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Home | Internet & Businesses Online | E-commerce Opening a retail business and not spending money for inventory is very appealing. That's the way traditional consignment stores work. But a drop-off store differs in several important ways from the neighborhood consignment store. The main difference, and major weakness is they don't specialize in any type of product; they have no market niche. When a drop-off store opens, it does so with the intention of accepting all types of items that are legally saleable on eBay. In an effort to gain some control over the items the stores often impose a minimum estimated value (educated guess) limit on what they take in. Unfortunately, most owners or franchisors set that limit too low; usually $30 to $50. A more realistic value would be $100. Since many auctions on eBay result in final prices that are one third of the new item cost, customers must bring in products that originally retailed for $300 and up. Once owners realize that doesn't happen very often and since they can't accurately predict expenses nor is there a guarantee that the item will sell, they start taking in anything they think might sell. That only complicates the problem. Each item taken in to auction on eBay has a cost of processing associated with it. Some items are easy to process; others require more time and atention. In either case the commission rate(s) are the same. Furthermore, eBay will charge a fee to list each item on auction. That fee varies depending on the starting bid and on some items a reserve fee may be added. If the item doesn't sell, the store is out all those upfront fees plus the cost of processing. Once an item sells it must be shipped to the winning bidder. The items a store will ship can vary greatly, so they have to be able to package and ship almost anything. In addition to getting it out the door the owner is taking the responsibility for safe arrival. If it breaks they still must pay the customer their portion of the sale, refund the buyer's cost, and they are then left with the task and expense of filing damages with the carrier. Since each item must go through many steps before the store can see money in the bank, the stores attempt to lower costs and speed items through by setting up the processing as an assembly line. But, because of the variety of items, no store can ever realize the true economics of scale and lower these costs. That will only happen in a niche business which is not the idea behind the drop-off stores. Article Source: http://www.articlewheel.com
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