By Glenn Lovelady
Technology is a wonderful thing that has changed the way we live our lives. Yet when it comes to diamond testing, it has its limitations.
There are a number of testers to choose from today, using different methods of identification and verification. This will tell you if it is diamond or a diamond stimulant.
That’s where it ends. To be competitive in this trade you’ll have to go a lot further to determine value.
We’ve all heard of the 4 Cs. If you can identify those in a diamond, a tester will be of secondary importance. Stick with the information I give you in this and future columns and surprise yourself with how little mystery is involved in diamond identification.
By KENT MARTIN
Selling electronics today is not for the faint of heart. “Electronics change very quickly anymore,” said Mike Rechtman, owner and manager of Big Chicken Pawn, in Marietta, Ga.
And the secret to success? Speed. “You have to get in and get out! We get in, we get out. We want to sell stuff quick. We loan a fair amount of it but then we sell it cheap. We don’t sit on it, we don’t bleed it.”
But even though electronics remain one of the most in-demand product areas, Rechtman said it’s not necessarily where his big profits are made.
“We don’t double our money on electronics. We have to move it because every day you keep it, it’s worth less money. You have to get rid of it. Bam! See ya!”
Rechtman’s comments tend to reflect much of what’s happening in electronics sales in pawn shops across the country. With few exceptions, electronics gear must be fairly late-model: The older the model, the less demand for it.
“We have some members who are very cautious about making loans on any kind of electronics just because the prices drop so very quickly,” said Emmett Murphy, spokesperson for the National Pawnbrokers Association. “This can affect the actual return on the loan, so they’re often very cautious and are more comfortable with higher-end electronics.
“As an example, Apple products, such as Mac, iPads, iPhones, are things which retain their value, and also high-end laptops,” Murphy said.
“The more expensive laptops that cost $2,000 or more do retain their value. More pawnbrokers are making loans on those products because if they need to, they can sell them on eBay more quickly.”
Murphy said the turnaround time for electronics has accelerated. “I can speculate on the electronics issue just because the price point on electronics has dropped significantly and they are being produced much more quickly,” he said.
“There used to be maybe an 18-month turnaround between different product lines, and in the last year, we’ve seen new products being released much more quickly, maybe every six months or so. This has really changed things for pawnbrokers.”
Take televisions, for example. New trends in televisions still have to be validated in the marketplace before they’ll gain acceptance by shop owners. For Don Anderson, vice president at Ed’s Pawn Shop in Stockbridge, Ga., the jury’s still out on 3-D TVs. He prefers newer model flat screens.
“If it’s not a flat screen TV, we don’t even fool with it,” he said. “Even if it’s a nice, older, large screen TV, we don’t fool with it.”
Another pawnbroker agreed. “It doesn’t impress us if it’s 3D,” he said. “We don’t know where 3D is going, we don’t trust it.”
Murphy said smart TVs, on the other hand, are quickly finding a market. “Our members report that smart TVs that have high-end features like streaming have additional value. But they don’t see any additional value in features like 3D. It seems that the flat screen TVs are most in demand.”
Television accessories, such as video players, are also caught up in these trends. The more recent surge among consumers toward streaming services such as Netflix has dampened sales for video players.
Location, Location, Location
When it comes to DVDs and Blu-ray discs, it seems to depend upon your location. “Blu-rays are selling but DVDs, when we do sell them, they’re a dollar each,” a Miami pawnbroker said. But in Littleton, Colo., a pawnbroker reported that DVDs remain a steady seller in his store.
Video games are still strong. “The exception would be the Wii U, which was a big flop,” said Murphy. “Gaming systems still remain strong but again, people are careful to make sure they don’t get stuck with them for too long.”
Other business owners agree. “If you’re looking for a Nintendo game, like from the 80s, we’re not the place to shop,” the Littleton pawnbroker said. “But anything that’s current, like the newer systems, are really popular out here, too.”
In some areas, however, even vintage game systems find a market. “Pretty much any video games are good, even vintage stuff, like Atari,” said Anderson. “If it’s in good shape, there’s a market for that, too.”
The popularity of smartphones and iPhones, in particular, has driven sales in pawn shops nationwide. For younger consumers, especially college students, a smartphone has replaced a laptop for their computer needs. The newer iPhones sell the best, though older models still retain value.
Pawnbrokers will offer short-term loans for iPhones because they remain strong in the secondary market. But here again, changing technology in iPhones, especially new security features, may eventually dampen demand.
“iPhones are great, but the new generation of iPhones is getting to where they’re going to be very difficult to resell because they’re putting in tracking stuff and locking them up,” said Rechtman.
