Question for vendors who offer virtual inventory

[kenny]

I believe that includes almost all PS vendors.

Would you kindly describe to us the virtual inventory system?
Correct me if I'm wrong, but I believe it's is a huge database of diamonds that, while physically located around the world, can be sold by any participating vendor.

It sounds like a win win for buyers and sellers.
One problem I imagine must happen occasionally is your customer makes the decision to buy it and they pay for it but you later find out someone else bought it first.

When you sell a diamond that is in the virtual inventory how long does it take for you to find out if it's already sold to (or on hold for) someone else?

Is it instant?
Could it be instant in today's computer age?
If not, why not?

Oh and what is "memo"?
Is selling, or showing, a diamond to a customer that is from virtual inventory called having it "out on memo"?

 

[Rockdiamond]

Most of what Kenny wrote is correct.
Virtual diamond lists are an incredibly efficient way of compiling lists of diamonds to be made available to other jewelers, or, fed to one of the many consumer websites that participate.

One of the things I find is that this method stresses efficiency over other aspects that may be important- but cost the consumer more.
For example: the spread between cost/sell on "virtual" stones is truly tiny.
The massive cutting houses who provide these lists can absorb the low margin- as they provide virtually no service.
But a dealer that actually selects one of these diamonds, and purchases it will not be able to offer a high level of service, and the same price as the list.
Potential services a dealer provides are many.
They include being able physically verify a diamond's availability at a moments notice. Photography and various other tests people may request. Things like trade up are far less likely with the virtual inventory system. The best jewelry work is generally done by "physical" jewelers as opposed to "virtual" ones.
But another value may not be as evident- the dealer that purchases diamonds may be selecting stones from the same pool consumers see online in a "virtual" state- except, dealers buy in person.
This affects the overall quality of the inventory. GIA graded SI2's, for example, may possess a far higher percentage of eye clean stones in a "physical" dealer's inventory, compared to the percentage of eye clean stones on the list.

There's many cases where the stones get removed from the list quickly- but it may take to 24 hours.

"Memo" is when one dealer "lends" the diamond to another.
In such cases the stone might still show as available- and could lead to a situation where a consumer purchases a diamond from a list that's not available. When the dealer who owns sees that it sold on the web, he'll call whoever has it on memo
if the guy he memo'd it to tells him- "Bill me"- the stone may not be available to the consumer who bought it off the list.
That's one reason 100% compliance with the list will never happen.


I think that there's room for both.
A lot of people love the idea of the least expensive method, and are willing to give up the additional service. Others find that the relationship with the seller is important- and worth the money in this type of purchase.

 

[Diamond*Dana]

I have a question...my husband purchased a diamond for me in December, yet I still see it listed for sale by 4 different vendors when I do a search. The measurements are what caught my attention at first because mine seems to face up a bit larger than others in the same carat weight. The next thing was the GIA number. So why would my diamond that was purchased 5 months ago still be I'm the virtual inventory?

 

[Rockdiamond]

Wow- that's interesting.
You'd be doing any of those vendors a favor by sending them a note advising them they have the wrong price on your diamond- as the owner, you set the price and it's $1,000,000

Seriously- you would be doing the company you bought it from ( I don;t know who that is) a favor by advising them if it's still on their site.
They might even take action if you advised them you've seen it on other sites.
It really should be fixed.

 

[Diamond*Dana]

It was purchased from a jeweler who is a friend of ours. He is semi retired, not working for a company.
From what I see the online vendors are "selling" it for, we really did get a deal, lol.

 

[Rockdiamond]

Hmmm- that is also interesting.
There really is a small margin on many of the popular internet virtual diamond sites.
In general, if someone was asking about a local jeweler who was claiming to have substantially lower prices than aggressive internet pricing, we'd tell them something sounded off.

I'm not saying this applies to you- but it's not possible for anyone to sell diamonds from the list for much less- if any.
Maybe the places you've seen your diamond are not aggressively pricing compared to other sites?

 

[Diamond*Dana]

I'm not sure how it all works. The jeweler we purchased from is a close personal friend. He doesn't sell to us to make commision. My husband paid $4k for our E VS2 diamond. I see it listed online for $4200-$4600. When I say we got a deal...when you have three small children who demand all our finances, a savings of $5.00 is a deal to me!

 

[Rockdiamond]

That make a whole lot of sense Dana!!! And it IS a nice savings ( like 4 boxes of Pampers

The spread from $4000 to $4200 is probably the margin the virtual sites have on the stone- but again you need to let them know the new price as the owner

Something that has been brought up in another thread regarding the virtual inventory system- price changes.
Say the owner if a given diamond has not changed the list to reflect the new prices ( which have spiked considerably over the past few years)
If the owner of the stone get s a call for it- that might be the time they realize the price is an old price- and immediately change it- and refuse to sell for the old price.
This could have the effect of putting that virtual seller in a bad position.
The virtual seller will then have to either raise the price ( difficult to do if the consumer has already paid) or turn away the sale somehow- possibly by claiming the stone has been sold.

