?

--Carol

eBay Drop-off Stores: Survey Results Are In!

by: Ina

Tue May 8 22:09:50 2007

AuctionBytes has created a private forum for storeowners to brainstorm and share strategies on running drop-off stores. Independents and franchisees are welcome. The forum was created in response to the comments on this blog.

You can see the forum description on the main AuctionBytes Forum index page under Online Auction Sites & Services:
http://www.auctionbytes.com/forum/phpBB/index.php

You must apply for admittance to the forum using the email address of the drop-off store you own. No hotmail, yahoo or gmail applicants will be accepted. If you'd like to join, please send a request to dsteiner@auctionbytes.com

If you have questions, please let me know.
Ina

eBay Drop-off Stores: Survey Results Are In!

by: Hank

Fri May 11 13:34:19 2007

The formula is simple, open in a high traffic plaza in a community where people actually make money. Imagine that, people own things and upgrade to better things, then want to get rid of said old things.

Come on people, more then half of it is also knowing how to run a business.

Buying a damn business in a box isn't going to guarantee you all kinds of dollars, and quite stupid of people who thought it would.

If you all want to swap ideas about what it's like to be profitable, bless you.

But if the store is in the middle of Arkansas, nothing but a hope and prayer will make you profitable. You all will be flooded with people begging for answers on how to make money. Then the communication will stop. Leave it in the forums and let people figure it out themselves. Helping people is wonderful, and we lend advice a great deal...but you have to realize that the stores that are failing have common threads.

The truth is, there should be one/two stores per major city, and once that happens it will thin the herd. There may be one franchise left, because the others would have dropped or been bought. We are in a major area, and there are two stores left out of about ten total. And the other store will be going soon. It's all about location.

The model is NOT flawed, it's just that people opened the damn stores all over the place.

Good luck!

eBay Drop-off Stores: Survey Results Are In!

by: Stu Ped

Sat May 12 12:45:15 2007

Personally, I agree with Hank. Hank and I are in agreement. Like 2 pees in a pod. There are three reasons this type of business fails:
-location
-location
-location
If you put an eBay drop off store in the middle of Idaho (or udaho or whatever the case may be) you will not make money. I own an eBay drop off store, and its a franchise, and we know what were because were making money. The key to sucess is a high-rent area, high income area. The wife told me to keep respectful so I'll stop here.

eBay Drop-off Stores: Survey Results Are In!

by: Toffy

Sun May 13 09:18:53 2007

Very helpfull, thanx. A agree with first comment about that it would be interesting to compare the actual dollar amounts of the salaries the owners are paying themselves.

eBay Drop-off Stores: Survey Results Are In!

by: nicholas forrest

Wed May 16 01:15:54 2007

Thanks for that, I have been looking for a review of dropshippers because there are so many out there

http://www.artmarketblog.com

eBay Drop-off Stores: Survey Results Are In!

by: Mario Vodopivec

Wed May 16 13:49:16 2007

I wonder why price categories are divided as under 50, 50-100 and above 100. Statistical data from my sniping service (gixen) shows that median (not average) price of an item sold on ebay is around 15-17$, so the ''under 50'' category should be divided further. I would suspect drop-off median price would be higher, but it would interesting to see how much higher.

eBay Drop-off Stores: Survey Results Are In!

by: Rat Fink

Fri Jul 6 21:10:30 2007

''The formula is simple, open in a high traffic plaza in a community where people actually make money. Imagine that, people own things and upgrade to better things, then want to get rid of said old things.''

''The model is NOT flawed, it's just that people opened the damn stores all over the place.''

BS Hank get real

I spent $1200.00 to $2000.00 per month on advertising in one of the highest traffic locations in a major metro area with a demographic most drop offs can only dream of, trust me the model IS flawed

eBay Drop-off Stores: Survey Results Are In!

by: Chance

Thu Dec 6 17:41:46 2007

I believe the statistics need to reflect the other half of the stores that closed. They are part of the real statistics that the concept does NOT work. Also to be called a drop off store, you need to take into consideration the walkin traffic that the concept was built on, and not the the non drop off models. And with such a low response, I don't believe anyone should consider this concept successful, ask the 600+ stores that have closed!

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