“We’ve done a really good business with cell phones but it looks like that era’s coming to an end because they’re starting to lock ‘em up and make them very, very difficult to resell.”
But perhaps the most dramatic trend is in computers. For decades, if consumers wanted a PC, they bought a desktop. Desktops were in virtually every business and in many homes. They dominated the marketplace for decades. No longer.
The move toward portable computers has shifted into hyperdrive with the advent of the laptop in the 1980s and, more recently, the tablet. Today, mobility is king and the desktop is quickly going the way of the typewriter.
“Our members are not making loans for or buying desktop computers any longer,” Murphy said. “It’s really laptops and tablets. We have members who cater specifically to students, they’re located near colleges, and they think laptops have better resale value than iPads or tablets, but definitely desktops are out the door.”
Indeed, pawnshops may be the best place to find low-priced laptops today. Typically, in many stores, laptops may be priced at half of their original retail price.
“iPads and Mac laptops are probably No. 1,” said Rechtman with Big Chicken Pawn. “Laptops sell a little bit, tablets sell some. We wholesale a lot of laptops because we’re a big laptop business; we take in a lot of laptops.”
But even laptops’ price point has deteriorated. “So we wholesale a lot of ‘em and we sell about 75 percent to a few different people that resell ‘em on their own, and then we retail a few, but we keep the flow going with our wholesale customers,” said Rechtman.
Interestingly, Murphy said a few NPA members have found a niche market for desktops: Themselves.
“Some members feel that desktops still have value in their business,” he said. “We have one gentleman who, when a high-end desktop comes in, may make a loan on it with the intention of acquiring it if it defaults because pawnbrokers still use desktops and towers for their own business.”
And then again, no matter which latest, hottest iPhone or TV may be dominating the market or how outdated a video player may be, the old adage often holds true: Anything will sell for the right price.
As Anderson noted, “It’s really all about price. Anything will move at the right price, even if it’s not a particularly popular item, if it’s at the right price, if you set a low enough price for it.”
By RIC BLUM
The world is not coming to an end, but maybe DVD discs sales are starting to wind down.
DVD sales are dying around the country. I caution those of you with tons of used DVDs to be careful. Yes, there might still be a small market for new releases, maybe some box sets and a few Blu-rays, but the old stuff may be better served as drink coasters.
I’ve spoken with other pawnbrokers around the country and many agree — the physical DVD disc is old school. When it comes to video entertainment it may be going the way of the video tape, Laser Disc, the 8mm and 16mm movie reel.
After two years and three surgeries, I’m finally getting back into the swing of things and once again exercising on a very regular schedule, treadmill every morning and free weights almost every evening. (OK, they weren’t free, I had to buy them.)
Now, I’m not bragging here, but I try to get up every morning at 6 a.m. (except Sunday and holidays – on those days, usually around 8 a.m. – 9 a.m.) and hit the treadmill for three miles before breakfast (usually a protein shake). Shower, shave and I head off to work or wherever I am going.
For many years, I would “borrow” a few DVDs from work to watch during my morning workouts. I’ve watched hundreds and hundreds of DVDs good, bad and ugly — that means scratched and needed to be resurfaced. A movie would have to be pretty bad for me to not watch it, but there have been a few. Luckily, I have never fallen asleep during a movie while on the treadmill.
However, everything changed last year when I received a one-year subscription to Netflix from my son. Of course, I had to upgrade my older, used DVD player to a newer, used DVD player with Blu-ray, Full HD and more importantly, a built-in LAN. Glad to report since I work in a pawnshop it was not too difficult a task.
Wireless access wasn’t a must for me because my home network — modem, wireless router and switch — is located only two feet away from my workout DVD player and TV.
Now there are only a few out-of-pawn DVDs for me to borrow. I line up a dozen movies or a TV series in Netflix’s queue and I’m ready for a few weeks of viewing. (I typically spend 45-50 minutes a morning on the treadmill.)
Netflix, which was a DVD post-and-rental business, has gradually transitioned to streaming films on demand online in return for a monthly subscription – although there is a constant debate about exactly when and at what price films should be available.
Nevertheless, the direction of the market is clear: Netflix has nearly 23 million subscribers in the U.S., putting it on a par with Comcast, the largest cable company.
Do you think our customers are any different? (Well, yes in some ways, I think more may be couch potatoes than treadmill addicts.) Why buy a new or used DVD when you can watch an infinite number (well, maybe a finite number) of streaming movies and TV episodes over the Internet almost instantly?
OK, there will always be a few people out there who do not have Internet access, but this select group is probably not a large purchaser of your used DVDs.
