Reselling Gems & Jewelry- What can you expect?

Its not what id expect considering that the same diamond in the hand of a dealer automaticaly becomes worth full retail but in the stacked deck that is the used diamonds your numbers pretty much agree with mine on what someone will actualy get.

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Its not what id expect considering that the same diamond in the hand of a dealer automaticaly
becomes worth full retail
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A dealer has to make a profit or he cannot stay in business. A retail profit covers his expenses, and allows him to make a salary that he and his family can live on.

A basic fact of life which you will find present in every industry, with most industries making far more in terms of percentage.

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On 7/31/2004 11:51:03 PM Richard Sherwood wrote:

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Its not what id expect considering that the same diamond in the hand of a dealer automaticaly

becomes worth full retail

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A dealer has to make a profit or he cannot stay in business. A retail profit covers his expenses, and allows him to make a salary that he and his family can live on.


A basic fact of life which you will find present in every industry, with most industries making far more in terms of percentage.

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name one other consumer product with 200%-%300 markups.
even kirby vacuum cleaners are only at the 150% level.

Then name one product that other then "collectables" that rises in sale price once a dealer touches it as much as gemstones do.

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name one other consumer product with 200%-%300 markups.
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200 & 300% markups are a thing of the past in the jewelry industry with the exception of a distinct minority of stores or products.

Markup very seldom even reaches the 100% level any more, especially on the more expensive goods ($1000 cost and up).

That given, there is a myriad of industries operating at far greater markups, ranging from clothing to electronics to pizza.

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Then name one product that other then "collectables" that rises in sale price once a dealer touches
it as much as gemstones do.
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In terms of profit percentage, when you browse the local consignment shop, flea market or secondhand furniture store you'll encounter markup similar or greater than what jewelry dealers work at.

Richard has presented a good tutorial on market levels. I’m a little intimidated to insert my comments after such an eloquent teacher. I’ll try to be as clear.

Where and under what circumstances you buy your diamonds (and anything else) is part of the value of what you are buying. It’s easy to assume that money spent on the dealer is money wasted but I flatly disagree. There are quite a few things that can be included by the dealer that will increase the value of a purchase.

1)Assurance that the item is not stolen or otherwise from dubious sources
2)Someone to take recourse against if item #1 turns out to be false.
3)Financing and other special terms.
4)Return privileges and trade up programs
5)Warrantees
6)Prestigious packaging
7)The opportunity to examine the stone and compare it to others in a convenient and well designed environment.
8)Speed
9)Buyer education
10)Assistance in making the selection.
11)Ease of access
12)“New” merchandise

The list is long and this is just a drop in the bucket. Economists call these sorts of thing “value-added” and people get MBA’s in this topic.

Diamond selling is a wickedly competitive business and it gets more so every day. There are dealers all over the world who are anxious to sell to you and each has assembled what they consider a good bundle of benefits in order to attract customers. In general, the more value-added elements included, the higher the prices. Some of these things are rather expensive to deliver while others are relatively cheap and not every customer wants the same bundle after all. It’s the reason that Costco and Tiffany’s can happily share the same planet while selling superficially similar merchandise for vastly different prices.

All of this is important to you as a seller because this is your competition. A stone sold by a dealer is probably worth more than that same stone when sold by an individual. It’s not a grand conspiracy to pay you less than your stone is worth, nor is it a clip job by the jewelers who are charging more.

Many customers put a fairly high value on this sort of thing. For example, it’s likely that you, as an individual, will find it difficult to sell to customers who place a high value on financing. Other customers are more concerned about getting the best possible price. This is likely to be your target market. Design your own bundle of benefits (independent grading reports, consignment to a fancy store, good photographs, slick ebay advertisements, selling through escrow, easy access through friends, etc.) that makes your stone attractive to customers that you’re going to try to sell to. Ebay and flea market customers will expect a different set of benefits when they buy, than the owner of a fancy consignment shop will want. Pawn shops expect very little but they tend to pay fairly little as well. It’s important to properly match what you are offering with the market you offer it into. Unfortunately, we can’t give you an easy answer about what bundle is ‘best’ because it depends on your circumstances, available time, skills, market access and a whole litany of other variables. Only you can make that decision.

