eBay Drop-off Auctioning4u Acquires Assets of iSold It UK
By Ina Steiner
Auctioning4u announced it has signed an agreement to buy the assets of iSold It UK, which went into receivership. Both companies operate eBay drop-off stores in the United Kingdom, but with different business models.
iSold It UK had the rights to sell franchise stores in the UK under an agreement with iSold It LLC, headquartered in the US. Each location was a stand-alone operation that marketed their services and listed items for consignors. iSold It UK went into administration recently - a somewhat similar procedure to Chapter 11 in the United States, according to Auctioning4u CEO Christian Braun. That left four UK iSold It franchisees with stores already operating as well as up to 20 franchisees who had been close to signing leases for their locations, according to Braun.
President and CEO of iSold It LLC Ken Sully replied to inquiries with an email stating he could not yet comment, "as we have not finalized things officially with the administration in the UK."
The iSold It UK franchisees now have the right to contract with Auctioning4u, according to Braun, though he said the existing iSold It stores have somewhat of a problem. Because of Auctioning4u's centralized model, there is no need for large stores, but some of the iSold It UK franchisees are locked into larger spaces with long-term leases.
Auctioning4u operates a 40,000 square-foot centralized location, working with third-parties trading under the Auctioning4u brand as "territory partners" who acquire consigned goods and send them to Auctioning4u's main center. There, the company's 65 mostly full-time listers research items and list them for sale on auction sites. The listers have areas in which they specialize, making it more efficient to list accurate descriptions of diverse items.
Braun said under the Auctioning4u model, rather than a large store with 3 - 4 employees, his territory partners need only 600 - 700 square feet and one employee. (They also run home collection services, and in addition to listing items on eBay, Amazon, and specialty sites, Auctioning4u sells through traditional auction houses for items such as classical furniture and fine wine.)
Part of the iSold It UK assets acquired is a database of over 5,000 individuals who had approached iSold It UK with an interest in purchasing a franchise, Braun said. He estimates there are 40 other drop-off stores in the UK, and said there were about 80 that have gone out of business to date. His company has 12 locations - four are company owned, one is owned by a territory partner, and 7 co-locations. The latter are mostly storage companies like Big Yellow or The Storage Depot in which Auctioning4u has trained the staff, who collect items and forward them on to Auctioning4u's centralized processing location.
Braun said his company has raised $8 million to date. The concept of eBay drop-off stores gained widespread attention in 2003 when AuctionDrop raised over $6 million and placed billboard advertisements on Silicon Valley highways. The company tried various models and ultimately closed its stores.
Since then, there has been wide debate in the industry about whether franchise or independent drop-off store models work best. A recent survey by AuctionBytes revealed profitability is still elusive for many drop-off stores (http://www.auctionbytes.com/cab/abu/y207/m05/abu0190/s02).
In an interview with AuctionBytes.TV at last year's eBay Live conference in June, the master licensor for iSold It eBay drop-off stores in the UK Phillip Molloy said he had plans to open 300 stores (http://tinyurl.com/36zha6).
Braun said that both iSold It LLC and the former iSold It UK teams "have been as helpful as they could tring to find a new home for their franchisees. They have had a tough time and should get a break where earned."
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
You may quote up to 50 words of any article on the condition that you attribute the article to EcommerceBytes.com and either link to the original article or to www.EcommerceBytes.com.
All other use is prohibited.