Before it’s too late, this should bring up another change in the items we take in pawn – the DVD player. More and more of my customers are looking for DVD players with Blu-ray, Full HD, 1080p and with Netflix, Pandora, YouTube, Hulu Plus, Blockbuster and Facebook capabilities. And they also want these features to be on a DVD player with built-in Wireless LAN capabilities.
Smart TVs and TVs with built-in Wi-Fi – no DVD player necessary
And just when you learned how to plug up your DVD player and find the proper input selection button on your remote control (and more important – how to change it back to TV or cable or satellite), there’s a new technology on the market.
A funny thing about televisions, the new models seem to do more and cost less than their predecessors, all things considered.
The latest TVs are Smart TVs. These TVs will allow you to access the Internet directly without the need for a DVD player or other device. They either have an Ethernet jack on the back or connect to the Internet with built-in wireless connectivity or both.
These digital media receivers access videos, audio, photos and other content from Internet-connected apps optimized for your TV. And for those who do not have a Smart TV, there are Smart Set-Top boxes which will accomplish the same thing.
Whether you have a Smart TV or a Smart Set-Top box, you can easily get instant access to streaming movies, TV shows, videos and music on your HDTV and home audio system.
Many of them also let you view personal photo albums, read news and sports info, use social networking sites and much more, right on your HDTV.
Advanced smart set-top boxes have web browsers and may access content from any connected device on your home network, like your computer, and then send the content to a connected HDTV or home theater.
While connecting your smart set-top box directly to your router (hardwired) will provide the best streaming experience, almost all boxes come with built-in wireless connectivity.
For set-top boxes, an economic alternative to the DVD player with streaming capabilities is already on the market.
For example, the Netgear NeoTV Streaming Player (NTV200) lets you enjoy online entertainment with Internet apps for your TV. You can instantly watch movies and TV shows in HD and access a variety of TV apps including movies, games, music, and more, with built-in wireless for an easy Internet connection.
Some product highlights include:
• Reliable 1080p HD streaming from the network experts
• Stream YouTube, Netflix, Vudu, Hulu Plus and hundreds more channels
• Free iPhone, iPad and Android phone remote control app for easy navigation
• New content delivered to you every month
Then there is D-Link MovieNite Streaming player (DSM-310), which allows you to stream new movie releases the same day they come out on DVD with VUDU. Easy to set up and use, MovieNite provides instant access to unlimited entertainment choices from VUDU, Netflix, Pandora and YouTube right on your TV in full HD (1080p) quality.
Yes, you can still sell a nice, used basic DVD player with a remote control for $20 (more for higher end units) and a Blu-ray DVD player for $40 (more for higher end units), but for how long? The world is evolving and so is our customers’ tastes. They now want it all in their used, DVD player purchases – Blu-ray capability, online video streaming, built-in WiFi, 1080p HD and more. They also consider this when deciding whether to pick up their loan and pay the finance charges. But how long will this last?
I remember just the other day when we took in televisions with large picture tubes. We first started cutting out the ones which did not have built-in digital tuners when broadcast signals changed to digital. Next, we went to flat panel televisions only (with digital tuners – some early models only had analog tuners). My pawning customers had a fit when we stopped taking their older televisions, but I can’t fill my shelves with obsolete merchandise.
Of course the set-top digital converter boxes extended the life of analog tuner TVs and most still operated fine with a cable or satellite signal. This also created a new pawnable item (digital converter boxes).
I see a similar trend with DVD players. Our customers have been bringing them in to pawn or sell because they now have a new TV which has built-in Smart TV capabilities or a Smart TV Set-Top box and no longer use their DVD player.
Customers are also attempting to sell their DVD collections because they take up too much space. If they want to watch Rocky V for the fiftieth time, they’ll do so through on-line video connectivity.
You keep lowering the prices of your used DVDs and the number available for sale still increases. And you wonder why.
What’s more, movies and TV shows/series are coming to DVD faster than ever. The prices are lower. New releases are all on sale. There is a marketing ploy now to produce a 2-Disc DVD and Blu-ray combo pack. If retailers can’t make any money on individual sales, they’ll make it on volume.
Like so many other items in the past, pawnbrokers have been too slow in getting on board with the latest trends in technology. This is just another case where we need to be diligent and be ready to exit the market at the right time.
It might be time to re-evaluate your position on DVDs and DVD players. Cut back on loans, reduce the retail price, package them – 5 for $10, for example, dump them in lots on eBay.
The same considerations need to be considered with DVD players. How many do you have in stock (pawn)? Are they still selling (being redeemed)? Are they full-featured (internet ready) which may expand their life and salability for a while?
