The rise and fall of Auctioning4u

February 3, 2008

This post was written in February 2008; specific information contained within it may be out of date.

For the last five years Christian Braun was co-founder and CEO of ClockWorx Ltd (best known under one of its trading names Auctioning4u) which has gone into administration.

There has been much speculation regarding the business and today Christian shares his thoughts and experiences of the trading assistant business model with an overview of the company, its history, the reasons for its demise and possible lessons for survivors in the industry.

There is a lot of discussion of franchised versus company owned trading assistant models – I believe that discussion to be beside the point; the real question is if one can run a commercially viable trading assistant business (we know it works as a hobby from home).

Our Consumer Segment

The initial idea was to help consumers sell unwanted possessions on eBay. We started the business almost at the same time as Auctiondrop in America and Dropshop in Germany. We became a Trading Assistant business in April 2003 and soon opened our first shop in West London.

At the height of our consumer activity we had 13 locations; 11 in Greater London, one in Manchester and one in Brighton. Some of these were 3rd party locations in storage companies, some company owned stores and two were franchised.

We also had a fleet of four home collection vans. We exited the business in 2007, the shops in the summer and the vans around October. We sold the brand Auctioning4u at the end of the year to the operators of Serial Sellers who trade on a smaller scale from South London.

Main Issues

  • Consumer Acceptance

    In our experience there are principally two groups of users: those who don’t want to pay for a service they could provide themselves (even if more often then not do not follow through) and those who value their own time and therefore have no problem paying for services. The latter group however is time poor and/or cannot be bothered to bring their unwanted possessions in.

    The only attractive consumer segments are those that undergo a life changing event such as a move, relocation, death in the family or children leaving the house. Most of these are hard to market to; we found only the relocation market to be attractive – the target market is affluent, time poor prior to the move and everything has to go before leaving the country.

  • VeRO

    The current VeRO programme (eBay’s programme to allow brand owners to stop sales of counterfeits and trademark infringing items) makes it impossible to run a sizeable trading assistant business. The combination of the sheer size of the problem (more than 18,000 firms monitoring eBay for alleged infringements), the lack of any incentives of those firms to show restraint in their take-down actions and eBay’s three strikes out policy are lethal.

    eBay closed our main eBay shop four times over the years meaning almost unbearable pain and costs for a trading assistant. As an emergency measure we had to stop taking fashion items in the summer last year making the shops unviable. But even non-fashion items will become a problem over time.

    I believe that as a matter of policy auction sites such as eBay need to be put on the same footing as ISPs; i.e. brands should be allowed to serve take-down notices but sellers should equally be able to defend themselves by declaring the item to be genuine or not infringing a trademark. If the brand feels strong enough they then ought to take the seller to court but leave the auction site outside. With the current legal framework it is just a question of time until general auction sites will have to close due to legal risks (try selling a Tiffany product these days on eBay and you will understand what I refer to). Unless the VeRO issues are going away I do not think that it is possible to offer services to consumers on a commercial basis.

Our Charity Segment

With Blue Ocean Solutions we had a strong partner in the charity segment and at our peak served more than 200 charity shops. However, the value of donations was never sufficient and training the charities proved too difficult (our charity shops had an average of 18 employees, most with very little IT skills). The fact that being a trading assistant is labour intensive and charities principally do not pay for their labour did not help. We started to close our programme at the end of 2006 and I do not believe that a charity programme can work on commercial terms.

Business Segment

Started in 2005 this segment soon became the most important part of the business. This month alone we sold more than £500,000 of eBay GMV. That being said we believe that the VeRO problems also impact this business. We have had significant problems selling fashion items or other luxury products for a number of our clients including department stores and jewellery companies (we even tried to sell a product for one brand owner only to be stopped by one of the same brand owner’s employee through the VeRO programme) and were so worried that we sold off all non consumer electronic and IT clients to XS Items, a competitor in late 2007. Another problem is the fact that eBay is only a partial solution for companies’ problem stock (returns and overstock); most of the times clients will have stock that either has no market on eBay or cannot be sold due to its low value.

The high number of Non Paying Bidders also added to our problems rising to 15% in the last few months (eBay sellers should be able to insist on immediate payment, which would be no different to any other ecommerce site).

This segment made profits for the company; particularly once we had specialised (in consumer electronics and other IT equipment through our brand Clocktronix and in vintage and collectible toys through our brand The Toy Auctioneer).

Closing

In the end our overhead costs put in place when we had wanted to built a national network, in particular our 45,000 sq.ft. processing centres and marketing costs to build the Auctioning4u brand and the relative low margins on the business segment made new investments into the company an unappealing choice and leave the board no other choice than to close.

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Auctioning4u - The dying throes

February 1, 2008

This post was written in February 2008; specific information contained within it may be out of date.

If you are looking for contact details for the liquidators they are here

Are eBay Drop-Off franchises sound business models?
(Part III)

Trevor Ginn reports that Auctioning4u has called in the adminstrators. In truth they’re no longer even called Auctioning4u having sold the brand and website in December. Trading as Clockworx they finally locked the doors for good on 31st January.

