BOCA RATON, Fla. -- Musa Raza stepped in when he overhead a customer's question in one of his Florida-based convenience stores: Is there a pawn shop around here?
Raza told the customer he had something in his car's trunk that might do the trick. It was an envelope. He explained that the envelopeor, more specifically, a packetwas an integral part of a new service called Cash4Gold his stores offered that he believes could make pawn shops obsolete.
Cash4Gold, a division of Albar Precious Metals Refining Inc., Pompano Beach, Fla., [image-nocss] empowers customers to work through their local convenience store as a means of cashing in gold and other jewelry. And it appears to be a win-win proposition, said Raza. The customer receives an equitable payoutmore than he would through a brick-and-mortar pawn shop, according to execs from Albarwhile Raza's stores benefit from increased revenue and traffic.
Here's how the process works:
The customer picks up a Cash4Gold-branded packet from an in-store display. He encloses gold bracelets, rings or other precious jewelry items, along with a brief written description, in an accompanying envelope and then drops it in the mailbox. The U.S. Postal Service delivers the package to Albar, which reviews the contents and issues a check to the customer within 24 hours.Retailers collect 25% of the total amount of each transaction, according to Albar. Each envelope has a specific store code, so a store owner is guaranteed creditand, thereby, part of the proceedsfor every package that originates from his location.
It's extra income, Raza told CSP Daily News. People are very skeptical at first, but I tell them it's very reliable.... The majority of our stores are owned by individuals, and there's no cost to them. And we give them a percentage of the sales. For the store owner, there's no labor involved.
The average ticket paid out to customers is about $50, according to Albar CEO Jeff Aronson. Retailers face virtually no risk, and there's no labor or commitment other than stocking a small displaythe countertop unit has a footprint of 9.5 inchesnear the point of sale.
This really revolutionizes things, almost like check-cashing did, Aronson told CSP Daily News. Retailers are making money off this, and they're doing nothing and collecting 25%. There's no risk to the store because there's no dollar or metal transaction. If anything, now the customer has more money to spend in the store.
Aronson estimates the investment per store to be about $100, which includes more than 100 Cash4Gold packets. Given enough transactions, a store owner will earn a return on that minor investment rather quickly. For example, a ticket of $50 will afford the retailer $12.50, or 25% of the transaction amount. And unlike most other new profit centers, there seem to be few extraneous details or potential headaches.
They don't have to worry about spoilage or changing things on the counter, Aronson said. And the ROI per square foot is just massive.
Raza's experience with Cash4Gold has been brief but rewarding. His Boca Raton, Fla.-based company, A&M Investments, owns more than 200 convenience stores throughout Florida. Only a fraction of those currently had Cash4Gold displays as of mid-October, but he said that will likely change by the end of the year.
Albar execs have bold expansion plans for Cash4Gold. Aronson expects to have the service offered in at least 1,000 independent retail stores by the end of 2008. For retailers who worry that the service could frame them in unflattering light, Aronson believes such worries are irrational. Furthermore, he said the service will work in any store, regardless of area or customer base.
It's all spectrums and all demographics, he said. We did a little test in one of the wealthiest ZIP codes in the world [Boca Raton], and it did really well. So it works everywhere.
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