Are you seeing new set-top boxes being pawned? Or how about those Smart TVs? This may be the wave of the future.
We don’t always have to lead, but we really don’t want to be in last place either.
Ric Blum is a vice president of Ohio Loan Co.in Dayton, Ohio. He has served as president of the Ohio Pawnbrokers Association, secretary/treasurer of the National Pawnbrokers Association and as a member of the board of directors and the board of governors of the National Pawnbrokers Association. Please feel free to e-mail your to RicBlum@att.net or mail them to Ric Blum, Ohio Loan Co., Inc., 3028 Salem Ave., Dayton, OH 45406.
By RICHARD WEATHERINGTON
As arbitration agreements make their way into more and more employment contracts, fired employees are finding countless ways to attack the agreement itself or the way the process is handled.
Recently, an employee of a Montana title pawn filed a wrongful discharge action, but first he had to fight the arbitration agreement he had signed.
A man whose first name was Michael was hired by a Montana title loan company after negotiating and signing a non-competition agreement as well as an arbitration agreement.
On July 10, 2008, after Michael was hired, a Georgia title pawn company acquired the Montana title lender. The new owner fired Michael on Sept. 19, 2008 and then dissolved the Montana title lender, effective March 16, 2009.
On March 30, 2009, Michael filed a wrongful discharge action against both companies (collectively called Title Pawn). Both were served on April 14, 2009.
The new owners removed the case to federal court, and filed an answer in that forum. Its answer included, as its first affirmative defense, a request to arbitrate.
Ultimately, the federal court sent the case back to state court for lack of diversity, finding that although the Montana title lender was a dissolved corporation, it could still be sued under Montana law.
Upon return to the state court, Michael moved for entry of default against the Montana title lender for failure to plead or otherwise defend. Default was entered by the Clerk of Court the same day, June 1, 2009.
The Montana title lender filed its answer and a motion to set aside the entry of default on June 3, 2009. The Montana District Court granted the Montana title lender’s motion on June 12, 2009.
On Aug. 17, 2009, Title Pawn filed a motion to compel arbitration under the parties’ arbitration agreement. After a hearing, the Montana District Court granted Title Pawn’s motion, finding that its requested arbitration was timely under the terms of the arbitration agreement because it had requested arbitration in its answer; that it had not waived its right to seek arbitration by removing the action to federal court; and finally, that the arbitration agreement was within the reasonable expectations of each party, was not unconscionable, and was not a contract of adhesion.
In 1962, the California Supreme Court noted that a “contract of adhesion” refers to a standardized or sometimes called a “boilerplate” contract that is prepared entirely by one party to the transaction for the acceptance of the other; such a contract, due to the disparity in bargaining power between the draftsman and the second party, must be accepted or rejected by the second party on a “take it or leave it” basis, without opportunity for bargaining and under such conditions that the “adherer” cannot obtain the desired product or service except by acquiescing in the form agreement.
The California Supreme Court also noted that Professor Frederick Kessler in 1943 wrote in the Columbia Law Review that, “Standard contracts are typically used by enterprises with strong bargaining power. The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses. His contractual intention is but a subjection more or less voluntary to terms dictated by the stronger party, terms whose consequences are often understood only in a vague way, if at all.”
Motion to Set Aside Default
Michael filed an appeal, which was eventually heard by the Montana Supreme Court. The Montana Supreme Court noted that when considering a motion to set aside entry of default, courts are guided by these general principles: every case should be decided on its merits, and judgments by default are not favored. Rule 55(c) of the Montana Rules of Civil Procedure provides:
“For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside… No default of any party shall be entered, and no default judgment shall be entered against any party, except upon application of the opposing party. Any stipulation for extension of time between the parties or their counsel, whether in writing or made verbally before the court, shall be effective to extend the time for serving and/or filing any appearance, motion, pleading or proceeding, according to the terms of such stipulation. In any case if a party in default shall serve and file an appearance, motion, pleading or proceeding prior to application to the clerk for default, then such defaulting party shall not thereafter be considered in default as to that particular appearance, motion, pleading, or proceeding.”
When default is entered, said the Supreme Court, but no judgment has been entered on the default, the standard announced in the 1989 case of Cribb v. Matlock Communications, Inc, applies.
The court in the Cribb case discussed the following factors to consider upon a motion to set aside entry of default under Rule 55(c): (1) whether the default was willful; (2) whether the plaintiff would be prejudiced if the default should be set aside; and (3) whether the defendant has presented a meritorious defense to plaintiff’s claim.
