Money: Now you see it...
Now you don't
Based on 50 mins processing time per item
One person, in 8 hrs, can handle
 9.6 items/day
Three people, in 8 hrs, can handle 28.8 items. I'll increase that
to 30 items for ease of figuring
 30
items/day
Open 6 days a week or 24 days per month that's
 720
items
Of that 720 only 75% may sell so that's
 540
sold items
With an average selling price of $50 the sales for that month is
 $27,000
gross
Store commission on $27,000 at 33% is
 $8,910
A franchised store may pay a 5% commission on the gross
sales or $1,350 leaving the store
 $7,560
to cover overhead
Cost to process 720 items is about
$10,412
On the average, 39% of the items a store sells
doesn't cover the costs of processing that item!
Making money by selling other peoples items online through a drop-off store
sounds great, but there's more involved in that concept and more ways to
lose money than most people realize.

  1. You have to educate the customer about the process
  2. Sort through boxes of worthless stuff
  3. Convince them to sell at liquidation value
  4. Explain listing fees,  reserve fees, gallery fees, final value fees
  5. Explain why it didn't sell for what they wanted
  6. Justify your high sale commission
  7. Explain why their check hasn't arrived after two months
  8. When they get it, listen to them gripe about the small amount.

Your commission has to cover all of your costs. Every item that a store takes
in will go through most, if not all, of a long list of processes before it is history.
Not all of the items will sell. That means the store incurs fees and labor costs
that it must absorb. If the items sells, the fees are taken out of the seller's
portion of the sale and overhead comes out of the store's commission. That
commission can vary greatly and has no bearing on the actual cost of
processing.
No profit - no store
The example store above had sales of
  • $27,000 at a cost of
  • $10,412 but only netted
  • $7,560
If you think the numbers I'm using are unrealistic, consider the fact that I did not
include two major expenses that most people overlook in determining
profitability.

  1. First, there is no money going to repay the startup costs of the store. This
    could be a bank or SBA loan. It could be a personal or family loan. In any
    situation, somebody needs to be repaid eventually.
  2. Second, there is no money going to provide an income for the owner.
    Either the owner is getting paid by working for someone else or not taking
    an income. If the store isn't paying the owner why own it?

Factor those costs into the numbers above and tell me these stores are making
a profit!
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