Fighting internet diamonds

[CaptAubrey]

the trade has gotten so worked up about internet competition that there is going to be a two-day conference on it in october:




www.couturejeweler.com/couturejeweler/headlines/article_display.jsp?vnu_content_id=1000455873


"The Internet is turning the diamond into a commodity," echoed both retail panelists Jim Rosenheim and Russell Cohen. "Given the relative sameness of diamonds, our main differentiation is price, forcing all of us to continually cut our profit margins and leading us down the path of commodification," said Rosenheim. "We need individuality. Cutters need to create new styles of diamonds that are instantly recognizable." Rosenheim suggested retailers band together to market distinctive diamonds, exclusive to their area, which would provide new marketing opportunities to return the diamond to the profit center it once occupied."




i do think jewelers are starting to get the message, though. i am hearing more honest advice about improving sales associate eduction and customer service, using a setting request as an oppportunity for future business instead of a personal affront, expanding your selling options so you have a comparable selection, etc.

 

[aljdewey]

HA.....believe me, *I'd* like to sit down with these folks as a customer and tell them where they are missing the boat.




I'd love to highlight for them ways they are alienating the customer and how to improve that.

 

[pricescope]

From GIA newsletter: Industry Analysis: Diamond Profits Continue to Narrow

 

[valeria101]

The manifesto reads: "We need individuality. Cutters need to create new styles of diamonds that are instantly recognizable."

And then... you say that "that there should be two diamond markets: standard traditional cuts (commodity) and unique pieces - sort of diamond art"

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Yet, the most common statement of 'performance' for new cuts it's about their... number of facets !? This sounds strange and not very informative.

It must have been quoted 100 times on PS that >.

What are the H&A supposed to be? The best 'standard cut' (commodity) or a piece of artistry?

 

[pricescope]

Valeria:

----------------
And then... you say that 'that there should be two diamond markets: standard traditional cuts (commodity) and unique pieces - sort of diamond art'.
----------------

Not me but a friend of mine said that

 

[pqcollectibles]

Women of the World,..... Raise your right hand!!

 

[elmo]

I couldn't help but laugh out loud when I noticed on the bottom left corner of the couturejeweler website the advertisements of three low-priced internet diamond websites as "Sponsored Links". I guess the barbarians are at the gates

.

 

[DiamondExpert]

The barbarians have long ago breached the gates, and are in the kitchen eating "their" lunch!

 

[wallace]

I guess have lost my head somewhere... but by my understanding of the word commodity - A DIAMOND IS A COMMODITY!!! Perhaps these besieged high-end retailers mean to suggest that a diamond is an elusive commodity - one which is escaping only their own grasp.

It sounds like Mssrs. Rosenheim and Cohen are proposing a monopoly of the branded diamond trade setting themselves up as the sole direct middleman between the cutter and the consumer. Unfortunately, this control-freak method instigated by greed hopefully cannot thrive in a capitalistic market. THey should take their whining elsewhere. Stamping their feet like spoiled little boys... they cannot stand it that someone has moved in their territory and it is legit!

Mr. JIM ROSENHEIM, the owner of the TINY JEWEL BOX in Washington, DC suggests that retailers have had to cut their profitability in order to compete. Having been a former customer of his "boutique", I can assure you that none of that cost cutting has been passed on to the consumer. I invite you to peruse his selection and compare prices yourselves when in DC. In my experience, the only cut has been in quality and customer service. The sales staff appear to be totally unknowledgeable about diamonds. The moment I asked technical questions, I was reproached with a very defensive response: "Have you been reading on the internet".

As regards his suggestion that retailers band together to provide exclusive access to these brands (to which he means he alone should be privy), I find this wildly hypocritical. In my experience, the Tiny Jewel Box is doing its very best to quash even the slightest competition from other stores "in the area" by trying to convince consumers that their store is the only one "in the area" that offers certain brands. This is patently untrue. If this is the local reality then it is not hard imagine the furor that internet sales would spark for a business such as the Tiny Jewel Box and others.

You have only to visit there once to why the panic has set in in jewelers like Mr. Rosenheim and his ilk: If you carry on your business in a manner that is surpassingly inferior to everyone in your market, you too would feel extremely threatened even by fair and legitimate competition!

If ever there was a caveat, it is here: be wary of one who stirs the pot before it is boiling! Something to hide...?

 

[dimonbob]

I recently returned from the AGS Conclave where I quietly sat through several discussions about the Internet diamond business.

It seems that the Internet companies as of 2003 "took" 2.5% of the diamonds sales from the retail store. This translates to $2.50 out of every $100 that the retailer sells. The retailers also sold 6% more in 2003 than they did in 2003.


I don't think the retail jeweler has a whole lot to complain about. They lost 2.5% to the Internet but gained 6% overall.

Back in the 1970's and early 80's the retail jeweler complained about the GIA certified diamonds because they were turning diamonds into commodity. What they were really upset about was that they could no longer buy an I color SI1 and sell it for a G VS diamond or worse yet a "blue-white clean" diamond. Price margins dropped significantly back in those days and they will drop again when the Internet diamond sales take hold.

 

[Garry H (Cut Nut)]

That is intersting when you consider that Blue Nile did 4.4% ($129m) of the $29 billion of estimated sales.

Those who have seen the aussie movie - the Castle - know what I mean:

"Tell'em their dreamin"

It must be nearer 10% Internet sales.

 

[Garry H (Cut Nut)]

Just got some better numbers on my last post.

Polished Diamond Content in Retail Sales
US$13.5BN
Total world retail diamond jewellery $56B
figures for 2001 from http://www.gov.nt.ca/RWED/diamond/industry.htm

So if this is true then $129M for Blue Nile sales is made up of mostly loose diamonds then this = a huge portion of the worlds total retail diamond sales.

 

[pricescope]

Garry:

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... 4.4% ($129m) of the $29 billion ...
----------------

I'm affraid you missed one '0' - it is 0.44%

$129M from $13.5B is less than 1%.

 

[elmo]

I'm still very impressed with 1/2%, didn't realize they were that big a factor. How many other jewelers in the country make those kinds of numbers?

 

[Garry H (Cut Nut)]

I believe in USA 100M=1B
Therefore 129M / 13.5 x 100 = 9.55%

I have looked and looked at these numbers because it appears the experts and newspapers have got it very wrong.
There was a USA today report last week that had obvious errors in it where all these numbers were quoted.

Elmo for scale Tiffany do S2,000Million world wide (20B) - but maybe only 50% of that is diamond jewellery sales, and the diamond content there would perhaps not be more than double the cost value of what BN are selling given the differences in margin.

Can someone tell me if those #'s are all ok please?

 

[strmrdr]

1000M=1B

 

[Garry H (Cut Nut)]

Silly me
I should know better than to argue with Dr Leonid Phd

I will do 50 lashes and wear a hair shirt.

 

[pqcollectibles]

----------------
On 4/12/2004 12:41:41 AM Cut Nut wrote:

Silly me
I should know better than to argue with Dr Leonid Phd

I will do 50 lashes and wear a hair shirt.----------------

I wanna see that!!

Ah, Dear Garry,..... You were only off by a factor of 10!!