supplier-retailer negotiation?

[elmo]

I'd like some expert / pro insight into how the business works regarding pricing and negotiation.

For gems that are somewhat unique and that might be considered "important" (maybe starting in the $20k-30k range), how customary is it for a retailer to negotiate price with a supplier? I'm referring more to colored gems and diamonds rather than to colorless round brilliants.

An excellent Discovery Channel program over the holiday weekend showed various aspects of the diamond trade, from mining to sightholder sales to cutting and wholesale trade. I was particularly interested in how intense the negotiating was between a cutter and retailer for a potential 15-carat stone.

In my experience, though, my retailer has seemed reluctant to negotiate with suppliers. For gems that aren't traded in great volume and where there isn't a GIA report indicating quality to some degree of precision, I had almost expected that the marketplace would be more like for fine art and antiques, where some degree of negotiation is often almost expected.

Just curious what other folks' thoughts are.

 

[DiamondExpert]

Hi el'

To some extent this will depend both on the relationship between the retailer and wholesaler, and between you and your retailer.

Where there are good relationships all around, as long as the retailer retains a constant % of the final price, it seems like the retailer should attempt negotiation to see if it can benefit the client.

Your retailer should be willing to act like a "good lawyer" (oxymoron?

) by negotiating the best deal for you!

 

[elmo]

Gary, thanks. Good lawyer I think is in some respects a good analogy. (Maybe we get lucky and LawGem doesn't see the oxymoron comment.

) I'm not talking about a traditional jewelry store situation, it's more of a brokering relationship with a knowledgeable client, where the jeweler is in many respects representing the client the way a lawyer would, and the client is an active participant in the process. I think this isn't so uncommon in this type of situation i.e. with a collector; I've seen for instance where well-regarded appraisers offer brokering services.

You also make a good point, that a particular client-supplier relationship can be important here, as a history of steady sales can bring special attention. Also, some particularly fine items are going to be non-negotiable.

I could still hang myself pretty easily, but the more I learn about the things that interest me, the more I want to be involved in the process. It is almost as though the relationship with the retailer evolves as the client brings more knowledge to the table.

 

[mike04456]

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On 12/5/2003 3:31:34 PM DiamondExpert wrote:











Your retailer should be willing to act like a 'good lawyer' (oxymoron?

)

----------------

No more so than "good jeweler."

And elmo, I didn't even notice that remark until you pointed it out.

 

[DiamondExpert]

'...the relationship with the retailer evolves as the client brings more knowledge to the table."...this is very true, and the more knowledge the better for everyone concerned (although sometimes people get threatened by it).

As a savy consumer, you know you are better protected from making a glaring mistake, than if you were uninformed. You will always make mistakes, we all have/and will, but you try to minimize them and do a better job each time you go through the process.

That "better job" includes how well you work with your broker - it's like visiting a physician where both of you need to work together in your healing, and the physician is limited to some extent by how well well informed you are about yourself.

In the final analysis, the greatest value of the broker is to honestly represent and protect your (the client's) interests, and not just be a middle man with his hand out

.

 

[DiamondExpert]

Gosh, Ben

...I didn't know you were a lawyer too!!

 

[elmo]

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On 12/5/2003 6:18:40 PM LawGem wrote:

No more so than 'good jeweler.'

----------------

LawGem, you are right, too...a jeweler's business model is that of a jeweler. I've seen industry experts and appraisers who also do brokering offer a "gemologist-consultant" service, which may be even more along the lines of Gary's lawyer analogy.

The more unique an item is, the more specialized knowledge that may be needed to effectively negotiate based on subtle nuances of quality differences that still have an impact on price. I mean, how many 2-carat intense pink diamonds or 7-carat unheated Burma sapphires do most jewelers sell in a year?

 

[fire&ice]

Brokering is very common with any unusual high end object/item. Many dealers of any kind don't want to put all their eggs in one basket. All fees/prices are negotiable. The more rare an item is the more the holder of such will stick to their price. In that case, the broker should reduce their fee to secure a sale. As mentioned, usually if one is collecting in the high end stuff, the relationships are there all around.