Online auction startup site says hock it to me
By Leslie Walker
Washington Post
WASHINGTON — Pawnshops seem unlikely businesses to flock to the Web, considering that most hocked items are reclaimed by their owners. But an entrepreneur in Loudoun County, Va., is trying to move the pawn industry online with a new service that displays inventory from shops around the country on a single Web site.
Launched last month, GlobalPawn.com is the second big attempt to recruit the nation's estimated 13,000 pawnshops to sell unclaimed merchandise through a single site. Even if as many as a third of such shops don't have computers, or even Internet access, the founders of GlobalPawn.com contend the startup will succeed, in part because today's Web software allows for greater automation.
"We have plugged our system into all the major software programs used to run pawnshops," said co-founder Kevin Yorke, of Ashburn, Va. "The shops can have their entire inventory automatically placed on the Internet for sale. And if something sells in a store, it's automatically removed from GlobalPawn.com."
Short-lived attempt
That's a big change from the first industry clearinghouse, created in 2000 by Pawnbroker.com Inc. of Reno, Nev., which lasted barely a year. That site required shop owners to manually list all items for sale and charged them monthly fees to participate.
GlobalPawn, by contrast, charges no listing fees and collects a 4.5 percent commission on items that sell. Its goal is to create a consumer marketplace for secondhand goods resembling eBay's, including a similar system allowing buyers and sellers to rate each other's reliability after each transaction.
Rather than copy eBay's auction method, GlobalPawn has created a system in which the buyer negotiates one-on-one with the seller. Say a seller posts a weed trimmer for $80. A buyer can submit an offer of $20; the seller might counter with $50. The negotiation continues until the seller accepts the offer or one party stops responding.
GlobalPawn appears to have made inroads into the highly fragmented pawn industry, but it is not the only Internet startup trying to pull pawnbrokers online. 2ndBuy.com of Jacksonville, Fla., also is trying to create a central place where pawnbrokers can offer merchandise for sale on the Internet. Its plan is to make money by building custom Web sites for each pawnshop and charging $49.95 a month to host them. The firm also is reaching out to independent car dealers and sellers of other used merchandise.
"I would say 90 percent of pawnbrokers still don't have a Web site," said Fred Thomas, the software programmer who started 2ndbuy last year. "Within the next couple of years, I think they will begin to see the benefits of Internet advertising more and more."
1,000 pawnshops
While Thomas has signed up only a dozen pawnshops and 100 car dealers, GlobalPawn said it has nearly 1,000 pawnshops testing its system or getting ready to install the software needed to post items to GlobalPawn.com.
One reason pawnbrokers aren't rushing en masse to the Web may be that their primary business is lending money, and their revenue comes mainly from interest. Only about 15 percent of items pawned are forfeited by their owners, according to Bob Benedict, executive director of the National Pawnbrokers Association. Still, those items have to be sold, and many brokers have big showrooms.
Yorke said GlobalPawn will complement rather than compete with eBay, because it will help shops list goods at the giant online auction site as well as at GlobalPawn.com. Yorke said he thinks most pawnbrokers won't offer everything on eBay, which charges higher commissions.
Tom Streng, president of Data Age Business Systems Inc., which makes software used to run more than 2,000 pawnshops, agreed: "You can't put your entire inventory on eBay, because then you would have no inventory in your regular store."
Extended reach
The King Pawn Inc. chain in suburban Maryland, which has sold on eBay for about six years, agreed to test GlobalPawn to see if it can increase sales even more. "The Internet has opened our world here up to everywhere; we sell all over the country and have sent stuff around the world," said King Pawn President Michael Shapiro.
Shapiro said he recently bought a software program called CompuPawn to link his four shops. GlobalPawn's software is being integrated with CompuPawn's to allow clerks to send stock photos and manufacturer's descriptions of tools, electronics and other items to eBay or GlobalPawn.com.
Not all pawnbrokers are gung-ho about the Internet.
Nick Fulton, whose family owns six pawnshops around Jackson, Miss., was skeptical that GlobalPawn can make it push-button simple to upload inventory. "That is a good theory," he said. "But there are going to be delays and errors. That's computers for you."
It remains to be seen whether pawnbrokers need their own Web marketplace or will end up using eBay and their own sites.
Benedict, of the pawnbrokers association, said he has seen more pawnbrokers go online: "It's where a big part of the industry's future lies," he said.
