They call him the Wholesaler...

[FilthyHarry]

I wonder if anyone else has noticed something that is coming to my attention. Maybe it's been happening forever and I just wasn't aware, but it has impacted me in the last few months.

I'm talking about pawn shop handgun offerings being bought up in one fell swoop. I have been faced with empty display cases where the handguns usually reside, so I ask... "Did y'all sell out?" The response is, "the wholesaler came in and bought everything... he has a big trailer... He takes them to the gun shows and sells them..."

What? Has this always been happening? I would love to hear from those in the know!

Thanks!

[44 AMP]

A wholesaler buys items in quantity lots, either from the manufacturer, other wholesalers, or any place they find them. They then supply the product to retail sellers. That's what they do, and what they have done since the idea first occurred to someone to do it that way. (a long time)

"Wholesalers" may, but usually don't do direct retail sales. Some are not licensed to do retail sales. It depends on a lot of things.

With firearms, wholesalers (aka "jobbers") supply dealers, dealers do retail sales. Someone buying up the stock at a pawn shop, and taking them to a gun show for retail sale is a dealer, not a wholesaler, but is being called one by the pawn shop guy, because of the quantity of guns being bought & sold.

(and, it the fellow doing this isn't licensed properly for what he's doing, he's breaking several laws)

[T. O'Heir]

A wholesaler/jobber would have to be getting extremely low prices in a pawn shop for that to be worth his time.
Far more likely to be a guy who thinks he'll get rich selling firearms at gun shows. In this case, it's the pawn shop that is the wholesaler anyway.
"...if the fellow doing this isn't licensed properly..." Yep. On several levels. Never mind the FFL. Likely not paying or collecting sales taxes, no State/municipal business licence, keeping the ATF happy., etc., etc.

[DaleA]

Far more likely to be a guy who thinks he'll get rich selling firearms at gun shows.

Hope, eternal...

Seems like the time to do that would have been a year or so ago.

Might be fun to get the 'wholesaler's' name and go see him in a few months. He might be anxious to sell by then.

[Doyle]

When the OP said "pawn shop" I'm sure everyone thought about used firearms. Many pawn shops also sell new firearms. The wholesaler talked about could have indeed been the one who supplied that pawn shop with the firearms in the first place. He could very well have an arrangement with the retailer go buy back unsold inventory - which he did with the intention of selling them at the gun show.

Just speculation here.

[somerled]

The "Wholesaler" may be buying inventory for gun dealers in outlying rural areas. That happens here. Some dealers have a large inventory and they have good connections with the large wholesale companies. Thus, smaller dealers will do business with the larger dealer.

[Ricklin]

I am a wholesaler, it's what I do for a living. I don't do guns tho

44 amps explanation pretty well nailed it. It's all about supply and demand, seems the demand side has taken a steep drop. That will last till the next panic.

Then the cycle will repeat. The difference now is the manufacturer's are fully ramped up. Joe Public gun buyer will mostly buy new.

That leaves lots of good stuff for us!

[Double Naught Spy]

We never had it happen with firearms, but did have this type of thing happen with Snap-on tools, TVs, and boom boxes. It can be a good deal for the pawn shop. It affords the opportunity to clear out everything of a given category, including slow movers, make a quick profit (but not as much) and make it without a lot of extra work. Moreover, if a deal isn't reached, nobody's feelings get hurt. And the best part? No returns and nobody coming back in to complain about a no returns policy.

[Cheapshooter]

He must be getting a BIG discount for buying out the entire stock from a pawn shop. Which has to bring question about the pawn shop's thinking on how they value their non-wholesailer customers. At least in my area anyway. The pawn shop prices are no longer a bargain in any way. Neither are gun show prices in recent times. I've seen several well used guns priced at, or above what I could get new for in some cases.

Because of the turmoil going on in an area about thirty miles from my home the cases care pretty empty even in gun shoppers around here!

[peggysue]

Or just maybe the Pawn Shop was telling you crap? May not have put them out? No pawn shop will give nothing away unless he makes a profit to stay in business and guns is not their big money maker..

