average mark-up from polygon price to customer?

[themagazinescene]

What would you say the average e-vendor mark-up (say whiteflash or GOG or DCD) is on say a 1 carat diamond that the e-vendor is selling for $5000? Do they pay $4000 at Polygon /IDEX or $4500 or what?

Thanks,

Ben

 

[pqcollectibles]

Etailer profit margins have been discussed on PScope before. Of course the Vendors don''t disclose their margins, but other folks in the know have commented. The Etailers tend to make less than 10% with 5%-7% being the most common figures tossed about. Sometimes, Vendors make as little as 3%. On average you can guesstimate their profit at 5%. Compare that to a local B&M that mght turn $1K or more on the sale of a similar stone.

 

[perry]

Ben:

While pq's answer is correct I will try to address what I think is your bigger question based on your other post where you indicated a desire to get into the diamond business.

It is not just enough to look at markups from what the various vendors pay for their diamonds.

You must also factor in what services the vendors are supplying and their overhead for what they are doing.

There are internet vendors who do not stock any diamonds at all. The dimaonds listed are from their supplier (virtual inventory). Some of these vendors will never even see the diamond you buy from them as their supplier will ship the diamond directly to the end customer. Some of these vendors typically has the lowest mark-up and only does business over the net (they don't even take phone calls). A problem that I have with these vendors is that some of them will present the image that they are holding the diamond in their hand and have personally inspected it.

One issue with all industries and business segments is that there are always a few that are using deciet as part of their mode of operation. These vendors usually create a bad image for the rest.

The other extreem is the vendors who only list an inventory that they sell, that all of their diamonds are personally selected to be in the top 1/10 of 1% in cut quality, that supply lots of additional information for their diamonds, and will patiently answer your questions untill the moon turns blue. NiceIce and Good Old Gold are the two vendors that come to mind. These vendors charge a higher mark-up over their cost to cover the inventory, generation of reports and photograps, and time to answer your questions.

Everyone else is between these two extreems. Many of the internet diamond vendors will list both a virtual inventory and stock a selection of better cut to excellent cut diamonds. A few vendors, such as Whiteflash, have a stock of the top 1/10 of 1% diamonds and another stock of diamonds that are probably in the top 2% of diamonds out there.

It would not be unusual for a stocking vendor, active here on Pricescope, to have $400,000 to $1,000,000 in inventory.

More fundamentally, though is how these vendors prices compare to what a small jewelry store can get diamonds from their supplier...

I have a local jewlery store - one that just won the cities "store of the year" award. The owner is one of only 4 people out there who I felt was straight up reasonbly knowlagable and honest with me on diamonds. Once he knew that I was looking on the internet he told me that many of the internet vendors are selling their diamonds for less than what he pays from his normal supplier - and that in certain cases he purchases diamonds for resale from internet vendors.

The reason for that is that there is no one fixed "wholesale" price for diamonds, or for any other commodity that is sold. The end price you pay is always tied to the volumn of product you are purchasing. It may be in a volume discount price, or it may be in a rebate based on volumn of product in a month, or a combination of the two, or other price/benifit structures.

Thus, a diamond vendor selling 30 carat weight of diamonds a month gets a better supplier price than one selling 10 carat weight of diamons a month, and less than a vendor selling 100 carat weight of diamonds a month.

While there is a lot of talk about the "Rap" report, the fact is that the larger vendors do not pay those prices, they get their diamonds at a discount (the amount "back"). This is why some vendors adopt the stratagy - if pushed on price - of selling you for the Rap price. Trust me, they are still making a profit - and perhaps a good profit at that...

Hope this helps,

Perry