Pawnshops seem unlikely outfits to flock to the Web, considering that most hocked items are reclaimed by their owners. But a Loudoun County entrepreneur 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. Considering that as many as a third of such shops don't have computers, or even Internet access, GlobalPawn.com may have its work cut out. But the founders contend they will succeed where others failed, 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 S. Yorke of Ashburn. "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."
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 reputation-rating system allowing buyers and sellers to rate each other after each transaction.
Rather than copy eBay's auction method, GlobalPawn 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, and the seller might counter with $50. The electronic negotiation would continue until the seller accepted the offer or one party stopped responding.
GlobalPawn appears to have made inroads into the highly fragmented pawn industry, but it is not the only Internet start-up 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."
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.
