Hi all,
New here and new to the world of gold, however I well versed in various areas of it because it's always been interesting to me. I had a succesful ecommerce brand that I recently sold and a friend of mine who is a jeweller (and not a savvy business person) has come to me with a 'business idea'. This isn't reinventing the wheel, tonnes of people are doing it as you all know. It's a cash for gold type business. Where he customer sends in their gold and we assess it, send to refinery and pay out the customer based on weight/purity. We are in the UK, there are loads of these types of companies, and everyone is making money if you reserach them. There are honest ones and dishonest ones, the honest ones show you the fixed rate and what they pay off that usually paying out around 93%, the dishonest ones don't give you any price and you get given a price per gram once you've sent your gold in, hoping you;re a desperate mug and they pay anywhere from 75-85% of the fixed rate. That to me feels not very moralistic and I'd like to pay the general public the better end of the prices, but if a refiner is buying it at 98% (which is rather standard), and you are paying 90-93%, that leaves very slim gross profit margins that when you take into account customer acquisition costs and admin costs etc I don;t see how this business makes money. I guess it's a volume game, and you can get lucky with the types of stuff sent in (I suppose people don't care what they send in, they just want cash, so you can end up with Cartier etc when they think it's scrap). But I am wondering how the ones who buy at say the top end prices of 93% make any money at all if they have to sell it for 98%, could it be they are the refiners themselves and the other people who don;t advertise their prices are not, so need to make a larger margin? Is this a totally saturated market? I have very solid expertise in creating a brand and marketing as that's what I did for ecommerce, so I would use those skills but I don;t want to get involved in something which has such terrible margins if that's the case. Am I missing something?
TIA
New here and new to the world of gold, however I well versed in various areas of it because it's always been interesting to me. I had a succesful ecommerce brand that I recently sold and a friend of mine who is a jeweller (and not a savvy business person) has come to me with a 'business idea'. This isn't reinventing the wheel, tonnes of people are doing it as you all know. It's a cash for gold type business. Where he customer sends in their gold and we assess it, send to refinery and pay out the customer based on weight/purity. We are in the UK, there are loads of these types of companies, and everyone is making money if you reserach them. There are honest ones and dishonest ones, the honest ones show you the fixed rate and what they pay off that usually paying out around 93%, the dishonest ones don't give you any price and you get given a price per gram once you've sent your gold in, hoping you;re a desperate mug and they pay anywhere from 75-85% of the fixed rate. That to me feels not very moralistic and I'd like to pay the general public the better end of the prices, but if a refiner is buying it at 98% (which is rather standard), and you are paying 90-93%, that leaves very slim gross profit margins that when you take into account customer acquisition costs and admin costs etc I don;t see how this business makes money. I guess it's a volume game, and you can get lucky with the types of stuff sent in (I suppose people don't care what they send in, they just want cash, so you can end up with Cartier etc when they think it's scrap). But I am wondering how the ones who buy at say the top end prices of 93% make any money at all if they have to sell it for 98%, could it be they are the refiners themselves and the other people who don;t advertise their prices are not, so need to make a larger margin? Is this a totally saturated market? I have very solid expertise in creating a brand and marketing as that's what I did for ecommerce, so I would use those skills but I don;t want to get involved in something which has such terrible margins if that's the case. Am I missing something?
TIA