For a little background, 4 years ago I took a job with a family member with the promise that once successful I could leave and start my own business with the family member’s aid. Unfortunately for me, the business was a pawnshop. The business was started with my family member as a piggy bank, his associate as the manager, and myself as the associate’s flunky co-worker. Surprisingly neither of the other two had much experience in retail and even less in the pawn business.
The result of having no true experience in the pawn business has left us running in the red since the time we opened. If it isn’t bad enough that we have loaned way too much on many items with the result of not having the stuff redeemed, my compatriots believe that we should ask what we want, not what we need, out of items for sale. The consequence of having high prices is the potential buys don’t negotiate, but leave and never come back.
In the 4 years since we opened, the competition has increase to include 9 other independent pawn shops, 12 independent check cashing stores, and 8 independent title pawns locations. In a county of 70,000 that makes a store per 2333 people. Faced with these rivals, the two stockholders have decided that we should move to Ebay to sell our goods. Both of whom’s only experience online is through AOL, believe that we can just move our inventory to Ebay and it will fly of the shelves. It is my opinion that unless we cut our prices, our inventory won’t sale…and if we have to do that, why not just cut our prices in the store.
My question is…am I seeing Ebay wrong? I’m not a big Ebay shopper, but have bought several things on Ebay and it’s only an interest to me when I can get a really good deal. And being I don’t really get to see the item physically till after I purchase it, I am little leary about bidding unless I get a really good deal. Am I right in assuming that most others feel that way too?
Why the hell not cut prices in store? How much do you get that stuff for anyway? I was under the impression that pawn shops don’t expect to make much off of in store sales, but rather make all their money through interest on loans. Everytime I’ve spent in pawn shops seems to support this, as no one really cares if I buy or not. Kind of like how McDonalds et al can give away food all they like, because the only thing they are really making money on are the soft drinks. Bring um into the store with low prices and eventually they’ll need your more lucrative services.
Maybe I’m just a dolt.
The way I see it there are two main reasons to shop eBay: To get a bargain, or to get something you can’t get elsewhere. Your buying experience is because you’re looking for the former. Others might one something that’s a little harder to get, such as a rare CD or a specific watch. One thing that many buyers look for is whether the seller accepts PayPal. No PayPal, no sale. But if you have a shop you probably accept credit cards and you might get some sales by bypassing PayPal and having buyers contact you directly. On the other hand, some people will not consider that secure enough and will insist on PayPal. So as far as selling goes you will have to consider insertion fees, final value fees, and PayPal fees; plus the time it takes to photograph the items and post them.
What about pricing? You’ll have to take costs into consideration of course. But you also need to know how much an item might reasonably fetch. If you price it at ‘what you want’ you may not get ‘what you need’. You need to make the price reasonable. You should also set your minimum bid at the minimum you will accept. Many people are turned off by Reserve auctions and won’t bid on them. If you need a certain amount to cover the cost of the item, and that amount is reasonable, then it’s likely to sell if someone is looking for it. If you make more than that, good.
Why not reduce prices in your store? That’s a good idea. I stopped into a pawn shop on a whim, and looked at firearms (which you can’t sell on eBay, but this is what I looked at in the shop). Way overpriced. I walked out and will not be going back. Pricing reasonably will help sales in your store just as it will on eBay. So if you do that, then why eBay? Because you have one pawn shop for every 2,300 people in your town. eBay will open you to a wider pooll of buyers.
The thing is, what do people want? That’s hard to say. I may have an old Yankee screwdriver and think, ‘Why should I put this on eBay? Who’d know what it is, let alone look for it?’ But there are people who collect old tools and will look. If it happens to be a rare Yankee screwdriver I may even make a good profit. On the other hand, what if I loaned someone fifty bucks on a Realistic (Radio Shack) tuner? I don’t know if I’d make that back. For something that’s a POS, you have to decide whether it’s better for it to take up shelf space in your shop, or to sell it at a loss.
Who is your clientele (in the shop), and who will be your potential customers (at ebay)?
You say that in a county of 70 000 you and your competitors provide 1 shop for each 2333 people. But that assumes that every single person in the 70 000 is at the same economic/social level. You mention 17 pawn shops and 12 check-cashing places…How many bank branches do you have in the county? I assume that the people you market to are not the same customers the bank aims for.