 

[Rhino]

Answers between the lines.

I believe that includes almost all PS vendors.

Would you kindly describe to us the virtual inventory system?
Correct me if I'm wrong, but I believe it's is a huge database of diamonds that, while physically located around the world, can be sold by any participating vendor.

Correct with some caveats. There are companies that list their inventories in the virtual database that can not be listed publicly. That's why what you see online isn't necessarily all of the available options for a given call. When we are serving a client and hunting down a diamond for them we have the ability to search locally, nationally or globally. Also there are companies that will not allow just any vendor to acquire diamonds from them. Some only give diamonds to genuine bricks and mortar stores and there are others of course who give to Internet vendors as well as b&m's.

It sounds like a win win for buyers and sellers.
One problem I imagine must happen occasionally is your customer makes the decision to buy it and they pay for it but you later find out someone else bought it first.

Currently (and you know this already Ken, at least about us) is I don't allow this to happen to us period. As I do not list the virtual inventory on my site at this time, when we are contacted to acquire diamonds that we physically do not have we query the virtual inventory and call and confirm availability. If it's not available I simply do not let the client know about it.

When you sell a diamond that is in the virtual inventory how long does it take for you to find out if it's already sold to (or on hold for) someone else?

We find out asap as we speak to the manufacturer.

Is it instant?

Should be but can't. It depends on how quickly the supplier removes it from the virtual list. There are many companies that do not update their lists as quickly as we'd like. There are some manufacturers that have their inventories listed and the greater majority of it not be available either. It is very frustrating sometimes.

Could it be instant in today's computer age?
If not, why not?

Yes it could be instant but it would require each manufacturers inventory being listed and linked on a real time database. Currently their inventories must be uploaded manually and any changes must be done in house, then uploaded.

Oh and what is "memo"?
Is selling, or showing, a diamond to a customer that is from virtual inventory called having it "out on memo"?

Yes. When a diamond is sent from a manufacturer to a distributor it is either sent with an invoice to purchase or sent on a memorandum (ie. memo).

Hope that helps.

Rhino

 

[whitewave]

Asking new questions based on this really old post:
1) has anything changed on the issues of real time databases, or are stones still removed manually

And

2) where are these manufactures located?

 

[Karl_K]

Asking new questions based on this really old post:
1) has anything changed on the issues of real time databases, or are stones still removed manually

And

2) where are these manufactures located?

It is more efficient these days and the software has more links between accounting and listings so things do likely move faster.
However listings are only updated every so often depending on the listing service so there can be several days lag still.
Memo is more rare but still done.
So in reality nothing much has changed.

The are located all over.
More are likely in India as they seem to have embraced technology more than some other areas of the world.
There are still players that refuse to let their diamonds be listed online in the lists.

 

[whitewave]

@Karl_K thanks. Interesting.

 

[metall]

Question regarding these virtual stones since I was just reading a few PS threads about it:

Are these inventories like the PS search engine where you get photos, video, aset, of stock before a buyer has to place an order? or does a gemologist pick just based solely on the numbers?

How hard would it be for a plain jane buyer (not a retailer or a jeweler) to get access to these stones? It seems that the lists are out there easily available, but to actually get your hands on any of these particular diamonds that listed seems like it would be a different story?

 

[Rockdiamond]

Question regarding these virtual stones since I was just reading a few PS threads about it:

Are these inventories like the PS search engine where you get photos, video, aset, of stock before a buyer has to place an order? or does a gemologist pick just based solely on the numbers?

How hard would it be for a plain jane buyer (not a retailer or a jeweler) to get access to these stones? It seems that the lists are out there easily available, but to actually get your hands on any of these particular diamonds that listed seems like it would be a different story?

About pics/videos: more and more cutters are using widely available picture/ video systems. But by no means all- so there's inconsistency in which stones have pics/videos. Even the ones that do are not done in a consistent manner making comparisons difficult.

In terms of how hard it is for a "plain Jane" to obtain stones off the list: As of now, rapnet is for trade members only.
Even jewelers/trade members may have difficulty in obtaining stones from the virtual db because some- ( actually, a lot of)- the cutters are very particular about who they send stones to. If they don;t know the jeweler/ dealer- many will ask for "cash memo"- forcing the person trying to sell the diamond off the list to pay in advance.

 

[metall]

About pics/videos: more and more cutters are using widely available picture/ video systems. But by no means all- so there's inconsistency in which stones have pics/videos. Even the ones that do are not done in a consistent manner making comparisons difficult.

In terms of how hard it is for a "plain Jane" to obtain stones off the list: As of now, rapnet is for trade members only.
Even jewelers/trade members may have difficulty in obtaining stones from the virtual db because some- ( actually, a lot of)- the cutters are very particular about who they send stones to. If they don;t know the jeweler/ dealer- many will ask for "cash memo"- forcing the person trying to sell the diamond off the list to pay in advance.

