answer the questions in this case study

S WHAT WENT WRONG? eBay Drop-Off Stores: How Feasible Were They? unds like a good idea You're replacing your laptop auction myself, while the same person might glady give computer with a new one, but your current laptop still up 40 percent of a $20 baseball card because the total works and should be worth something you'd like to amount of money involved isn't that much. If this type of sell it on eBay but don't want to hassle with setting up an thinking was pervasive, the drop-off stores would be stuck eBay account, listing the laptop, and following the auction selling a large amount of low ticket items rather than The alternative is to take the laptop to an eBay drop-off high-ticket products. Another thing the skeptics ques- store, which will sell your laptop for you on eBay. You'll tioned was the range of items the stores were willing to then get a check less a commission taken by the store sell Could the same store owners be experts managing In the mid-2000s a number of eBay drop-off stores auctions for diamond rings, baseball cards, boats, cam- started to do just this Nonexistent in 2003, by 2005 there oras, computers, decorative plates, rare photos, and were thousands of independent and franchise eBay countless other things? One of the pitches the drop-off Drop-Off Stores across America: today, only a handful stores made was that they would help their clients know emain. What went wrong? what a fair price was for the items they hoped to sell The eBay drop-off store idea was initiated primarily by Regrettably, many of the skepties' worries came true two franchise organizations--Soldit and QuickDrop Literally hundreds of eBay drop-off stores have closed Although the idea made sense to many-there were 7,000 The main complaint, by the store owners who have drop-off stores by mid-2005-skeptics questioned the called it quits, is that their profit margins were either stores feasibility from the beginning. The lure of the nonexistent or too low. They simply dealt with too many drop-off store idea is that nearly everybody has something one-time sellers and one-of-a-kind items to develop a in their closet or garage they'd like to sell on eBay. So the cadence of repeat business and efficient processing market's almost unlimited. But the skeptics wondered They also found that the cost of processing an item was how much "quality" merchandise would actually come in the same whether it was a $30 decorative plate or a It's one thing to manage an auction for a $600 laptop and $15,000 boat Processing each item included talking to a another to manage one for a $20 baseball card. With customer, researching a price, taking a photo, writing a commissions in the 40 percent range (that's what the description, posting the item on oBay, following the auc- stores were getting), what was most likely to come in? It tion, shipping the product to the buyer, getting paid by was easy to envision someone, the skeptics maintained, the buyer, and paying the customer. Not much money thinking to themselves, I'm not going to give up 40 percent would be left over from a 40 percent commission on a of my $600 laptop computer ($240). I'll manage the S30 decorative plate after all of that CHAPTER 3 FEASIBILITY ANALYSIS 81 There are now many disgruntled formar eBay drop- off 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 sito, 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 Hustrate how high emotions were running during the time many eBay drop-off stores were going out of business QuickDrap. one of the pioneers of the eBay drop-oft 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 Soldit 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 con- cept 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 af 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 busine? 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? Sources: Sold homepage,p://877 doldit.com (accessed May 21, 2011: D. Steiner "Where Have All the Day Drop-Off Stores Gone?" AuctionBytes Blog.http://blog.auctionbytes.com/ag-bin/blog/blog. pl/p/2010/3/1269784171 html, Posted March 28, 2010 accessed May 21, 2011 s. Poole, You Own a QuickDrop eBay Drop Store Franchise What We You Do Now?" http://ezinearticles COV? H-You-Own-A-Quiclcrop-Ebay-Drop-Store-Franchise-What will bu-Do-Now?id-930650 accessed May 22, 2011. posted on January 15, 2008