Business Model Example: i-SoldIt.com versus AutctionDrop.com
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I think i-SoldIt.com has the right ingredients to be a great success:
1. Substantial RL (Real Life) presence (their stores);
2. Cheap method of acquring (i.e., marketing to) product suppliers (walk-in store traffic);
3. Alternative channels for acquiring product suppliers (UPS, Fed/ex, USPS);
4. Cost to acquire Inventory = zero;
5. Effective and cheap way to connect (i.e., marketing to) customers (eBay);
6. They will have a long term "concession" giving them control over a factor of production (their stores) that will be hard to replicate/duplicate/compete with, thereby giving their business a long (stable) life expectancy;
7. They can expand fast with minimum capital (by franchising their stores);
8. They have a large untapped market of eBay (consumer) wannabees who can't really master the intricacies of selling on eBay and delivering their products;
they also get instant credibility with eBay customers by dealing through i-SoldIt.com;
9. They are among the first movers in this new category but not the first;
10. They will control the 'concessions' (their stores) unlike competitor AuctionDrop (which uses UPS Stores instead);
11. They can tap into B2B markets too to help them get rid of unsold merchandise, equipment, etc.;
12. The i-SoldIt.com Corporation's real customers are their franchisees;
13. Their franchisees real customer is eBay;
14. Their customers are also their suppliers (i.e., consumers are on both sides of this business model as retail clients of eBay and suppliers of products to the i-SoldIt.com franchise stores).
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15. AuctionDrop's real supplier is UPS;
16. Obviously, they do not control UPS Stores so they rely on those stores to represent them well to the eventual inventory suppliers (i.e., consumers);
17. AuctionDrop has the advantage of a huge network of stores in place from Day 1 with zero cost to develop them;
18. AuctionDrop has the added cost of paying for merchandise to be returned by UPS to their suppliers if it doesn't sell on eBay, potentially a large cost;
19. AuctionDrop is locked into UPS- Fed/Ex, the USPS and other methods of product delivery seem to be sidelined;
20. i-SoldIt.com and AuctionDrop.com are really 'pawn shops' for the 21st Century. Who really knows if they can be successful but their B. Models are imaginative;
21. These B. Models are also useful examples because they are multi faceted- customers are also suppliers/the question of who your real customer is turns out to be quite complex to determine... Business Models are the engines of your businesses- they don't guarantee success but it is a useful part of the new entrepreneur's toolkit to make sure that the 'harder you work the more money you can make'.
Post Script: Brian Suomela, former Entrepreneurialist Culture student reports that AuctionDrop.com has failed. Read his posting (February 8, 2005) on why he thinks it might have failed. What do you think is in store for i-soldIt.com now? Can the fact that they control their own stores save them from AuctionDrop.com's fate? Is the 'pawn shop for the 21st Century' a concept that just can't work or maybe the niche is too small?
Dr. Bruce M. Firestone, Ottawa, Canada. August 2004.