As evidenced by the rise of daily deals sites, local listing marketplaces, consumer electronics consignment services, and a bevvy of designer fashion rental services, people like deals and have lots of stuff that they’re willing to get rid of or exchange. The Internet has only added more liquidity and flexibility to the process. These trends have collided recently in a new Web space: online pawn shops.
One of the first and most prominent online pawn shops in the US, which largely validated the model, is Pawngo, which was funded by Groupon co-founders Eric Lefkofsky and Brad Keywell’s Lightbank investment fund in 2011.
A slightly lesser known player in the space, Pawntique, launched a new ecommerce marketplace today. The company will serve both bargain hunters and those looking to raise short-term capital through buying, selling, or pawning luxury jewelry, artwork collections, and other items.
Pawntique’s new ecommerce site has a Pinterest-style, image-centric layout with items categorized into collections based on category and gender. At launch, there are only approximately two dozen items listed although included among them are several luxury watches by Rolex and Movado as well as several pieces of artwork priced at $20,000 plus.
According to the company’s press release issued today, the “inventory includes luxury items not picked up by [their] customers as well as items purchased for resale.” All items are said to be priced well below retail and there will be new merchandise added daily.
Nothing about online pawning tech itself is revolutionary. It’s generally just a digital recreation of the offline experience. What’s different, however, is that the pawn shop is located within the safety and convenience of user’s own living room, rather than in a sketchy neighborhood next to a liquor store and a payday lending shop. And this is a significant benefit to both people trying to liquidate luxury goods, and those looking to acquire them at a discount.
One of the keys to success within the Internet pawn business, which was not immediately implemented, is the ability to now offer valuations for items remotely, rather than requiring pawners to ship their items to a valuation facility. In the case of high value items (over $100,000 dollars), Pawntique takes this convenience a step further by sending out appraisal experts to the location of the asset. In a similar spirit of convenience, Pawntique is one of the only companies in the space to offer an iPhone app through which pawners can submit items for appraisal wherever they find them.
Pawntique offers what amounts to collateralized loans that typically range from $1,000 and $15,000 and last on average three months. Because its not a bank, it can’t call its fees interest. Industry standard jargon is to call them “option fees” charged for holding items. Loan fees includes the asset’s transportation, insurance, storage, and valuation.
Once an offer is made, pawners can accept with a single click. They can then wait for a courier pack to arrive by mail or can print a prepaid shipping label sent by email. Money is then wired directly to users’ bank accounts. Items are stored by Pawntique in a secure, insured warehouse until users stop paying “option fees” and the items are offered for sale in the ecommerce marketplace. Pawntique doesn’t release statistics on pickup rates, but Pawngo states that 90 percent of its users returned to pick their assets up.
TV shows like “Pawn Stars” and “Hardcore Pawn” have added an approachability of the pawn business. “The stereotype associated with pawning has gone away,” says Battis. “The bulk of our customers are serial entrepreneurs raising money to get new businesses off the ground; those who have just ended a relationship moving on with their lives without having to go into debt and business owners leveraging assets to shore up liquidity.”
Online pawning might never change the world, but is yet another way for modern consumers to access capital or purchase luxury items at below market prices. It also means that pawning is now accessible to those people unwilling to venture into society’s underbelly to do so — all to the good.