This industry is fascinating. As someone who has worked in retail before, this seems like a lot of hoops for jewelers to jump through for the stones they would be looking for. Though I guess it's similar to fabric designers who would only sell to certain companies. Or design houses who sell to department stores.

I guess a follow up question regarding images and videos is: how do jewelers (and I'm not even really thinking picky PS level jewelers) choose the stones that they would like to source for their pieces if they don't really know what they're buying?

I guess once they have a batch of diamonds, they would be able to use lesser diamonds in commercial pieces whereas the nicer ones would go into more custom pieces...But i image it would be very frustrating to work that way...

Thank you for the response @Rockdiamond. After reading some posts I had started looking at some stones from a cutter for a upcoming project, but i guess it'll be a bit of a waste of time if I couldn't find someone to call more than 1 or two particular stones in for review. By your account, there would be slim to none chances of that happening.

 

[Rockdiamond]

I guess a follow up question regarding images and videos is: how do jewelers (and I'm not even really thinking picky PS level jewelers) choose the stones that they would like to source for their pieces if they don't really know what they're buying?

You are very welcome- and thank you for forwarding the discussion.
I agree it's a fascinating business- I consider myself very lucky to be a part of it.
So- to answer the point above: There's so many different type of sellers....but ones that actually make their own pieces for stock ( as opposed to for a customer order) are pretty rare.
There were always stores that carried a lot of diamonds- but nowadays that number has vastly diminished as the internet has decimated margins overall on diamonds.
I used to be a traveling diamond salesman selling to jewelry stores. There are some very sharp, and honest brick and mortar sellers out there. But the true "mavens" have always been a small percentage.
For such stores, and those of us internet sellers who do actually purchase diamonds- relationships develop over time. Someone who does actually purchase diamonds will know which cutter is good for which type of stones. There are specialists all the different cuts. In some cases, only a few worldwide. Like the cutters of modern antique style repro diamonds, or Horse Head Diamonds, or certain specialized fancy colored diamonds. Manufacturing sellers need to know this stuff. If they're successful, they know who to call.
Also important, whose word can be trusted.
A lot of cutters will simply tell you "it's gorgeous" or offer no opinion. Others are far more detailed and forthcoming in describing a stone to dealers. I get frustrated by the ones who tell you every single stone is incredible.
I guess this is similar to what consumers face in some ways.

Thank you for the response @Rockdiamond. After reading some posts I had started looking at some stones from a cutter for a upcoming project, but i guess it'll be a bit of a waste of time if I couldn't find someone to call more than 1 or two particular stones in for review. By your account, there would be slim to none chances of that happening.

Here again- a sellers positioning makes a huge difference.
Unfortunately for people who want to get into the business- or even jewelry stores that don't sell a lot of diamonds, established dealers have a real advantage. If a cutter knows the dealer is a serious player, they will be able to get multiple candidates in to allow you to review.
Dealers that have a relationship with the cutter will also be able to get stones "on memo"- so they don't have to lay out the funds.
There are a number of sellers that advertise or post here on PS that will be able to show you multiple stones.
Our seasoned consumer members will steer you in the right direction.
Hope this helps!

 

[Texas Leaguer]

Very interesting topic. Kudos to the other trade members for posting some solid info on virtual inventory. In the grand theme of things, it is a relatively recent development in the diamond trade. And still evolving.

Originally jewelers bought and stocked diamonds. Then in the 1970's Rapaport came along and compiled price lists for the trade. Then manufacturers started leaving goods with credit worthy jewelers on consignment. Later they started sending individual stones out on 'memo". As a result, the amount of diamonds jewelers actually bought for inventory was less and less.

Around the year 2000, with the advent of the internet and advances in information technology, retailers learned how to process big lists of goods and project them onto websites for sale ('virtual inventory'). Middle men between manufacturer and jeweler started being squeezed out of the equation. Recently, consolidation has been happening rapidly with thousands of jewelers going out of business and manufacturers seeking ways to go 'vertical' - direct to consumer. The consumer has been greatly advantaged by this entire process with pricing becoming much more transparent and margins much smaller.

That said, there are definite downsides to the consumer in shopping from virtual inventory. Deliverability is one. Consumers are let down far too many times due to unavailable stones, or stones that cannot be accessed in a timely fashion. Quality control is another. The sale is made before the merchant ever has a chance to lay eyes on the stone, trusting a datafeed entirely in making his representations to the consumer. Images supplied provide another opportunity for mismatched data or other errors.

Something that I don't think has been mentioned so far is that some retailers get specific permissions from manufacturers to list the goods, but others simply "scrape" database listings and post them to their websites. This is one reason that you might see a sold stone stay on a website for months.

 

[Allisonfaye]

I have been looking for a while with one of the PS vendors and the diamond I have zeroed in on is available at several places with fairly wide price range, Blue Nile being the most. The ones that offer returns and who will call in the stone to evaluate will cost more. Also marketing, as in the case of a Blue Nile, is going to add to the cost.