Turning Retailing Inside-Out

When the founder of a new business jokes that she almost had to lock the doors after the first 30 days because the store was so busy, something is definitely going right. Born from a stay-at-home mom's fundraising idea, the iSold It franchise has grown exponentially since its inception at the end of 2003, due to the business and marketing acumen of a team of four experienced business professionals. The heart of the operation includes co-founders Elise and Rick Wetzel (also founder of the Wetzel's Pretzels franchise), president and CEO Ken Sully (who also helped grow the UPS Store franchise to 3,000 stores) and SVP of marketing David Crocker (who cut his business teeth on companies like Nestle, Bristol Meyers-Squibb and Pepperidge Farms).

iSold It is a franchise operation that offers the gamut of services that facilitate selling items for customers via eBay and other Internet selling sites. Services include storing, photographing and shipping items, in addition to processing payments to the customers as well as the shipping facilities. Customers bring their merchandise to the retail outlet, and then iSold It handles the sale of the item from photo to shipment and payment. iSold It is currently the number-one seller on eBay.

The successful business premise banked on the fact that only eight percent of the registered users on eBay are sellers, while 92 percent are buyers. "Buying on eBay is easy but selling is a lot more work," remarks Elise Wetzel.

The first iSold It store opened in December 2003 in Pasadena, California to a stampede of business. "We were swamped with business," recalls Elise Wetzel. "In the first 30 days I had so much merchandise coming in that I couldn't keep up. Not only had we filled the store with merchandise, we had to pile stuff up on the counters and in the hallway."

The iSold It franchise included 185 retail stores as of September 2006, up from 100 a year ago, with many more franchises sold but not yet open. The business is growing at a rate of 10 to 12 stores per month and will have a nationwide footprint at approximately 400 to 500 stores within the next 18 months, notes Rick Wetzel. Gaining that nationwide exposure is significant, he says, because it provides improved business efficiencies. "At that point we can begin marketing nationwide and can truly provide a nationwide liquidation and overstock service," Wetzel says.

Inside-Out Retail Business

While other retailers can learn a lot from the business and marketing strategies employed by the iSold It team, it is not a typical retail structure. "It is an inside-out, upside-down business model," says Sully. "We don't have any cash registers or POS systems in the stores; we don't have any cash in the stores and we don't have anything to purchase in the stores. The owners don't have any inventory costs or payables."

Typical infrastructure issues were not the biggest hurdles in laying out the iSold It strategy. "The challenge was to develop technology to be able to process the items efficiently with the least amount of labor," he explains. "What makes our business model unique is that we are a very efficient processing facility that looks like a retail store."

Sully came on board when iSold It was a one-store franchise and began to put together a technology plan. "We found a couple companies that had auction management software, but none had what we needed, which was a retail check-in process for the customer," he explains. "We needed a unique process which would include recording and tracking the customer, keeping track of items with barcodes, and tracking how much commission to pay each customer. We created a wrap-around interface software that connected to a third party."

Software Expansion

Through the initial growth process, the company wrote its own software but as the business model expanded, the team found it necessary to search out a third-party e-commerce solution provider with multi-market experience, Sully says. Today, iSold It offers customers the opportunity to sell products via sites like uBid.com and eBay, and will add Amazon.com in the future. The retailer also works with other businesses to liquidate overstocks.

The company's initial internally developed proprietary software is called Store Activity Manager System (SAM), which is being expanded into SAM 3.0 in conjunction with Infopia, based out of Salt Lake City, Utah, which offers an Oracle-based software platform. SAM 3.0 will improve a number of iSold It business processes: workflow, inventory, shipping, credit card processing, auction management, search functions and e-commerce sites for individual stores and e-commerce platforms, explains Crocker. The Infopia implementation is scheduled to begin rolling out to all open iSold It stores by year-end 2006.

"Together, with our new software partner, we have developed a whole new front end for their engine," says Crocker. "Our stores will be working on our proprietary software that handles all the workflow in the stores, built around our new software partner's marketplace."

Because iSold It is working to increase its B-to-C business with small, local businesses as well as larger big-box retailers, the new technology platform is being designed to simplify the process for those clients. "We provide the expertise to sell online and our IT helps provide processing efficiencies so the stores can stay focused on their core business," says Crocker. "We are providing a new business model to make it operationally efficient for retailers to get rid of overstock items and returns, and in some cases we are helping to develop a new online channel for retailers' newer items."

Franchisee Communication

One of the keys to iSold It's success is its focus on maintaining open communication with and among all the franchisees, the executives report. "We have an Intranet that all the franchisees use to share ideas," says Crocker.

In addition, the corporate office provides marketing templates through the internal system that individual franchisees can adopt and customize to their local markets. "We are providing a great tool kit for them and in doing that we are providing consistent messaging and branding across the franchise," Crocker notes. "We have a very entrepreneurial group of franchisees and we credit a lot of our success to their networking," adds Elise Wetzel.

"Because of the nature of the business, based around the Internet, the franchisees tend to be highly technically savvy," adds Rick Wetzel. "At Wetzel's Pretzels we still mail materials and newsletters to the stores, but iSold It is virtually paperless. We use technology to standardize the experience and the service across our stores. We also use technology to utilize the franchise network as one voice."

Preparing for Scalability

As iSold It continues to grow, and rapidly, Sully is employing his experience with UPS and Mailboxes, Etc. to prepare his new venture to handle expansion. "We have been fairly clever in making sure everything we do is fairly scalable," he says. "We do approximately 25,000 transactions each month already, which includes probably 15,000 to 20,000 seller checks being printed and mailed each month. We don't see why we can't take the business to 1,000 to 2,000 stores in the near future using our new technology."

His eye on the future, Rick Wetzel is looking for technology to keep up with the company vision. "We mail checks today but we think one day we should be able to offer customers the ability to pay electronically from their checking accounts or through their debit cards. We have lots of other modules we'd like to add but you can only program and code so fast."

Next steps include updated payment processing procedures. To date, iSold It accepts Visa, Mastercard and Paypal. "We are reviewing and testing debit cards and value cards that we could hand to the customers when they walk in the door and upload their commissions onto the card via the Internet."
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