Vendors/ PS''ers- Brainteaser for you... Am I just stupid???

[caligirl08]

Hi there,

I have a question and was wondering if you could help me understand the rationale behind this. I'm not bringing it up to be argumentative at all- I just truly do not understand. My degree's in business and I'm feeling pretty stupid that I'm not getting this...what am I missing? I know I'm simplifying things here, but I don't want to bore anyone with financial models Hopefully this illustrates the concept.

1. Let's say I buy a diamond (Diamond A) for $10,000
The vendor makes a 5% margin, so gross profit on the transaction is $500

2. I try to return the ring, but I'm not able to do so because it was a diamond that the vendor brought it and it's past the return date. However, I can upgrade the diamond.

3. I pick out another diamond that is available on the PS multi-vendor search and exchange Diamond A for Diamond B, which costs $10,500

4. The vendor makes an additional $25 on this sale (assuming 5% margin on the $500 price differential) but vendor spends $50 bringing in the ring and running sarin, idealscope, etc.

5. Ring A goes into the vendor's inventory and the gross profit from both transactions is $475

Wouldn't it have made more sense for the vendor to take back Diamond A (since it ends up back in inventory anyway) and charge a 5-10% re-stocking/handling fee?
In terms of SG&A, nothing changes. Fixed costs are the same and variable costs actually increase in the no-return scenario (time spent bringing in stones, consulting customer).
I'm not understanding unless profit margins on stones are much higher than the 4-7% that's been reported.

Thanks!

 

[strmrdr]

I really should stay out of this...

What your missing is they would have to have it regraded when its returned and that is a few hundred bucks and your under estimating the cost to do the pictures and data.
They lose money when people do that close of an upgrade that quick and its rarely done.

Frankly, do I think it sucks for you that they wont take it back?
Yea I do feel sorry for you, but it is well within the policies you agreed to when you purchased it for them not to do so.

 

[caligirl08]

Thanks Karl. I was just curious. Wasn''t sure if I was missing something...

 

[SilverLily]

This is your third post about not being able to return your WF diamond (yeah, I know, you didn''t mention WF, but you won''t convince me that this isn''t about them). I don''t think you will be able to bully them into returning it. You should accept that you missed the return period and enjoy the new diamond or sell it.

 

[vslover]

I think you should just take your mom''s diamond and make it into a pendant or a RHR and be done with it. Stewing about the problem isn''t going to make it go away. Most PSers would love to get an extra diamond!

 

[risingsun]

Diamond A would have gone back to the original source, not your vendor, had it been returned in time. It was not from the vendor's inventory and was brought in for you. As Leslie explained, there is a time constraint on such diamonds.

 

[goobear78]

Date: 8/26/2008 8:54:12 AM
Author: SilverLily
This is your third post about not being able to return your WF diamond (yeah, I know, you didn''t mention WF, but you won''t convince me that this isn''t about them). I don''t think you will be able to bully them into returning it. You should accept that you missed the return period and enjoy the new diamond or sell it.

Just wanted to point out that caligirl08 did mention that it was a WF diamond she is talking about in 2 other posts.

caligirl08, sorry to hear about your experience with WF. I haven''t purchased from them yet and I''ve only heard great things about them. I hope this works out. Can''t answer about the brainteaser...

 

[HariSeldon]

To answer your title question... Yes.

WF has their return policy clearly outlined for a reason. stop trying to con them into returning a diamond beyond their policy and stop trying to con us into giving you ammunition to fight back at them.

you can''t always get what you want...

 

[denverappraiser]

What are you missing?

#1. Vendors with any sense are pretty selective about what they put into inventory. Not every one has the same sorts of criteria so they don’t all want the same things but certain stores do better with certain items and it only makes sense that they invest their limited capital in those items. WF, in particular, promotes a pretty narrow niche of stones that meet their ACA requirements and their inventory reflects it. Since this stone was special ordered, it presumably isn’t one of those and, all things being equal, they simply don’t want to own it.

#2. One of the advantages to the vendor of the whole special order system is that they don’t have to pay for the stone until you do. That means that they don’t have their money tied up in it and it’s the key to how so many relatively small companies can offer millions or even hundreds of millions of dollars worth of selection. It’s a massive virtual consignment system. The same stone from their regular source is BETTER than buying it from you. You they have to pay up front, from them it’s a consignment.

