E-Commerce Developments
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Lost, unclaimed jewels and watches yield millions
By Joseph Dobrian
June 19, 2009
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| PropertyRoom.com helps law enforcement agencies sell lost or unclaimed stolen goods through online auctions, yielding greater profits than traditional auctions. |
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Mission Viejo, Calif.--Wholesalers, retailers and savvy consumers alike cheerfully become buyers of stolen goods on a regular basis, thanks to PropertyRoom.com.
This online auction site, founded in 1999 by former police detective Tom Lane, sells lost or stolen merchandise that the police have been unable to return to their owners.
The operation's total volume came to $34 million in 2008--and about 40 percent of that amount came from watches and jewelry.
"We've been flying under the radar for years and only started growing significantly in the past two or three," says Chief Executive Officer P.J. Bellomo. "We're the McDonald's of jewelry outlets, and McDonald's is thriving in the current economy, so maybe it's no surprise that 2008 was the best year in our history."
A few municipalities around the country use online auctions to serve wholesale markets, selling heavy equipment they no longer need, such as backhoes and bulldozers. But the backbone of PropertyRoom.com's business comes through profit-sharing partnerships with law-enforcement agencies, which traditionally would monetize lost or stolen goods by holding poorly attended auctions in a parking lot, netting very low price deals.
The agency-run auctions would bring in maybe 25 percent of wholesale, minus the expense of advertising and paying the auctioneer, Bellomo says.
"Those who really make out, in those [type of] auctions, are pawnbrokers and savvy jewelers," he says.
By contrast, PropertyRoom.com is set up to appeal to both wholesale and retail buyers. The former can be counted on to bid an item up somewhat. Retail customers might then buy the piece at a high wholesale or very low retail price.
"We discourage reserve prices, because we get better prices with no reserve," Bellomo says. "Our clients can insist on a reserve, but they do so maybe once in 3,000 auctions."
PropertyRoom.com's advertising budget is tiny, Bellomo says. The site is well-indexed by search engines and is well-publicized by the mainstream media. Customers can sign up to be notified when certain types of merchandise becomes available.
For security purposes, PropertyRoom.com has no brick-and-mortar store and doesn't publicize the location of its warehouses. Physical pickup is allowed for expensive-to-ship items, but not for jewelry.
The company has a graduate gemologist on staff, who assesses and appraises pieces with a probable resale value of $500 or more and issues a grading report for higher-end gemstones. Top-brand watches are sent to an expert for identity verification, and the company destroys (and documents destruction of) all fakes. If a piece turns out to be not as advertised, the buyer can return it for a refund.
"It's happened maybe eight times that someone has claimed an item that was lost or stolen, and if the facts bear the claim out, the piece is returned free," Bellomo says.
PropertyRoom.com accepts merchandise on consignment from law-enforcement agencies, taking a cut that varies based on the value of the merchandise. The way to assess the prices paid at auction, Bellomo says, is to start with an expected wholesale price and look for the variation from that figure.
"We have regular wholesale customers who buy at a low wholesale price and re-sell," he says. "But the sale price usually runs from 50 percent to 90 percent of a retail price. It's hard to measure because we live in a world of unique SKUs."
For certain items, such as watch brands like Rolex or Breitling, there's a clear market value and the pieces finds their price level readily. The same goes for older jewelry that has no fashion value but might have heavy gold content, so that the value of the gold determines the price.
So far, year-to-date, PropertyRoom.com's traffic is up 30 percent over 2008, averaging 30,000 impressions daily, which includes from 22,000 to 25,000 unique visitors, Bellomo estimates. The company employs about 70 people nationwide, including truckers with regular monthly runs. About 1,400 law-enforcement agencies in 47 states have signed up with PropertyRoom.com so far.
"That's out of maybe 9,000 agencies that would be big enough to do business with us," Bellomo says. "So far, we're doing well, but we're not celebrating yet."
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E-Commerce Developments
Reston, Va.--U.S. online retail spending dropped 2 percent in the third quarter to $29.6 billion, representing the first time on record that consecutive quarters have seen negative e-commerce-spending growth compared with the same quarter the year prior, according to the latest report from ComScore. Read More
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