Again the question has to be asked if drop off shops will ever be a profitable business model. The first time I posed the question it appeared the answer was no, and that only economies of scale that come with centralised processing was an option. That was in April last year when Auctioning4u acquired the failed iSold It chain. It took just three months before Auctioning4u closed their franchises moving to a home collection model in London and Brighton. DHL was used for customers outside those areas but this was the begining of the end.

That brings us back to December when the brand was sold, and now having failed to secure further funding the company along with the software it developed are no more.

It’s a sad story for both the investors who reportedly pumped in £4m (approx $8m), and of course the staff who worked hard trying to make it a success. The big question that remains unanswered is ‘Can anyone make a profitable business running an eBay drop-off shop?’

If anyone runs (or knows of) a successful, profitable, eBay drop off shop with a long term track record of financial stability we’d love to hear from you.

Written by Chris Dawson · Filed Under News | 211 Comments 

Auctioning4u, iSold It?

December 5, 2007

This post was written in December 2007; specific information contained within it may be out of date.

What’s happening at the UK’s most prominent trading assistant and drop off shop, Auctioning4u? It’s barely eight months since they acquired the UK arm of the failed iSold It franchises but now it appears they’ve sold themselves.

The auctioning4u eBay ID has changed it’s name today to clocktronix and items listed today no longer have the Auctioning4u listing template.

The Auctioning4u website now states that Auctioning4u is “a brand owned by Bob Rock Ltd“, who also happen to own another trading assistant - Serial Sellers.

If Auctioning4u have sold out this must indicate all is not well in the Trading Assistant world. Auctioning4u in the past insisted, whilst eBay drop off shops were a difficult model to operate profitably, their success came from a centralised processing facility. In July this year Auctioning4u called it quits on their drop off stores, including closing the last remaining iSold it franchise just two months after taking over the brand.

It’s unclear if all, or just part, of the Auctioning4u business has been transferred to Bob Rock Ltd / Clocktronix, another of the Auctioning4u eBay user IDs TheToyAuctioneer hasn’t changed it’s branding or listing templates.

Auctioning4u rasied £4 million from venture capitalists, acquired Auctionicity, Auction Partner, Trading Nation, Sell It Shack and Recycle UR Stuff. iSold it appears to have been their last acquisition before they sold it.

To date there is no press announcement regarding the business transfer to Bob Rock Ltd on the Auctioning4u website.

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The Last (trading) Post

July 17, 2007

This post was written in July 2007; specific information contained within it may be out of date.

Are eBay Drop-Off franchises sound business models?
(Part II)

Three months ago I asked the same question, the replies were mixed with some in favour and some against. Now it’s revealed that the last major franchisee, Auctioning4u is to close it’s stores.

The company will be closing not only their stores and franchises, but also according to auctionbytes, close the drop off locations sited in third company locations such as those in self storage depots. Interestingly, having acquired the failed iSold It business from the administrators in May, this year it’s now revealed that only one iSold It franchise remains to be closed.

Auctioning4u has always insisted a central processing hub was essential to running a drop off store successfully. They’re now moving to a home collection model with a DHL option. Home collection is limited however, it will be interesting to see how long this service lasts, especially as to date it’s only been offered in London and Brighton. The DHL option allows buyers from across the country to send goods in to be sold but both these services do nothing to support drop off shops as a viable business.

It’s no secret that Auctioning4u is hugely successful, nor that most of their profits comes from business transactions. Consumer business is profitable, but closing the drop off shops gets rid a problem they just don’t need. Closing drop off shops changes them from a Trading Post to simply a large Trading Assistant.

So if Auctioning4u can’t make drop off shops a viable proposition the question has to be asked again, is this the death knell for the drop off shop?

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Would you risk £60k to a new eBay trader?

May 30, 2007

This post was written in May 2007; specific information contained within it may be out of date.

£60,000 is the investment that a company calling themselves bayagent have received in funding from a group of Venture Capitalists called Nstar. That’s a fair amount to invest in a company setting up as eBay trading assistants in a market where other trading assistants are failing. The one point in their favour is that they’re not looking for consumers to drop off items but intend to appeal to businesses with excess stock to dispose of. They aim to grow to a £14m turnover within two years - with fees of 33% that values bayagents cut at over £9m. Currently they state they’ve sold £48k having started trading in November.

It will be interesting to see how they fare, they have plenty of business experience - the founder set up studentmobiles.com which was sold to the Carphone Warehouse. What may be lacking however is eBay experience, although they state they’ve had an eBay account since 2003 they’ve chosen a user id masquerading as a URL. If they can’t follow basic eBay rules it doesn’t inspire confidence in their eBay expertise.

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eBay drop off stores offered life line

May 9, 2007

This post was written in May 2007; specific information contained within it may be out of date.