I hope this helps. I wish you the best of luck with your sale.

Regards, Neil Beaty, G.G.
www.gemlab.us

"12)“New” merchandise"
Is it really "new" or is it the diamond Joe down the street sold the dealer for 50% of wholesale because he needed the money quick after a failed engagement?
The recycling of used diamonds as new by the dealers is the point of my above post which is being ignored.
Or is it the one that Jane in washington sold to a dealer for 25% of wholesale and the dealer then sold it to a wholesaler?

Can you quarentee that any diamond has not been in a consumers ring before?

Items with 200%++ markups in some market levels:
1:> designer womens shoes
2:> perfume
3:> wedding dresses

hmmmm starting to see a pattern?

Now to break the pattern:
Razor blades

none of which are sold as new again once they touch a dealers hands.

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1)Assurance that the item is not stolen or otherwise from dubious sources
2)Someone to take recourse against if item #1 turns out to be false.
3)Financing and other special terms.
4)Return privileges and trade up programs
5)Warrantees
6)Prestigious packaging
7)The opportunity to examine the stone and compare it to others in a convenient and well designed environment.
8)Speed
9)Buyer education
10)Assistance in making the selection.
11)Ease of access
12)“New” merchandise
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Excellent points Neil. People aren't just buying the diamond, they're buying the "package".

Kind of like when you get married. You're not just marrying the bride, you're marrying her whole family. For better or for worse...

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The recycling of used diamonds as new by the dealers is the point of
my above post which is being ignored.
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If a diamond is a modern cut with no damage, there is absolutely no way to determine if it is "new" or "used". In my mind, that illustrates one of the advantages of a diamond over other luxury commodities.

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Or is it the one that Jane in washington sold to a dealer for 25% of
wholesale and the dealer then sold it to a wholesaler?
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Probably one of the primary determinants on how much a private individual receives when they sell their diamond is the intelligence with which they approach the sale.

25% of wholesale is a pawnshop offer. Why in the world would Jane in Washington sell to a pawnshop when she could walk into almost any knowledgeable estate dealers office or jeweler's shop and receive double or triple that figure on an instant cash basis, or four times that figure with a little patience (consignment), or five times that figure by investing a little energy (sale to privates, friends or family)?

Intelligent selling realizes greater value. Naive selling realizes greater loss. Everybody has a choice as to which route they take.

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On 8/1/2004 12:47:08 PM strmrdr wrote:

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'12)“New” merchandise'
Is it really 'new' or is it the diamond Joe down the street sold the dealer for 50% of wholesale because he needed the money quick after a failed engagement?
The recycling of used diamonds as new by the dealers is the point of my above post which is being ignored.
Or is it the one that Jane in washington sold to a dealer for 25% of wholesale and the dealer then sold it to a wholesaler?

Can you quarentee that any diamond has not been in a consumers ring before?
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strmrdr

In straight answer to your quesion, no. No one can issue such a guarantee unless they personally were both the miner and the cutter. I've never met such a vendor.

"New" is easier to define for some items than others. It's certainly true that recycling of diamonds is easy and commonly done. However, I know stores that take great effort to avoid selling previously worn goods. They have no control over their suppliers but they will buy directly from vendors in Belgium or Israel and they will not buy directly from the public partially for this reason.

Other components in jewelry, for example gold, are also recycled and are even more difficult to separate. If a pawn shop sends their gold to the refinery who processes it and then resells it to a jeweler, is it new or used? Does it matter what the pawn shop paid their customer or how much the jeweler is charging for their final product?

Not all stores offer all of the things on my list. Some offer none, some offer a different selection entirely. I included that as an example of something that they might be able to offer to differentiate themselves from their competitors that are not a function of the gemological properties of the stones.

Neil