I’m guessing that ebay customers are also not the same demographic as your shop customers.
My thoughts exactly. In theory, a pawn shop should make its money of interest, but my employers, like a few other pawnshop owners, think “hey lets making a killing of sales too!”. In my opinion, if our competition isn’t bad enough, every yard sale, swap-meet, and flea market is a killer. Logic to me is to reduce the price at the store to what we need, before having to move to Ebay. And as I said earlier, I can’t imagine things selling online if we don’t drop prices.
I can’t speak for everyone, but those are the reasons I bought on Ebay too. If I come across something in the store I think is unique (or at least rare), I could see Ebay too. But unual items are the exception not the norm. I admit I haven’t sold on Ebay before but I believe the minimum cost is $0.20 per auction even if I make 1 cent the opening bid. My bosses are looking to get their money back plus a nice profit so I am guessing we are going to be losing between $1.20-$4.80 per auction. In theory you get your money back if it sells the next time through, but that is only if it sells then and you paid that auction fee. If it doesn’t sell the second time through, you’ve lost you money twice without selling with no chance for a refund.
How do you figure that you’ll lose $1.20 to $4.80 per auction? Are you assuming that the item won’t sell? It might not, or it might. If your bosses are looking for ‘a nice profit’ then they’re probably being greedy. If I were running a business I’d like a nice profit too; but I’d rather make a small profit than to lose money by not selling something at all. Personally I don’t do 1¢ auctions. I look at the fees and the reasonable value of the item and decide where the break-even point is. If it sells, I haven’t lost anything. Or I’ll set a minimum price that is fair.
For example, I bought a 16mm camera for $5,500 back in the early-'90s from a shop. It was a fair price for it. Since people have largely turned to digital video, I might get $4,000 for it now. If and when I get around to putting it on eBay, I’d be nuts to try to get $5,500 for it. I’d like to get $10,000 for it, but I’d take four kilobucks. It’s not doing me any good now (I have a super-16 and digital video), so I’d have to take the loss. Of course this is over a decade past the purchase. A pawn shop is probably going to have newer stock. AIUI you guys typically pay 30% of the current value for an item. So if you sell it for 50% of its current value (forgetting for the moment the cost of having a physical shop and employees) you’re making a profit. If the bosses hold out for 90% of the value, then they’re less likely to sell it. Let’s say you loaned $30 for a $100 (current market value) widget. You would have a good chance of selling it for $50, or a poor to fair chance of selling it for $90. Is it better to get a $20 profit, or to possibly not get a $60 one? If you’re operating in the red, it might be time to consider a lower positive profit than an apparently non-existant larger one.
Agreed. I went to several pawn shops just to look at the guns and the prices were crazy, CRAZY! The guy behind the counter winked at me and said the prices were negotiable. Well, thanks pal. Try taking $150 off of the price of that gun and that would be a starting point for our negotiations.
But, you are hoping that I am some rube who will lay down the cash for what you have marked there and try to rip me off. Forget it. I will go to the local gun shop where they treat customers with a little more respect.
To the OP, that is a huge part of the problem at these places like yours. The prices are so ridiculous that a buyer won’t even attempt to negotiate…
Well, I should have explained my circumstance better. The pawnshop in question is in Alabama and we have some quirky pawn laws. Your interest is 25% per month which the pawnshop only has to hold two months. So an item will needs to be sold to re-coop the original loan plus 50%. An example would be a widget that sells new for $100, you might offer a $40 loan based on the $20 you will charge in interest. If you had to sell it…you need $60 to match what you would have gotten with interest. My employers think we should ask at least a 100% markup so the widget will sell with us for a least $80. It is assumed that we will either get that amount or customer will negotiate it down, maybe for $75, $70, $65, but not less than $60. While that sounds good in theory, most people today don’t negotiate, they just walk away.
Back to eBay, if we take an item that we want $80 for, but you can buy new at Amazon, Tigerdirect, or any of you local stores for $100…would you? I can only speak for myself, but I wouldn’t. I’m willing to pay $20 for a new item with a warranty especially if I can see and touch the item first in a local store. In the past, the items I bought on eBay were new items that I couldn’t find locally. I can’t say I wouldn’t buy a used item at 50-60% of its original cost, but I doubt I would buy an eBay used item for 80-90% of the original price. And this is after considering shipping.
