Sounds like a good idea. You’re replacing your laptop computer with a new one, but your current laptop still works and should be worth something. You’d like to sell it on eBay but don’t want to hassle with setting up an eBay account, listing the laptop, and following the auction.
The alternative is to take the laptop to an eBay drop-off store, which will sell your laptop for you on eBay. You’ll then get a check less a commission taken by the store.
In the mid-2000s a number of eBay drop-off stores started to do just this. Nonexistent in 2003, by 2005 there were thousands of independent and franchise eBay Drop-Off Stores across America; today, only a handful remain. What went wrong?
The eBay drop-off store idea was initiated primarily by two franchise organizations—iSoldit and QuickDrop.
Although the idea made sense to many—there were 7,000 drop-off stores by mid-2005—skeptics questioned the stores’ feasibility from the beginning. The lure of the drop-off store idea is that nearly everybody has something in their closet or garage they’d like to sell on eBay. So the market’s almost unlimited. But the skeptics wondered how much “quality” merchandise would actually come in.
It’s one thing to manage an auction for a $600 laptop and another to manage one for a $20 baseball card. With commissions in the 40 percent range (that’s what the stores were getting), what was most likely to come in? It was easy to envision someone, the skeptics maintained, thinking to themselves, “I’m not going to give up 40 percent of my $600 laptop computer ($240). I’ll manage the auction myself,” while the same person might gladly give up 40 percent of a $20 baseball card because the total amount of money involved isn’t that much. If this type of thinking was pervasive, the drop-off stores would be stuck selling a large amount of low-ticket items rather than high-ticket products. Another thing the skeptics questioned was the range of items the stores were willing to sell. Could the same store owners be experts managing auctions for diamond rings, baseball cards, boats, cameras, computers, decorative plates, rare photos, and countless other things? One of the pitches the drop-off stores made was that they would help their clients know what a fair price was for the items they hoped to sell.
Regrettably, many of the skeptics’ worries came true.
Literally hundreds of eBay drop-off stores have closed.
The main complaint, by the store owners who have called it quits, is that their profit margins were either nonexistent or too low. They simply dealt with too many one-time sellers and one-of-a-kind items to develop a cadence of repeat business and efficient processing.
They also found that the cost of processing an item was the same whether it was a $30 decorative plate or a $15,000 boat. Processing each item included talking to a customer, researching a price, taking a photo, writing a description, posting the item on eBay, following the auction, shipping the product to the buyer, getting paid by the buyer, and paying the customer. Not much money would be left over from a 40 percent commission on a $30 decorative plate after all of that.

There are now many disgruntled former eBay dropoff store owners. The initial capital outlay and working capital for a franchise like iSoldit was between $100,000 and $150,000. One former owner of an iSoldit franchise, Karen McGinn, was so mad that she and her partner maintained a Web site, Am I the Only One, for several years to provide updates about eBay drop-off store problems. While the site is no longer functional, it does illustrate how high emotions were running during the time many eBay drop-off stores were going out of business.
QuickDrop, one of the pioneers of the eBay drop-off store industry, closed shop in early 2008 and stopped selling franchises and supporting existing franchisees.
Not all is lost. There are still eBay drop-off stores in existence, as illustrated by the iSoldit Web site. Yet the numbers are small compared to original projections. At one time, iSoldit had ambitions to open 3,000 stores in the United States and more overseas. At the time this feature was written, the company had 29 domestic stores listed on its Web site. The survivors are also evolving beyond the original eBay drop-off store concept.
For example, iSoldit stores are now positioned as Neighborhood Logistics Centers and combine their eBay drop-off services with retail packaging, shipping, and business services.

Questions for Critical Thinking
1. How many owners of eBay drop-off stores do you think conducted a feasibility analysis before they opened their stores? If you think the number is low, what’s the explanation?
2. Describe the difference between eBay drop-off stores as an “idea” and as an actual business. Is it possible for something to be an enticing business idea but a poor business?
3. Why do you think people bought into eBay drop-off stores toward the end of the downward spiral of the category?
4. What can a start-up learn from the experience of the eBay drop-off store industry about the importance of feasibility analysis?