Trading PostA couple of weeks ago Trevor Ginn spoke about the iSold It franchise model as it went into administration. Now his company, Auctioning4U, has acquired the UK arm of the failed company. iSold It franshisees across the UK are being invited to transfer their businesses to the Auctioning4U brand with the promise “Our process is streamlined and guaranteed to generate better results and make more money for our clients. A de-centralised model with hundreds of different shops all processing their own items just cannot work economically”
Read more

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How to sell my first item…

April 30, 2007

This post was written in April 2007; specific information contained within it may be out of date.

I had an interesting call from a friend tonight that wanted to list their first item on eBay. Their son’s car is up for sale and where better to advertise it than eBay for motors? Of course being the local “eBay expert” they asked me over to assist. First thing was to show them how to set up a “seller account” but amazingly although they profess a total ignorance in the ways of eBay they not only have an account set up, but they’ve at some time in the past set up a seller account and made previous sales!

As with many eBay accounts they have a “Family” account, it’s not used just by the account owner but the entire family use it for bidding and buying. Which one of them actually set up the selling account remains a mystery, but all that remained for me to do was to show them how to update their payment preferences to add a current credit card.

Listing the car (a Peugeot 205) was a snip - it’s a long time since I’ve used the SYI (Sell Your Item) form instead of TurboLister. It’s so much easier than when I listed my first item on eBay with the old SYI layout. The part of the listing that took longest was taking the photos, followed by composing the description, clicking the boxes for item specifics, price, payment and postal options (It’s a car…. payment on collection only!) was the work of seconds.

I left the family with the promise that they’d check their email at least daily during the course of the auction, and with possibly my lowest ever fee for consultancy - a couple of beers at the pub next week. The biggest thing I took away though was how the whole family were involved in listing the car, even if it was just looking over my shoulder at the screen amazed at how easy selling a car on eBay really is!

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Costly trading assistant request

April 30, 2007

This post was written in April 2007; specific information contained within it may be out of date.

Today I received a Trading Assistant request to contact another eBayer and potentially sell on their behalf. The email included a telephone number to contact the prospective client on, but with an 07024 number. This number falls within a range set aside as “Personal Numbering Services” attracting a charge of 47.5p per minute. Needless to say I declined to contact the sender of the email.

eBayers should be aware of numbers sent to them in ASQ and other communications, if it’s not a standard landline number consider whether you really want to place the call, and just how much you might be charged for doing so. If someone wants you to contact them the very least they can do is to supply a telephone number which can be called at standard UK charges.

Written by Chris Dawson · Filed Under Uncategorized | 2 Comments 

Are eBay Drop-Off franchises sound business models?

April 13, 2007

This post was written in April 2007; specific information contained within it may be out of date.

In the wake of iSold-it US cancelling expansion plans and iSold-it UK shutting up shop, Trevor Ginn has some interesting comments on eBay drop-off stores. Ginn is largely not in favour of them which is surprising seeing as he’s the Head of Consulting for an eBay drop-off store. However his argument is that “the only way to make money out of this industry is with central processing, as the low margins require economies of scales”. This makes an awful lot of sense, the set up costs for a drop off store are prohibitive, if you decide to purchase a franchise drop-off shop from a national chain set up costs rise further but in addition you’ll be handing over a slice of your profits.

I’m unconvinced by the business model of franchised Drop-Off shops, and unsure just how much brand recognition a national chain of Drop-off shops attract. Often they are known locally as “The eBay shop” rather than by the franchise name.

Drop-off shops appear to fly in the face of traditional eBay businesses. Generally on eBay an unknown local business gains a national or international audience. National or International chains of drop off stores attempt to trade off their brand to attract local business - the exact opposite to that which eBay excels at. Attempting to create a brand to profit from another brand appears an uncertain way to do business.

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Trading Assistant (Trading Post) regulations tighten

November 25, 2006

This post was written in November 2006; specific information contained within it may be out of date.

Many eBay sellers source stock by acting as a Trading Assistant. Trading Assistants are experienced eBay sellers who will sell your items on eBay for a fee so if you don’t have the time or have items of high value an experienced seller can handle the eBay transactions on a commission basis.

A Trading Post is a highly experienced Trading Assistant who provides staffed drop-off locations with regular business hours. You can drop by the Trading Post without having to call ahead or arrange a meeting time.

There is increasing legislation in the US with Florida joining Louisiana, Tennessee and Maine as the latest to start regulating Trading Posts and how they operate. The Florida Board of Auctioneers in their quarterly new letter said that Trading Posts should be treated as auctioneers, requiring their owners to be licensed. To become licensed involves some 80 hours of classroom work and a years apprenticeship so many owners of Trading Posts are stunned at the implications.

The ruling came as a surprise to both eBay and Florida’s Department of Business and Professional Regulation who both consider an auctioneers license is not required for eBay Trading Posts. Red tape is increasing though, including the requirement to check any items with serial numbers against the Florida Department of Law Enforcement’s stolen-property database. eBay show little concern at Trading Posts being required to carry out checks for stolen property but do fight moves such as requiring sellers to become licensed.

In the UK draconian legislation of this kind is some way off - there are only a couple of Trading Posts in the country, but doubtless as they expand and new companies enter the field similar measures will be considered.

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