The talking machine world (Jan-June 1928)

1. 2. 4. Fox Makes No Trade-in Deals Because Too many sets have to be junked. Too much time wasted in trading. Increases risk of financial loss. Endangers percentage of profit. How Two Live Dealers View the Problem of Radio Trade-ins The Two Bridgeport Dealers Whose Ideas Regarding the Pro and Con of Radio Trade-ins Are Presented Here Are Both Successful With the Policies They Have Adopted By Clarence J. O'Neil THE problem of second-hand radio sets turned in as part payment for a new receiver can never be settled by ignoring it or condemning it as bad business practice. It is a problem that is definitely at hand, and, like it or not, the dealer must face it. One of the leading radio trade associations has revealed that 75 per cent of the merchants favor reselling the trade-in. Despite this apparent majority favoring the trade-in policy, it is interesting to note the varied, yet logical, opinions, pro and con, of two veteran dealers located in the same community. One merchant is a stanch supporter of the trade-in question, and the second is just as determined in his objections to this method. Both have been in business since the introduction of the radio and both are equally satisfied with their sales volume of radio receivers. Alfred Fox, of 174 Fairfield avenue, Bridgeport, Conn., frankly admits that he makes no allowances whatsoever on used sets and arbitrarily refuses them. To substantiate his idea for ignoring trade-ins Mr. Fox has set forth four concrete reasons why he holds to this practice. On the other hand, John I. Taylor, credit manager of the Piquette Music Co., Fox's nextdoor neighbor, of 183 Fairfield avenue, presents another four reasons why he believes in trade-ins. Before dissecting the business methods of these two dealers it may be well to visualize the situation; first, as to SSh^hSSS the demand for trade-ins; second, as to the ultimate profit or loss to be had by encouraging or rejecting this form of merchandising radio receivers. As to the demand, it is generally accepted that 25 to 30 per cent of the people buying sets at present have a set which they would like to trade in, or on which they would like an allowance. It is also probably a fair statement to say that the average radio merchant is appraising the trade-in set for its resale value, based upon a quick turnover, and is making an allowance of 40 to 50 per cent on such an appraisement, a plan that permits the dealer to profit. With all these apparent alluring inducements and the immense resale demands offered in catering to the trade-in patron, Mr. Fox says "not interested," with the following objections. Too many sets have, to be junked; 'too much time is wasted in dickering"; too much of a' financial risk; would rob himself of his normal percentage of profit. To support his objections to handling tradeins Mr. Fox said, "It is apparent that at least 50 per cent of trade-in sets would have to be junked because o£ obsolete parts and the general run-down condition of the outfit. The cost and labor to rejuvenate the set would, to Piquette Co. Favors the Trade-in Because 1* Easier sales to present owners. %• Have resale value of their own. 3. Wise allowance boosts the profit. 4* Pave way for sales of new radios. my mind, eat up the eventual resale profit. I also see a considerable loss of time in making trade-in transactions. I am convinced during the time wasted in first discussing the trade-in idea with the customer, and then the eventual consideration over the set, when the customer finally delivers it after a second or third interview, that in the meantime I could have worked up at least one new customer for a clear sale. "Before reselling a second-hand set the dealer should check it thoroughly, should clean it up, and if necessary refinish the cabinet. These considerations are bound to affect the price allowance and profit to be made on the set. From an ethical standpoint, trading-in, I think, becomes pernicious when used by a dealer as a means of cutting prices to build sales volume." TTZ H ETHER the retail talking machine dealer rr decides for or against the trade-in as applied to the radio department, some definite and sound policy must be worked out. In the accompanying article two concerns operating in the same city give the reasons which decided them in favor of and against radio trade-ins. Every retailer should read this informative dissertation on one of the most important phases of radio retailing that faces the trade in this day of intensely competitive merchandising. Mr. Taylor, of the Piquette Music Co., in direct contrast to Mr. Fox, is so confident in the trade-in profits that he advertises extensively in the newspapers for the exchange of old sets. His four reasons for accepting tradeins are as follows: Trade-ins make new sales to present owners easier; have resale value of their own; can be sold profitably if allowance is 50 per cent of resale price; pave way for later sale of new set to purchaser. Mr. Taylor's method of bidding on old sets is to examine the set and quickly make an estimate of its resale value, in most cases offering its owner one-half that figure. He claims this procedure calls for an eye appraisal made promptly and a statement of the exchange offered in a manner that does not leave room for bargaining. His next step is to convince the Customer that the', old set has greatly depreciated in value. This means that if a set is accepted for a trade-in, and if Mr. Taylor believes he can promptly resell it in his store for $50, the owner of the set should be offered $25, thus safeguarding the dealer against loss at time of resale. "I am perfectly aware," said Mr. Taylor, "that in making such an appraisement of a trade-in my profit will not be equivalent to a 50 per cent discount, because, after acquiring the set, I will be put through the expense of testing, of correcting any mechanical defects and of making it presentable. Furthermore, some merchants will say I am assuming a hazard more or less great in putting this old set into my stock. I realize that, but I am willing to stand by my judgment in not only making a little resale profit, but also pave the way for a new set sale. In closing a trade-in sale I always try to impress the customer that he is actually making a purchase, not a sale." That there is danger in accepting trade-ins is testified to by the many warnings against allowing too much for such equipments, and having it left on the dealer's hands — that it may prove a valuable means of developing business if handled properly SSSS ^^^m >s generally acknowledged. The experiences of these two dealers, situated in the same community and holding opposite views on the important subject of radio trade-ins, is proof positive of the assertion, many times repeated, that no hard and fast rule regarding such a policy can be made to apply to all dealers. Each member of the radio retail trade must study the situation and put into effect that policy which will produce the best results for his own business and will be in line with his method of dealing with his customers. Take for example a neighborhood dealer carrying a complete line of musical instruments and depending to some extent upon the repeat business of customers with whom he has been dealing for a number of years. They have at different times purchased high-priced pianos, phonographs and radio receivers, in addition to music rolls, records, sheet music and other accessories for the instruments. To refuse to accept a trade-in set as part of the purchase price of a new instrument, this dealer would be endangering the good will which he has built up over a span of years, which would, in many such cases, be a shortsighted policy. Let each dealer decide upon his own policy, remembering always, however, that each set taken in must be resold at a profit, and that to overlook or minimize this angle is to engage in a profitless transaction, or even worse, to lose money on the deal. Crosley Dividend The Crosley Radio Corp. has declared a stock dividend of 4 per cent and an initial dividend of $1, payable in four quarterly instalments during 1928. to