[James K]

If the pawn shop is selling new guns they bought through a distributor, their profit is the same as that of any other dealer, but they may be willing to settle for less money in order to do a volume sale and reduce inventory.

If they are selling pawned items, you better believe they can give a big discount and still make a whopping profit. Anyone who doubts that, offer to pawn one of your guns and see what they offer you for it. That TV pawn shop is paying a lot bigger percentage of retail value than most hock shops.

Jim

[Dragline45]

As others mentioned for a guy to go in there and buy everything in the cases he had to have gotten a pretty steep discount buying in bulk. No matter what shop you run, when merchandise sits on the shelves too long it ends up costing you money. For this pawn shop owner to sell a couple cases worth of guns in 20 minutes, which would probably take him 3 months to sell normally, even at a steep discount he made out pretty well. That just frees up more real estate in his cases to fill them and sell more guns.

[colbad]

I once had an investigation where a shotgun was stolen off the counter of a Pawn Shop (licensed FFL). As I learned, the SG which was being sold for around $300ish, was actually owned by the shop for about $40 used! Pawn shops typically prey on those who need money and steal the item. After all, if you were not desperate, you would not be selling to a Pawn Shop. My point is, they own the items for next to nothing and can make great deals to dispose of lots of stuff if they choose to.

Armed with this knowledge, I have made myself some pretty sweet deals once I know how little money the shop has into USED items. Anything over their ownership price is profit and they typically are highly motivated to move inventory. I can very easily see a entrepreneurial FFL making a pawn shop a wholesale offer for a truck load and getting it.

[James K]

I once had (note past tense) a "friend" who borrowed my K-22. He was late returning it and finally confessed that he had pawned it. He got $2, which even in 1956 was a very small fraction of what it was worth.

I told him that I would have loaned him $2 rather than chance having my gun beat up in a pawn shop; I got the gun back, and we parted company.

Jim

[FilthyHarry]

Think there's any chance it's Bloombergs money quietly buying and melting?

Haha!

I want to "rescue" the good ones! Just trying to do my part...

[BWM]

When you go to a pond shop to buy gun to resale you by buy the numbers! That way you get good by so you can resale you will take guns that they have had a long time. This makes him happy and you can make some good money also.

[eveled]

As far as the shop that owned the $300 shotgun for $40, it might have been a pawn deal. Guy leaves the gun for a loan that he knows is far less than it is worth, but doesn't want to pay extra interest. Something happens and he defaults on the loan the shop makes out like a bandit.

[DanTSX]

Pawn shop guy is telling you a story.

Just like that bald guy on tv that offers five bucks for everything in his Vegas shop.

He probably has cash flow probs

[Double Naught Spy]

Pawn shops typically prey on those who need money and steal the item. After all, if you were not desperate, you would not be selling to a Pawn Shop. My point is, they own the items for next to nothing and can make great deals to dispose of lots of stuff if they choose to.

Pawn shops don't prey on anybody. Nobody has to pawn anything with a pawn shop. People bring in items and voluntarily pawn or sell them. If they don't like what is offered, then they are free to go elsewhere. Often, they have nowhere else to go, can't get credit from a bank, friends and family either can't or won't help them, or they won't involve friends or family and they aren't willing to hold a yard sale. So where there are a lot of other options other than pawn shops, people still go to pawn shops when they have exhausted all those other options.

We were in the pawn business for 25 years. I can assure you that we didn't come to own things for "next-to-nothing."

Some simply rules of thumb to consider. In this modern day and age, .1-3% of the items pawned or sold to a pawn shop are reported lost or stolen and are confiscated by the cops. In the old days of the 1970s, numbers were more like 1-8% depending on the shop (based in information at the time from Dallas Pawnbrokers Association and Texas Pawnbrokers Association).

Only a small percentage of the pawned items fail to be retrieved by customers. Most customer do not sell items to pawn shops, unlike what you see on TV. When they do sell something, it is because they aren't willing to take the time to sell it themselves to another individual for more money.

While a pawned item that may come out for sale several months later (in Texas, the time is one month plus 60 days before forfeiture), the cost of the item isn't just the amount loaned, but all of the associated overhead including facilities, breakage, deterioration, shrinkage, wages, etc. Indirect costs actually make up a big chunk of the actual cost of the item.

