South African second-hand traders are cleaning up their act, writes Rowan Callahan
There are many similarities between the current second-hand goods market and the used-car market of old.
A few years ago there were thousands of small used-car dealers all over the place offering “low mileage, one-owner bargains” out of dingy premises.
What people got in most cases was scrap metal with a motor.
That was until big business began to realise the scope of the used-car market and set about legitimising its tarnished image with better service and guarantees.
The second-hand goods market is in the midst of a similar shakeup.
Companies like Cash Converters, a new franchise operation dealing in second-hand household goods, are introducing levels of professionalism unheard of before and are trying to repair the damage of decades of shady dealers.
According to Richard Mukheibir, managing director of Cash Converters, the main problem is that practically anyone can get a licence to trade in second-hand goods.
The only requirement is that you must not have been found guilty of an offence relating to dealing in second-hand goods and you must have suitable premises to trade out of.
“The greatest problem we have is the public perception of the man in the street that second-hand stores are fences for stolen goods,” he says.
“The industry is not going to grow if the perception is that everything in your house is going to end up in a second-hand store.”
The chain is trying to change the perception by the professional layout of its stores, their professionally trained staff as well as their computerised audit trail.
“It’s professional retailing in an environment that’s never had it before,” Mukheibir says.
This approach to doing business has even reduced the risk of Cash Converters buying stolen goods. The law requires only that traders keep a written register of who they bought each item from and who they sold it to. People selling goods also need to produce some form of identification.
Cash Converters asks for a copy of an ID, proof that the person is over 21 and that the goods have been cleared (paid up).
“With new goods we even ask for an invoice and call to check if the goods have been paid off,” he says.
People who are blacklisted are put on a “dodgy characters list” that is placed on the Internet for other stores in the chain to access.
While this system has worked for Cash Converters, the issue remains a serious one for traditional traders.
A pawn shop owner from Brixton in Johannesburg says that there is no way to check if the goods he buys are stolen or aren’t paid up.
“I’ve also lost a lot of goods through hire purchase where people haven’t paid goods off and the furniture store comes to collect the goods,” he says.
His only recourse is to lay a charge of fraud against the person who sold the goods, but that is time consuming and he normally doesn’t do it.
‘I have also bought stolen goods without knowing it,” he says.
The police, through a special second-hand goods unit, routinely go through the store and the register to see if there are any stolen goods.
Despite these and other small problems, the small second-hand dealers seem to be thriving within their niche markets. But for how long?
Cash Converters is expecting a R60- million turnover from its 25 stores by the end of the year. Along with other similar chains, it is eating into a market that was the preserve of the small corner dealer for decades.
According to Mukheibir, the arrival of Cash Converters in some areas has led to smaller, less professional outfits closing down or revamping their operation. And this can only be good for the industry and consumers.
While the introduction of more professional retailers will not wipe out the smaller traders, it will play an important role in legitimising an industry that has never been known for its professionalism.
Once people have confidence in the industry, the potential for growth is huge.
In the United Kingdom, the second-hand goods industry has an annual turnover of 5- billion.