What began as an experiment to cash in on consumers selling gold has morphed into a growing software and service business for the founder of Goldspeed.com.
What started as a small experiment to cash in on consumers selling gold for cash has morphed into a growing software and service business for the founder of online jewelry retailer Goldspeed.com Inc.
A year ago Goldspeed.com CEO Neil Kugelman launched Refinement Services LLC to capitalize on a combination of high gold prices and a cash-hungry public. Refinement Services processes the gold a customer sells to retailers and sells it back to the commercial market. The proceeds are divided among the consumer and the jewelry retailer, with Refinement Services keeping an undisclosed commission. Participating retailers also pay a small undisclosed set-up fee.
Kugelman originally developed the concept, and the software to make it work, for his own online retailing site. But now Refinement Services is licensing its software and services to other jewelry retailers, including several divisions of Sterling Jewelers Inc. such as Kay Jewelers, The Galleria Of Jewelry, J.B. Robinson Jewelers, Belden Jewelers, Friedlander`s Jewelers, Goodman Jewelers, LeRoy`s Jewelers, Marks & Morgan Jewelers, Osterman Jewelers, Rogers Jewelers, Shaw`s Jewelers, and Weisfield Jewelers. Other customers include Daniel Jewelers Inc., a family-owned business with an e-commerce site and 55 stores in California, and SpeedyCash Inc., a payday loan service with 80 locations nationwide.
Each retailer’s gold exchange program is powered by Refinement Services’ software but branded as the merchant’s own service, such as the Kay Gold Exchange. Refinement Services’ system lets a consumer go to the retailer`s web site to see a video of her jewelry being unpacked, spread out and weighed, with the weight of the gold immediately visible on a scale.
Sellers register when they make an online request at the site for a gold-selling kit that includes a prepaid insured UPS label. All packages are videotaped when they are opened, and registered sellers receive a password via e-mail that lets them view the video of their packages being opened. “The customer sees their order being opened and weighed, so there is no question that what they put in the envelope is what we received,” Kugelman says.
Consumers are issued a check the same day their jewelry is received, indexed to the day’s gold market price, which is currently about $1,120 an ounce. Refinement Services handles all gold exchange transactions, including payment to the consumer and selling the gold on the commercial market, for each retailer and provides customer service. “From a jeweler`s perspective this venture has enabled us to exploit the flip side of the vicious cycle that has hurt jewelers in the recession: falling consumer disposable income and demand for jewelry,” Kugelman says. “There is a lot of growth potential here.”
In the past several months Refinement Services has upgraded its software with better video, a more user-friendly dashboard and international payments capability. Plans also are underway to develop a mobile app, although key details are still being developed, Kugelman says. As the CEO of two start-up companies, Kugelman won’t disclose financial information, including annual revenue for Goldspeed.com Inc.>, No. 413 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name) and Refinement Services.
But in the long term, Kugelman says his software and service company has the capacity to drive more business than Goldspeed.com. “We will be in over 5,000 locations within the next 60 days,” Kugelman says. “The indicators all point to a marketplace far larger than what we are doing with Goldspeed.com.”