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- Jul 21, 2004
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Date: 3/7/2010 4:09:16 PM
Author: DiceKTak
Meanwhile, the inventory cost of that lost day on a $6000 diamond is NOT $1800 for that one day. Nor do diamonds lose value between day 10 and day 11
Actually, it might.
This gets into an area that I discuss in the forum quite a bit and that's one of the keys the valuation business. Market selection. If a customer buys a stone, lets say from Wink, that he’s getting from a 3rd party vendor who listed it for sale in a database somewhere for $5,500. Wink buys it and flips it for $6000 with a 10 day return and pockets the difference. On day 10 he pays his vendor and they both go their happy way on to the next deal. Now the customer returns it. Wink doesn’t want it, he’s already said that and was just brokering the deal for a commission. He calls up his vendor and the vendor tells him to take a hike, they’ve been trying for a year to unload that dog and they don’t want it back either. They already spent the money for new inventory. What does Wink do? He can suck it up and take it on the chin for $6000, he can strongarm his supplier to take it back or he can try and find someone else who will buy it. If he could sell it easily then we wouldn’t be having this problem because he wouldn’t mind taking it into inventory and simply writing off 6 bills to good customer relations is way off the deep end even for Wink so this means he needs to stuff it down the throat of his supplier. Gently stuff it because he may want to buy something from these folks again for some other customer. Let’s say they paid $5k for it when they got it. They sure don’t want to pay more than that to get it back and since we already know it’s a dog for whatever reason they probably want to pay LESS than that, maybe quite a bit less.
On day 10 the marketplace was a retail consumer buying a consignment stone from a discount online vendor. On day 11, the marketplace is a industry veteran trying to unload a stone that he doesn’t particularly want onto a wholesale supplier for cash who probably doesn’t want it either. This is VERY different and, frankly, a 25% hit for this is cheap. The stone didn't change, but everything else did.
Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver