The founders of the nation's biggest daily deal, group-buying site are getting into the pawn shop business.
Groupon founders Eric Lefkofsky and Brad Keywell, who now run investment firm Lightbank, have partnered with online pawnbroker Internet Pawn to launch Pawngo, an online pawn shop.
The site aims to redefine the old fashioned brick-and-mortar pawn shop in the online space by offering customers "a more practical and affordable option to credit card loans and payday lending to get cash quickly without going into debt," the company announced in a statement.
"Financing from Pawngo can help fill gaps in cash flow, [helping consumers] pay for emergency purchases like major auto or home repairs or braces for a child," Lightbank said in the statement. "Once you've paid back the loan, your items are shipped directly back to you quickly and safely."
Here's where Pawngo differs from traditional pawn shops: The site offers loans based on an item's current market value for up to six months at 3% to 6% monthly interest rates -- a better deal than brick-and-mortar pawn shops, which can charge as much as 20% interest per month, Lightbank added.
Indeed, Pawngo appears to have set out to rehabilitate the pawn shop's sordid image for the online space. The Pawngo system "eliminates the intimidating feeling walking into a brick-and-mortar pawn shop in a seedy part of town," the company noted in its statement.
Here's how the site, which launched on June 7, works:
Customers go on to Pawngo.com and enter a description of the item or items, send a digital photo of the piece -- if available -- and enter their contact information. No credit card information or Social Security number is required. Pawngo will send the customer a preliminary loan offer or buy estimate within a few hours.
If the customer accepts the offer, Pawngo users can print an overnight, pre-paid FedEx shipping label to send the item directly to Pawngo's evaluation lab. Once the item has been received, a Pawngo representative will contact the customer with an exact item evaluation and an offer. If the customer accepts the offer, their item is kept in Pawngo's vault, and the site wires the customer money to their bank account.
The launch of Pawngo is clearly a sign of the times, Craig Johnson, chairman and CEO of retail consultancy Customer Growth Partners, told WalletPop. The economic downturn, Johnson says, has put that many more people into the "low income or temporarily low income" category, people who could find that this new service is just what they need to get them past the rough spots.