New to the Business - Need Advice (Trader)

[AADiamondsUSA]

Hello everyone,

I've recently returned from a trip to South Africa and have come in contact with a very reliable and willing supplier as I was shopping for a stone, engagement ring for my girlfriend.

To make a long story short, I'm now hooked to the business!

Here are a couple of questions to start:
- Shipping to the US from SA. Fedex? UPS? DHL? Which one would you recommend? I've read posts about Harmonized codes to use with Fedex and potentially the need to get additional insurance.
- Information on import duties and customs information and forms to import, where to get these infos?

I'm not interested in retail, just trader/wholesaler.
Where to start to create an initial customer base? Door to door Jewelry stores? Trade Shows? Advertising?

I'm sure there will be many more questions later, many will be silly to you and i apologize, in the meantime I'd like to thank those of you that will answer and continue reading this amazing forum.

Thanks!

 

[Karl_K]

First read up on the Kimberly process to make sure you stay compliant.
Second cold calling a jewelery store offering diamonds is very likely to get the FBI called.
No one wants to just disappear and end up in club fed on a patriot act violation.
That is a very real possibility messing with diamonds when you don't know the in and outs of keeping within the law.
Also read how it worked out for this person:
[URL='https://www.pricescope.com/community/threads/diamond-imports.210097/']https://www.pricescope.com/community/threads/diamond-imports.210097/[/URL]

 

[Texas Leaguer]

The link Karl suggested is excellent for your situation. It's great that you are enthused about joining the jewelry trade. But please be aware that the diamond business is hyper competitive, complicated, and full of potential pitfalls for the uninitiated. The learning curve is steep and expensive no matter how you slice it. The glamour can come off the enterprise in a hurry if you make too many mistakes, or even one bad one.

Is your relationship with the seller one where you will purchase the diamonds upfront, or will you be taking them on consignment?

 

[AADiamondsUSA]

First read up on the Kimberly process to make sure you stay compliant.
Second cold calling a jewelery store offering diamonds is very likely to get the FBI called.
No one wants to just disappear and end up in club fed on a patriot act violation.
That is a very real possibility messing with diamonds when you don't know the in and outs of keeping within the law.
Also read how it worked out for this person:
[URL='https://www.pricescope.com/community/threads/diamond-imports.210097/']https://www.pricescope.com/community/threads/diamond-imports.210097/[/URL]

Hi Karl and thank you for the feedback, so based on this post all i would need to make sure is that my supplier's invoice (and my invoices too) have the following:

The diamonds herein invoiced have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations Resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and / or written guarantees provided by the supplier of these diamonds.

By shipping goods pursuant to this invoice, we warrant that, to the best of our knowledge, the diamonds invoiced have not originated from Zimbabwe and have received similar assurance of non-Zimbabwe origin from any supplier from whom we have obtained the diamonds invoiced.

The diamonds herein invoiced are exclusively of natural origin and untreated based on personal knowledge and/or written guarantees provided by the supplier of these diamonds


I know all the stock I will receive will be already GIA certified.
What worries me is your comment on not being able to cold call on jewelry stores. If i have a legit business, reputable supplier and proof that i am abiding by the laws (Kimberly, import, origin ecc..) why should I be worried? Sorry for the naive question.

Is your relationship with the seller one where you will purchase the diamonds upfront, or will you be taking them on consignment?

Hi Texas, It will be on consignment at first. Better I assume.

Thank you all once more!

 

[JoshuaNiamehr]

Growing up in the diamond trade, I remember it being very very common for people to come and show you goods (setup appointments to show people your merchandise)... I dont think cold calling will get the FBI called on you, I dont see what is illegal about that or how it violates the Patriot Act.

Its much less common today because most of the trading is done online and the business has changed as brokers are getting squeezed out.

What do you offer thats different than other dealers and brokers out there today?

That is a very important question to answer and will make a huge difference in your propositions, if you can define your edge and advantage.

 

[VRBeauty]

We've had a number of people come here within the past few months with requests similar to yours - "I've found a good source of diamonds, please help me with the details of setting up to sell them." I'm wondering why there is this (apparently) sudden surge in potential new diamond dealers - how are these individuals getting in contact with their diamond sources.

AAADiamondsUSA - would you mind sharing what prompted you to start this new venture?

 

[denverappraiser]

I have a business out in the middle of fly-over country. I'm far from the central hubs of the diamond world but I'm pretty well connected in this business. That said, I hear from importers or people trying to become importers on a continuous basis. They call, they email, they fax, they show up at my door. I can just imagine how often the people in New York or Antwerp hear this story. Everybody knows a guy in India, or SA, Israel, Russia or New York and they want to sell me diamonds. A fair number of them ARE that guy. I see them by the hundreds at the various trade shows. It is, to say the least, a wickedly competitive business. Even if I was in the business of buying diamonds, WHY would I buy from one of these guys? Prices? Selection? Long term supply relationships? The pitch varies from one to the next but the key is deciding on your own value add. It's not easy. If what you're bringing to the table is that you know someone in South Africa, I assure you that's not bringing much. You've got an account at FedEx and know how to do an international shipment? Again, that's good, but it's not adding much. Prices? Don't bet on it. Who you're competing with is that army of other dealers, and they're pretty aggressive folks who will work on single digit margins. Will you? You're a really personable fellow? Good luck with that. So are your competitors. What if you give long term financing, free shipping and easy returns? Now we're talking, but that's not a game for small time players and amateurs. You'll end up investing millions and the service you're offering is now fundamentally banking. You're subsidizing jeweler's inventory. What do you do if someone doesn't pay their bill? What if you get a return? What if they go bankrupt, get robbed or just disappear in the middle of the night?

