How to Lose $120,000 in 10 Months or Less with an eBay Store
September 4, 2007 by Sean Kelly
Filed under ISOLD IT, xBuyer Beware
Another casualty from the eBay drop-off store gold rush is featured in the Press Enterprise today, excerpted below. This one didn’t even need the help of a franchise company like iSold It or Snappy Auctions, they were able to fail in less than ten months all on their own.
“The worst idea I ever had.”
When they launched The eBay Store last September in downtown Riverside, owners Ollin Martinez and Belinda Correa had high hopes.
“You’d be amazed,” Martinez said in a November interview. “There’s a buyer for everything.”
But there wasn’t. Within three months after opening on University Avenue, the partners were amazed to find heaps of unsold and unclaimed junk had turned their shop into a dump.
And so, hemorrhaging money, stuck with more trash than treasures and faced with street people demanding instant cash, they closed shop in May.
Correa said she lost $120,000 and her faith in sellers who had “unrealistic expectations” about the value of their merchandise.
“It was the worst idea I ever had,” Correa, 40, said. “It’s still haunting me.”
“Exciting at First.”
Eager to join 1.3 million sellers around the world who use eBay as their primary or secondary source of income, Correa believed the enterprise would be fun.
It seemed a no-brainer for clients. Clean out your closet. Cart in cast-off collectibles. The staff would research, authenticate, photograph, describe and post your items on eBay. Within seven days of purchase, you’d receive your money minus eBay’s fees, a listing fee, local pickup and delivery charges and the storeowners’ 10 percent to 20 percent commission, depending on the price of the sale.
“The first two weeks were exciting,” Correa said. “We got really neat stuff.”
Deluge of Junk
…”I got every broken chair. I was overwhelmed with plates.”
The 3,600 square-foot store metamorphosed into a landfill. People would call to unload old furniture after a home remodel.
“They’d say, ‘I don’t care what you sell it for,’ ” said Correa. “Just take it away.”
* * * * * * *
In the end, she made six or seven trips with piles of clothing, furniture, dishes and books to The Salvation Army.
“I waited, I went out of my way to return things,” Correa said. “I wasn’t going to baby-sit the junk. There was nothing of value.”
* * * * * * *
Despite $50,000 in listings, “in a good month, we sold $6,000,” Correa said.
Another miscalculation was the clientele. Correa had counted on the downtown professionals. Instead, she figures 40 percent of her customers were street people, many on drugs. Some were abusive; some tried to sell stolen goods.
* * * * * * *
“Not a Proven Concept”
“I don’t see how they ever expected to make money,” said Kevin Murphy, a lawyer and author who owns the San Francisco-based Franchise Foundations. “These are one-time eBay sales with big hassles involved. Sending, packing, shipping. And you’re dealing with people who are very picky.”
He said many eBay franchise stores have failed or are struggling and profits have plunged since 2004. “The concept was never proven in the marketplace before franchising started in 2002,” Murphy said.
The two Inland Empire eBay franchise stores, one in Rancho Cucamonga, the other in Palm Springs, are out of business. Just before Correa closed her place, another independent, eFront, opened on May 1 on Indiana Avenue in Riverside.
“We’re doing OK,” said co-owner Cliff Woolls. “We’re not getting rich.”
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Interestingly, the same hype and self denial is going on in another franchise area -the self prepared food franchise.
There is no proven concept here, but if you attach the word “franchise” and wave the magic UFOC, then the frog turns into a princess.
Not!
There will come a time, the federal or state regulations will be enacted to STOP these practices. I could see the Soldit CEO in front of a Congressional Hearing.
My god, do some research before you open a business.