The future of Online Revolution, the UK franchiser of eBay drop shop brand iSold It, appears to be in the balance amid reports that it has gone into receivership.
The company is refusing to comment on its future, referring enquiries instead to accountants BDO Stoy Hayward.
It hasn't returned calls, but one of iSold It's UK stores said the firm’s situation was “fragile”, adding: “We’re just trying to get on with things. It’s all very touch and go.”
Officially launched last year, Online Revolution owns the UK franchise rights for iSold It, one of the largest international chains of eBay drop shops.
iSold It charges a large fee to shops that want to carry its brand, but claimed last year to have over 1,000 stores under contract worldwide.
According to the firm’s website, six shops have been set up using its name in the UK, while a further four were expected to open in the coming weeks.
It's not clear whether this will still happen, or what the future holds for its existing outlets.
More generally, the move seems likely to raise questions over the drop shop concept – described by iSold It’s UK managing director Phillip Molloy as “the most exciting business opportunity to hit the UK for a long time” at the firm’s launch last year.
It’s yet to emerge what’s behind the firm's problems, but they follow closely after iSold It's decision to suspend new applications for franchises and concentrate on its existing businesses.
Earlier this month, AuctionBytes published a letter from CEO Ken Sully to the company’s partners, saying it did not “feel comfortable” selling any new franchises until it managed to decrease the failure rate of its stores.
It said over 60 of its outlets had closed, blaming variations in "average selling prices and labor hours", among other things.
Indeed, Trevor Ginn, head of consultancy at rival eBay service provider Auctioning4u, said the problem wasn’t the actual idea of drop shops, but iSold It’s business model:
“Standalone drop shops, as promoted by the US franchising model, don’t work. iSold It was selling a dream that didn’t stand up. The only way to make a drop shop service work is by centralised processing, allowing economies of scale.”
Our calls to the company's accountants to clarify the situation were not answered.