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Used Trading Requires the Right Training

28 May, 2004 By: Holly J. Wagner

Video specialty dealers looking to trade movies with consumers, whether as a customer service or a profit generator, may find it's more complex than it looks.

Issues include complying with local laws, managing purchases and stock, disc condition and customer service issues that may require changes in the way a dealer hires and trains staff.

“It isn't in my business model principally because I don't have anybody to whom I can delegate it, and I don't normally work the floor,” said Al Welch, owner-operator of Video Village in Rockwall, Texas.

“Right now, typically just management will do the buying from consumers,” said Todd Zaganiacz, owner-operator of Video Zone in South Deerfield, Mass., leader of the New England Buying Group and a Video Software Dealers Association (VSDA) board member. “I could see down the road that you might have to have your whole staff trained, and we would have to generate lists of what you are buying and not buying, and how much we are paying.”

Halsey Blake-Scott, owner-operator of C-Ville Video and Sneak Reviews in Charlottesville, Va., is taking his time considering the issues before hopping into consumer trades, which he hopes to do sometime between next quarter and next year.

“I see it, at least initially, as John Smith walks into the store with three or four discs. In three or four hours, we will have a quote for him,” he said, adding he plans to network the POS computers to generate speedy quotes. He's thinking used product will be priced based on a percentage of SRP or on what the title is fetching online.

Johnny Balmer, owner of five Chicago-area Second Hand Tunes stores, started consumer trades with music CDs, but now does about 20 percent of his business in DVD. “You definitely run a danger of overpaying for stuff, or underpaying so that people stop bringing stuff in,” he said. “There is a period of about six months before I would allow someone to buy [videos] unsupervised. You have to know what will sell.”

Zaganiacz agreed that product knowledge is critical to buying from consumers. “I have a pretty good idea what stuff sells for,” he said. “Discs that retail for $9.99, we can't pay $5 for.”

Besides knowing what to buy and how much to pay for it, employees have to be aware of the business' security practices and whatever local law applies.

“We pretty much have the same practices we always have, where we get a photo ID and look for things that are suspicious. If something looks suspicious, we just don't buy it,” said Balmer, who fought the city of Chicago when it added CDs and DVDs specifically to its secondhand dealer law. In other areas, common sense rules.

“You have to watch for stolen product. Most people will take a copy of a photo ID and have them sign a form that says ‘these are my DVDs,’ Zaganiacz said. “You have to watch for bootleg DVDs.”

Ed Geiske, president and COO of eight-store PrePlayed in the northeast, hopes to service independents the same way he did his company: with POS software taking into account local laws and pricing pressures.

“What we do in our POS is more proactive. We don't set our prices according to new. The minute that product hits the shelf, our prices are dictated by the POS system,” he said. “It will lower the price until it sells. Stores may price a product differently in Texas from Virginia, but it's priced at a level that people will buy it.”

The software factors in a combination of in-store and corporatewide data, Geiske said. He will promote a version of the software at VSDA's Home Entertainment 2004 show in Las Vegas, July 14-16.

Employees must also be trained to make sure incoming discs are in acceptable condition and to take the proper information from customers.

“Condition is very important. Very often when people bring stuff in, they are great titles, but they are really scratched up. We would have to discount that,” Balmer said. Although he said disc repair is too labor intensive, others, like Blake-Scott, said the disc cleaning and repair business would complement trading with consumers. Balmer has another solution: “We just have a pretty generous return policy, so people know if there is anything wrong they can bring it back.”

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