Is that just me?
It depends what the item is of course, but given a new item and a used ‘like new’ item I’ll usually choose the new one.
But you can only sell it if the borrower has left it for two months, right? If he’s not coming back, you’re not going to get the $20 interest. Again ignoring the cost of overhead for simplicity’s sake, anything more than $40 you get is going to be more than you get from the borrower.
Let’s say that someone brings in a Royal Doulton hummel mug, and you’ve agreed that it’s worth $100. You loan him $40 against the mug. If he doesn’t come back, you’re not out $60. You’re out $40. If you keep it in the store and price it at $80, you might get a local buyer who wants it who will haggle you down to $60. If you put it on eBay at $$65 you will likely sell it and get your $40 back, plus the fees, plus the $20 profit you ‘need’ because you’ll have more people looking for it than are probably looking for it locally. And someone might say, ‘Hey! That Royal Doulton “Highwayman” (Mask Up) is worth $165!’ So he’ll put it in his Watch List. If no one else bids, he may try to ‘snipe’ it for $65 at the last second – only to find that someone else tried to snipe it at $100. Or someone else’s grandmother may have had one just like it and they get into a bidding war and buy it for $250. Or not.
The point is that if you put a reasonable price on an item on eBay, and it’s an item someone would want, you’ll probably get your price. If you overprice it (whether or not it’s actually overpriced – but it is for the local market) then it might not sell and you not only don’t get the money you loaned back, but you also don’t get any profit.
So I’d say your bosses are being ‘overoptimistic’ and that they should accept that they can’t sell things for more than people will pay for them.
Outside collectibles like famous coffee mugs, most items we look up the price for a current new model on most stuff as it comes in. We base our loan value on either a new or used item of similar make and model. While we do make mistakes(most I would claim on my coworker), general the greatly undervalued pawns are few and far between. I think the 25% interest is too high, but its common to the industry here so I can’t complain too much. As for the interest, like it or not, if the customer doesn’t pay it… we need to collect it from the item through sales. If we didn’t, it would be better for the customer to just wait till the 61st day and buy it off the floor without having to pay the interest.
As for most items, around 95% I would think, that we have in stock originated at Walmart, Target, Kmart, HomeDepot, etc. The unique stuff I could halfway see putting on Ebay, but the bulk of the items without a massive discount I wouldn’t buy myself online. Sadly, I’m not that intelligent but I think most people that are even smarter than me expect a really good deal on Ebay before they buy anything.
For the last seven years I’ve made most of my living selling collectibles on eBay; I’m not saying a great living, but a living nevertheless. You’ll get absolutely killed on listing fees for unsold items with any kind of regularly available household items that aren’t massively discounted. Remember that the buyer has to factor shipping costs into the total price, so that $100 item that they won for $80 will really cost them $85-90 once they’ve paid for shipping. Also, that item that originally cost $100 at Target may now be on clearance for considerably less. All it takes is one experience - at most - with a seller who inaccurately described the condition of a used item for buyers to decide that the only way it’s worth the risk is if the discount is substantial. Collectibles and vintage items operate differently, but anything new(ish) had better be darned cheap.
FWIW, every year I found that about 15% of my gross sales goes to eBay for fees. If you accept PayPal, and policies that went into effect earlier this year for new sellers effectively force you to(*), you’ll lose another 3% on completed sales. That may very well be less than your store front costs, but if you’re paying them in addition to the costs of running a brick and mortar location… you see where I’m going.
(*) Yes, I know there are ways around the PayPal requirement, but in actual practice, most sellers find they have to accept it.
It depends on the item - if it’s some consumer electronics item such as a camera or portable gaming machine, probably not - because with these sorts of items, usage does tend to imply wear and reduction of remaining useful life, but if it’s something that is not significantly diminished through use (for example, a china figurine - assuming it is in ‘as new’ condition), then a 20% reduction against the new retail price is probably tempting.
I suggest you pick a selection of items and try selling them on eBay - see what works out best for you.
Set up a brand new account for this though - I tried selling some things on behalf of my company some time ago and it was a pain to split out all the fees - I think I ended up swallowing some costs that weren’t personally mine.
Well, thank you all for you time in answering. While this discussion doesn’t have any effect on me still having to list items online, it did allow me to do some venting.