Question about Rapnet - industry experts help need :)

[PolarBear2006]

A question for industry veterans

I am thinking about getting into the jewelry industry, but was reading an old post here on PS that discussed Rapnet, how not all the diamonds listed in the search engine were available to the Rapnet members and dealers will frequently refuse sale to a new company without years of credit history. This strikes me as surprising: I understand not accepting credit cards and whatnot as wholesalers, but why would you not sell to a new customer who is willing to wire you the money upfront? Having no credit history, I don't expect to get diamonds on memo, but I don't see why I would get rejected if I'm willing to pay upfront?

Anybody have any insights into this? Is the information I read on the other post inaccurate? The only reason I can think of rejecting a cash upfront deal is if there is previous bad history or grudge...any help would be appreciated!

 

[denverappraiser]

1) Most sellers are eager to have clients who will wire money up front. Most clients aren't offering that.

2) Some dealers have territorial exclusive deals with their clients. They don't want two stores in the same mall fighting over the price on one of their stones.

3) The suppliers are, in general, looking for a long term relationship, not a one-off sale. If they get the feeling that what you have in mind doesn't fit with their program, they may not wish to work with you.

Yes, it's annoying to upstarts. Some will work with you and some won't, and beating your head against this wall is how you get all of that history under your belt. It goes faster than you might think and you'll like it better when you're the guy with a protected territory. You can always ask, and the key issue here is that Rap is selling advertising, not diamonds. Someone is behind each deal, and they get to set their own terms and conditions, including who they will sell to and at what prices. Rap and their competitors get no vote at all in this. This tends to be contrary to what people are somehow expecting.

 

[Rockdiamond]

Great post from Neil as usual.
Selling directly to the retail public is an entirely different business model than the "traditional" diamond business.

My take is that the largest dealers that aren't already involved as owners/partners in websites selling their goods are simply not interested in dealing with the retail public.

I will wish you he best Polarbear- it's a very tough business at this point in time. Tougher for a larger percentage of sellers than at any time I can recall.
I'll tell you this- if I had not started my website 18 years ago I can't imagine what it would be like trying to do it today.

 

[PolarBear2006]

1) Most sellers are eager to have clients who will wire money up front. Most clients aren't offering that.

Hi Denverappraiser, thank you for the insightful feedback! I did kind of think that cash upfront would be the only route in the beginning as there is no credit history, most clients I guess are long time customers who will ask for net 30 or 60. I guess I can talk to them about it, but good to know that most will be willing to do business.

 

[PolarBear2006]

I will wish you he best Polarbear- it's a very tough business at this point in time. Tougher for a larger percentage of sellers than at any time I can recall.
I'll tell you this- if I had not started my website 18 years ago I can't imagine what it would be like trying to do it today.

Thanks! I know....its a tough world out there

 

[ADN]

1) Most sellers are eager to have clients who will wire money up front. Most clients aren't offering that.

Hi Denverappraiser, thank you for the insightful feedback! I did kind of think that cash upfront would be the only route in the beginning as there is no credit history, most clients I guess are long time customers who will ask for net 30 or 60. I guess I can talk to them about it, but good to know that most will be willing to do business.

Hey mate
'Cash is king' has never been more applicable than in the diamond business at the moment.
Also, what's your knowledge/experience of diamonds and the industry? There is way more to it than what you'll read on a chat forum . It's a big world out there, and there are allot of sharks - just make sure you know what you're doing/getting into - - in an industry that involves large amounts of capital, it can take just one bad transaction (from either a supplier or a customer) to finish you before you even get started.
Good luck with everything

 

[Paul-Antwerp]

Hello all,

Aside from the great insight you already got here, I see one aspect not mentioned, that is the question of what we know under the acronyms of AML and KYC.

AML stands for Anti-Money-Laundering and KYC (directly connected) stands for Know Your Customer. In most jurisdictions where diamond-cutters and wholesalers are active, they have increased legal requirements with regards to AML. They have to know who the UBO (Ultimate Beneficiary Owner) is of their customer-company. In Belgium, for instance, we need to make sure that our new customer has a plausible explanation regarding the origin of their money. Who knows, you may be faced with a drug-cartel who set up a so-called diamond-retailing-company, offering to pay upfront for their purchases of diamonds. We are legally bound to check.

In the same way, our customer cannot be a politically prominent person in their country, or related to one. Yes, we could sell to Bill Clinton Diamonds (please take this as a joke), but we would have to report it to our AML-authorities. Obviously, if this would regard politicians in a less 'organized' country, this would definitely lead to further investigation.

And for most diamond-miners, these AML-requirements lead to KYC-rules. In order to get better supplies of rough diamonds, the miners want you to report on the kind of customers you are serving, and how you are adding value to the rough in co-operation with these customers.

For those reasons, do not expect that up-front-money is going to open all doors.

Live long,

 

[tyty333]

1) Most sellers are eager to have clients who will wire money up front. Most clients aren't offering that.

Hi Denverappraiser, thank you for the insightful feedback! I did kind of think that cash upfront would be the only route in the beginning as there is no credit history, most clients I guess are long time customers who will ask for net 30 or 60. I guess I can talk to them about it, but good to know that most will be willing to do business.

Not in the industry, but I'm not sure how you concluded that from Denverappraiser's post. I read it and there is certainly not enough
information there to come to that conclusion IMO.