Yesterday, Clockworx, the company previously trading as Auctioning4u called in the administrators. It is a sad end to the dream of building a nationwide chain of eBay drop shops. It also, I feel, sounds the death knell for the idea that a large company can be built from franchaising drop shops. The stand alone shop model does not work as shown by iSold-it problems and now the centralised model has also failed.
I don’t know how much I should really say about this, considering I used to work at Auctioning4u, but nobody else seems to be blogging about this and so I will try and be fair. Auctioning4u was based around a centralised franchise model with sateillite shops taking items to a central processing facility for listing and fulfilment. At its peak the company had around 7 locations around the UK and two warehouses in North Acton, London.
The centralised drop shop model was always going to be difficult to get right. Margins are slim in processing items, and listing is labour intensive. The franchise model involved a revenue split 70/30 between auctioning4u and the franchiser. Neat solution though the centralised model was to the problem of running a chain of drop shops it did not provide a solution which appealed to potential franchisers. The 70/30 split meant that they had to process large volumes and entrepreneurial franchisees did not like the idea of merely running a shop without doing any of the other tasks.
Auctioning4u’s death has been a slow one. Last year they gave up on the franchise model to concentrate on home collections, only to give up completely and sell the auctioning4u brand to Serial Sellers a few months later. After that they concentrated on business sales and development of their software. Having not secured further funding the company was forced to close for business yesterday (January 31st 2008).