 

[MelisendeDiamonds]

I have a business out in the middle of fly-over country. I'm far from the central hubs of the diamond world but I'm pretty well connected in this business. That said, I hear from importers or people trying to become importers on a continuous basis. They call, they email, they fax, they show up at my door. I can just imagine how often the people in New York or Antwerp hear this story. Everybody knows a guy in India, or SA, Israel, Russia or New York and they want to sell me diamonds. A fair number of them ARE that guy. I see them by the hundreds at the various trade shows. It is, to say the least, a wickedly competitive business. Even if I was in the business of buying diamonds, WHY would I buy from one of these guys? Prices? Selection? Long term supply relationships? The pitch varies from one to the next but the key is deciding on your own value add. It's not easy. If what you're bringing to the table is that you know someone in South Africa, I assure you that's not bringing much. You've got an account at FedEx and know how to do an international shipment? Again, that's good, but it's not adding much. Prices? Don't bet on it. Who you're competing with is that army of other dealers, and they're pretty aggressive folks who will work on single digit margins. Will you? You're a really personable fellow? Good luck with that. So are your competitors. What if you give long term financing, free shipping and easy returns? Now we're talking, but that's not a game for small time players and amateurs. You'll end up investing millions and the service you're offering is now fundamentally banking. You're subsidizing jeweler's inventory. What do you do if someone doesn't pay their bill? What if you get a return? What if they go bankrupt, get robbed or just disappear in the middle of the night?

Great post Neil, and of course if you are asking questions on a CONSUMER forum it doesn't reflect particularly well on your level of knowledge about becoming trade in this industry.

Run away fast and don't look back or you will will very likely be in for a bumpy ride. There is a reason why the middleman brokers have all but disappeared in this industry. There just isn't enough margin to support that model anymore with too many hands to feed in between to be competitive.

 

[Texas Leaguer]

I agree with DenverAppraiser's cautionary advise above.

Regarding your consignment relationship, this is relevant. You have to ask yourself, if the diamonds your source was supplying you were at all liquid, why would he not be simply selling them himself for cash instead of taking risk by loaning them to an inexperienced person who hopes to break into the business? The reason is two fold: 1) he cannot sell them himself for a good price 2) He is charging you a premium to account for the risk in the hope that you will be able to sell them and that he will eventually get paid.

This scenario does not put you in a position to compete. You will struggle at best. But as long as you know what you are getting yourself into, you can make the best decision for yourself.

We are not hear to discourage you - we want to make sure you protect your interests. If you don't like what your are hearing, please don't shoot the messengers!

 

[Texas Leaguer]

Run away fast and don't look back or you will will very likely be in for a bumpy ride. There is a reason why the middleman brokers have all but disappeared in this industry. There just isn't enough margin to support that model anymore with too many hands to feed in between to be competitive.

Exactly.

 

[WinkHPD]

I was where you are in 1970 in Brasil, only with colored gems. I lived in Rio and bought stones from the garimpeiros at stupid good prices on a Friday night because they needed money to pay for a hotel, a bottle or two and perhaps a lady to keep them company. I sold most of them and kept the cream, at least what I thought was the creme. I had one advantage that you do not, I lived in the heart of the business rather than on another continent.

When I got to the States after nearly three years of doing this I found out that some of my cream was medium at best, and very little of what I bought was truly special, although a few pieces were, and most of those went to my wife rather than to my bottom line.

I found, that for me, color did not sell particularly well in the States and that diamonds are King here. Now, 45 years later I have a real business. I dread the very thought of having to start over in today's market. You will need a huge monetary investment to get to buying diamonds at a price that will allow you to actually wholesale competitively. I know this as it took me more than twenty years of continually weeding through the chaff to find the vendors I could rely on to consistently deliver to me at the type of prices that they promised me when we first started doing business. (One of the older tricks in the business, sell cheap to hook the client, then slowly raise pricing, hoping that they aren't smart enough to notice. It was MUCH harder to notice before Rap came out.) In those 45 years, one thing I have definitely learned is that I could never make it at the wholesale level, the entry price is MUCH too high.

To make a living at wholesale you will need to work on tiny margins and thus move an incredible amount, in the millions, to make any kind of a real living after expenses. If you are doing any traveling at all to sell these diamonds, well, there goes your profit. If you are selling millions, then you will NOT want to be traveling as you will become an incredibly rich target for the bad guys.

Oh, and did I mention that you will be competing against companies that are selling in the tens and hundreds of millions of dollars annually and have years, if not generations of experience with which to kick your behind into next week or further?

I do not actually expect you to pay any attention to what I am saying. I did not either when I was starting out, so I got my behind kicked many times and kept coming back for more. I am now a retail business, but working on the Internet and working on much smaller margins than a normal retailer, but still larger than you will get at a true wholesale level. I could make more money if I had put my business degree to work and gone corporate, but I love what I do and made that decision to work for less in spite of all of the advice I was given. If you find yourself truly loving this business, then I will root for you, knowing that you will shed a LOT of sweat and probably many tears before you even begin to profit, if you ever do.

I suspect you do not know enough to really love it yet, and find the allure of easy, found, money from your erstwhile friend in the business too much to resist until you find out that we really are telling you the truth about your chances.

In other words, I wish you well, but do not expect good things for you for several years.

Wink, who was once there.