The standard for setting aside entry of default is more flexible than the “excusable neglect” standard for setting aside a default judgment.
This issue was one of judicial discretion and, said the Supreme Court, there clearly was not an abuse of discretion.
Given the procedural posture of the case, and the Montana title lender’s immediate motion to set aside the entry of default, the Supreme Court said it concluded it was not a manifest abuse of discretion to grant the title lender’s motion to set aside the entry of default.
Motion to Compel Arbitration
Michael next argued that Title Pawn failed to file its motion to compel arbitration within 90 days, as required by the arbitration agreement. The court noted that the arbitration agreement between the parties stated, in relevant part.
By PHILLIP?M. PERRY
Will “Obamacare” batter or bolster your bottom line?
The federal Affordable Care Act comes at a time of rising health insurance costs for small business owners. Annual premiums for employer-provided family coverage grew to just under $16,000 in 2012, a rate some 4 percent higher than 2011, according to a report from the Kaiser Family Foundation .
Will the new federal law help put a cap on rates? If you have 50 or fewer employees you have a good chance of turning the new federal law to your advantage.
“Generally speaking the law is more favorable to smaller businesses,” says Shawn Nowicki, director of health policy at Northeast Business Group on Health, a coalition of 175 employers, unions and health care providers.
Nowicki points to a number of advantages geared toward the smaller operators. These include competitive state wide insurance exchanges, premium reform, and tax credits.
Here’s a rundown of how you may benefit from some of the law’s provisions:
Competitive exchanges. Competition is good. That’s the theory behind the new state wide health insurance exchanges, designed to allow small businesses to shop for plans from competing carriers. These exchanges will be available for employers with 50 or fewer people in 2014.
“To understand how the exchanges will work, imagine navigating to a travel website that aggregates airfares,” says Karl Ahlrichs, benefits consultant for Indianapolis-based insurance broker Gregory & Appel. “You type in your parameters and the site sorts your options and you pick what you want. That’s what employees will be doing with the exchange sites.”
Under the best of conditions, the new exchanges will also help trim the human resources overhead, by providing a host of robust administrative services.
“Businesses that send employees to the health insurance exchanges will be getting out of the health insurance management business,” notes Ahlrichs.
Premium reform. Small businesses have long been the targets of prohibitive premium hikes when one employee is hit with a costly illness. The new law levels the playing field.
“Starting in 2014 insurance carriers will not be able to set premiums based on health status, sex or claim history,” says Julie Stich, director of research at the International Foundation of Employee Benefit Plans, a research organization based in Brookfield, Wis.
“That will help small group plans where one catastrophic claim can cause health costs to go up.”
Penalty exemption. If you have 50 or fewer full time employees you will be exempted from penalties for not providing health insurance.
If you have more than 50 employees and your employees purchase insurance from the new state exchanges, you will pay a fine of $2,000 per employee who does so, excluding the first 30 employees from the assessment.
Tax credit. The law provides for a tax credit for businesses with 25 or fewer employees if the company pays at least half of the employee premiums.
Downward pricing pressure. The law may also encourage more transparency in the area of fees for medical services, says Ahlrichs.
In consumer-driven health plans, people will be given a set amount of money with which they can shop for services. They will be able to go to a Web site, enter a service such as an “appendectomy” and get a list of physicians that perform that procedure, a quality rating and a cost.
“Comparison shopping should put downward pressure on prices,” notes Ahlrichs.
Transparency. Do you know how much your broker is being paid for arranging your insurance? Today such commissions are buried in your premiums.
This may change under the new law as pressure mounts to reduce administrative costs. Brokers may start charging fees for their services, which may well dampen overall costs while promoting accountability and performance.
There is another hidden benefit the new law may provide smaller businesses: access to higher quality personnel.
“Today at larger employers there are many high quality, mid-career professionals who are frustrated because they cannot be very entrepreneurial,” says Ahlrichs.
“They would love to join a smaller organization where they can try things out, or they might want to band together and start something.”
In the current system, says Ahlrichs, if such people quit their current positions they are uninsurable.
“They may have a daughter or wife who is a diabetic or cancer survivor. Or they themselves may have some chronic condition. As a result, they are handcuffed to their desks because of healthcare.”
When the exchanges come online, the handcuffs come off. “There will be a significant shift in high performing talent out of the larger organizations and into smaller ones,” says Ahlrichs.
“This could be a huge benefit to small entrepreneurial organizations which position themselves as places where talented people can exercise some freedom.”
Many business owners are upset about the minimum level of benefits required by the new law. In some cases, those levels are higher than what is currently being offered in the workplace. That means greater expense in the form of higher premiums.