The amount loaned or paid (purchase) for an item is related to several factors that are not wholly about what the item is thought to be worth in the real world, but what it can maybe be sold for in the pawn shop itself. Every shop has its own market. Items that would move quickly when they came out of pawn would have up to about 50% direct cost (assuming the customer asked for that much money, which not all do). More mundane and slower turning items, the standard was about 1/3 direct cost.

Repeat or good customers are apt to get more money for their items, especially when the person pawns the same item repeatedly. That is just good business.

What a lot of people, like yourself, fail to realize is that a pawn is for the purpose of redemption. It isn't the pawnshop's fault if the person fails to redeem their item. It isn't the bank's fault if you fail to pay off your car loan. However, in the grand scheme, most pawn shops make a large percentage of their money from the pawns themselves. Depending on the year, we made between 45 and 70% (this is tied to economic cycles).

Anybody in retail sales knows that shelf time is a killer. Slow movers are not where you make your good money. Sadly, like a lot of guns stores, too many pawnbrokers get married to their merchandise and will have items moldering on the shelves for years. That is just bad business.

So the "Wholesaler" comes in to buy everything. As noted, we had a tool guy that did that. That person gets the stuff we loaned too much on as well as the stuff that we didn't loan that much on. He gets the stuff that is a slow mover and well as the stuff that moves quickly. Probably the biggest benefit is that the guy takes the stuff that we have too much cost in or the stuff that is slow moving (wrong market, too expensive, too specialized, out of date, etc.) that is just wasting shelf space for us. In the end, we don't make as much money off the deal as if we sold it all piecemeal ourselves, but shelves get cleared, things re-arranged, and we get a fresh start.

[HKFan9]

It is pretty common practice for larger gun shops in area's to strike deals with pawnshops. Pawnshops are in it for a quick buck and often get the guns for rock bottom prices. I have been sent into pawn shops with blank checks to offer to buy their lot. We get one solid price on used inventory, they get what they'd like, in one quick dealer to dealer transfer.

I have seen shops do this from time to time.

[BBush]

I have a friend that was the manager of a pawn shop for a number of years. He told me the first question that they are going to ask the person that wants to pawn an item is...what do you need for it? He is wanting the person to say a value that is lower than what he is wanting to pay. He told me that the absolute most that he would loan it 10% of the value. What this means is the if the value of a gun is $500, the most that he would loan is $50 and no more. There was no exceptions to this unless there was some item that he specifically wanted and he may go a little over that, but not by much. This would explain how a "wholesaler" could come in and buy the entire inventory of used guns for a great deal and the wholesaler and pawn dealer are both happy. The pawn dealer could "triple his money" for instance and get thirty or even forty percent of their worth and the "wholesaler" is getting a good deal on them and he could even double his money with ease at the gun show.

[Double Naught Spy]

I have a friend that was the manager of a pawn shop for a number of years. He told me the first question that they are going to ask the person that wants to pawn an item is...what do you need for it? He is wanting the person to say a value that is lower than what he is wanting to pay.

There is a lot of reasons for this. First, if you can make the person happy on THEIR terms, the transaction goes a whole lot better. The pawn industry is a service industry, first, sales, second. So you want the customer to feel good about the deal and if they call the shots (and it fits what the broker is willing to loan) then everybody is happy.

Second, there is generally more money, quicker profit, and more repeat business from the pawn side of the transaction than trying to selling.

Third, generally speaking, you want to make a loan on an item not a purchase. If you loan too much, you may be making what turns out to be a long term purchase (taking much longer for the property to belong to the pawn shop than via a flat out purchase). This is because you may end up loaning more than the person can or is willing to pay back for that item.

Say you loan $50 on a deer rifle. The customer doesn't want to lose his deer rifle for a measly $50. He will definitely try to get it back. You loan him $350 on that $500 deer rifle and customer then may decide that he doesn't need it so much anymore. After all, it was only worth $500 and his $350 plus interest might be better spent on other things right now.

Fourth, customers that pick up their pawns are more apt to be return customers in the future than customers who lose items.

The real money, day in and day out, is in the repeat pawn aspect of the business.