May Part 2- Retail Franchises, No Food Served

A unique concept - retailing with no inventory

Since August 2003, QuikDrop has been cashing in on the eBay phenomenon with their eBay drop-off store franchise. The concept is simple, but effective: help people with limited time and expertise to sell their stuff on eBay. To make it easy and convenient, QuikDrop storefronts are located in strip malls next to grocery stores and drug stores. Co-founder Jack Reynolds says, "On your way to drop your clothes at the dry cleaners, you could also drop off your old iPod at a QuikDrop to sell it to get money to buy a new one."

QuikDrop storefronts are about 1500sf, typically with 20ft on the front. Inside, it looks a lot like an airline checkout counter. "At the counter, we show you on a screen what your stuff is going to go for," explains Reynolds. "At that point, you make a choice whether you want to leave it with us. If you do, we actually take the item(s) across the counter, sell it on eBay, and then send you a check in the mail after we get paid." Of course, QuikDrop takes a healthy portion of the selling price first.

There is plenty of competition in this business. First, there are the 25,000 eBay Trading Assistants, most of whom operate at home or out of an office. And of course, people can always sell on eBay by themselves. And then there are other branded retail stores such as Snappy Auctions and I Sold It. "There are probably a dozen different franchise companies that do this," says Reynolds. "We are the industry leader, however, because we get customers more money for their items than anyone else does by far. We accomplish that with extremely high feedback (which gets us higher prices), taking quality power zoom pictures, and listing items internationally. A lot of people only sell in the U.S., not realizing they are walking away from 80 million foreign buyers. We translate all our listings into 8 different languages, take all the various currencies, and ship internationally. The bottom line is we've done better than any other drop-off store chain. What really matters to people is how much money you put in their pocket at the end of the day," claims Reynolds.

There are about 100 Quik Drop franchises now with another 50 opening by the end of the year. Reynolds says there are two key points that make this franchise very appealing. "Ours is the only retail business I know of where there is no cost of inventory and no accounts receivable. Both represent major investments for other types of retail businesses. Basically, retailers go out of business because of inventory problems. We can absolutely move everything at the price we need to because if it doesn't sell, we give it right back to the customer. And there are no accounts receivable because buyers pay via PayPal before we ship the item."

eBay continues to change buying habits
Reynolds says a typical Quik Drop customer is a working woman who owns a lot of stuff she could sell, but is very busy and has better things to do than mess around on eBay. "We sell a lot of handbags, shoes, musical instruments, and consumer electronics. Our customer is the higher end person who has some assets, age 35-55, who lives in a single family home with a garage full of stuff. This started out to be a matter of just wanting to get rid of that stuff that was hanging around and cluttering up the garage," says Reynolds. "But there has been a shift in the last year or so, Now people are trading up. For example, we have one store that is situated next to a Sports Mart. What happens is people go into Sports Mart and decide they want to get the latest water skis for the spring. Well they've got last year's model still sitting in the garage. So they bring in that old model to us and use the money from selling it on eBay to go get the new ones."

Reynolds says trading up via eBay is becoming a trend that is changing the way consumers shop. "People are starting to realize that their current products have value which can be used to purchase other products. So I really think it's going to change the way people shop. If you know that the product is going to retain its value better, you're more likely to buy a high-end brand because you know that when you go to get rid of it, you're going to get more money than you would for a cheap non-brand product. When making purchases, smart people are going to be thinking about resale value that could help them upgrade in the future. We are changing from a throw-away lifestyle to one where we get equity back out of the products we own," states Reynolds.

Contact Information: Jack Reynolds, Co-founder, Quik Drop, http://www.quikdrop.com, (714)429-1040.

Mini-convenience stores help get you through the day

Street Corner is a mall-based convenience store that has been scaled down. It started as a news stand concept, but the direction has shifted more towards the convenience aspect. Director of Franchise Sales, Brooks Pettit, says, "We cater to the likes of mall employees and patrons of retail shopping centers. Typically, our inventory is not food based. The products we offer are the same as you would find in an upscale convenience store, but with a real clean crisp concept. The footprint of the store is smaller. We don't carry charcoal, milk by the gallon, bagged ice, or anything people would want to take home to feed the family. Instead, we sell only impulse items, the kind of things needed (personally) throughout the day. That includes things like packaged snacks, bottled beverages, aspirin, tobacco, and a small selection of newspapers and magazines."

All Street Corner products are packaged. "We don't prepare food," says Pettit, "so we don't have to deal with food service issues such as health codes."

A flexible and adaptable concept
Street Corner stores range from 150sf at kiosk locations on the very minimal side up through 1000-1200sf inline stores. Pettit says concepts are viable. "Street Corner is a very flexible franchise concept in many ways. The business itself is pretty straightforward. But unlike most franchises, we are adaptable and allow franchisees to put their own twist on the concept a little bit. We encourage them to try to expand on our product lines. For example, in Miami right now, we have a franchise in a non-traditional location. It's situated in a lifestyle center with a retail residential component. The franchisee is catering very specifically to the local community by offering a wide variety of Cuban products that appeal to the people of Cuban ethnicity."

Street Corner is becoming more flexible in terms of site location as well. "We are not exclusively in retail malls anymore," says Pettit. "We are currently opening stores in what we call mixed-use developments, with a residential retail and lifestyle component such as stadiums, train stations, business office buildings, etc. This is where our growth is, outside of retail shopping centers. It is an increasingly competitive market for space availability in those centers so our push is towards non-traditional (for us) locations." Although the franchisor is flexible, there is one definite criterion for site selection. "We don't like to locate our stores in malls that have big box retailers like WalMart," asserts Pettit.

The Street Corner concept originated in 1988 in Topeka, Kansas. Over a period of about 10 years, the two partners Peter LaColla and Dan McCabe opened 11 stores. "They reached a point at which they had grown so much that managing all those stores from a centralized location was problematic," says Pettit. "Over the next five years, they sold all of those company stores and became really focused on franchising. In 2000, Street Corner was registered in all 50 states. The company has grown exponentially since then."

Contact Information: Pettit, Director of Franchise Sales, Street Corner, http://www.streetcorner.com, (785)272-8529.