#3 It’s very unusual, and very generous, to offer a trade up program on these sorts of deals. The vast majority of dealers will simply NOT ACCEPT a $10k virtual stone as a tradein on a $10.5k new purchase for exactly the reasons outlined above. I wasn’t aware that WF would be willing to do such a deal. You’re quite right, this is a money losing offer for them that’s being extended in the name of good customer relations. In light of how this one is working out, they may rethink that program before making a similar offer to the next customer.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[SilverLily]

Date: 8/26/2008 9:36:47 AM
Author: goobear78

Just wanted to point out that caligirl08 did mention that it was a WF diamond she is talking about in 2 other posts.

Yes, I realize that. I meant that she didn''t mention WF in this thread, but because of all of her other posts mentioning WF, we all know that this thread is about them. She is trying to disguise this thread as a question just to further her education, but she really wants to rant about WF''s return policy again.

 

[oldmancoyote]

Date: 8/26/2008 2:36:40 AM
Author:caligirl08
Hi there,

I have a question and was wondering if you could help me understand the rationale behind this. I'm not bringing it up to be argumentative at all- I just truly do not understand. My degree's in business and I'm feeling pretty stupid that I'm not getting this...what am I missing?

The answer is that the diamond in question is a virtual diamond. Thus, the retailer does not have it on stock, but calls it in on sales memorandum whenever a customer requests it. Retailer is able to return the item to the manufacturer within a specified period of time; past that period, the stone is considered sold and mfr invoices retailer.

Therefore, if the retailer accepted a return past the invoicing point, it would now have an inventory that it did not have (or want) before. This puts a rather different light on the various "costs" at hand, and actually makes the 70% buyback policy very generous.

This in addition to the other points that Karl and others have brought regarding restocking costs.

 

[diagem]

Date: 8/26/2008 9:55:30 AM
Author: denverappraiser
What are you missing?

#1. Vendors with any sense are pretty selective about what they put into inventory. Not every one has the same sorts of criteria so they don’t all want the same things but certain stores do better with certain items and it only makes sense that they invest their limited capital in those items. WF, in particular, promotes a pretty narrow niche of stones that meet their ACA requirements and their inventory reflects it. Since this stone was special ordered, it presumably isn’t one of those and, all things being equal, they simply don’t want to own it.

#2. One of the advantages to the vendor of the whole special order system is that they don’t have to pay for the stone until you do. That means that they don’t have their money tied up in it and it’s the key to how so many relatively small companies can offer millions or even hundreds of millions of dollars worth of selection. It’s a massive virtual consignment system. The same stone from their regular source is BETTER than buying it from you. You they have to pay up front, from them it’s a consignment.

#3 It’s very unusual, and very generous, to offer a trade up program on these sorts of deals. The vast majority of dealers will simply NOT ACCEPT a $10k virtual stone as a tradein on a $10.5k new purchase for exactly the reasons outlined above. I wasn’t aware that WF would be willing to do such a deal. You’re quite right, this is a money losing offer for them that’s being extended in the name of good customer relations. In light of how this one is working out, they may rethink that program before making a similar offer to the next customer.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

Its nice of WF to offer this..., doesn''t really make economic sense...

If I was in your shoes..., I would thank them

for that kind of generosity!!

 

[stone_seeker]

There seems to be some angry folks on here so I wont get into it other than say buyer''s remorse can be a pain but its not the company''s responsibility to deal with it beyond the date stated in their policies. If they did, there wouldnt be so many options online and prices would go up for everyone which is even more unfair.

I am sure you can sell it - you may have to eat 5-15% of what you paid but that should be worth it to et your peace of mind back.

 

[purrfectpear]

The answer to your title question is yes.

 

[stone_seeker]

Date: 8/26/2008 1:10:55 PM
Author: purrfectpear
The answer to your title question is yes.

Have I missed a thread where OP has offended some people? I see an unusual amount of terse and mean replies to the question posted.

 

[goobear78]

Date: 8/26/2008 1:16:22 PM
Author: stone_seeker

Date: 8/26/2008 1:10:55 PM

Author: purrfectpear

The answer to your title question is yes.

Have I missed a thread where OP has offended some people? I see an unusual amount of terse and mean replies to the question posted.

I was thinking the exact same thing. I must be missing something...

 

[stone_seeker]

I just did a quick search of past threads and other than the fact that this is the 3rd post about the same issue - which isnt that bizarre since people post here multiples times regarding the same purchase - I dont think anything was offensive. Unless maybe people are just annoyed about reading about the same complaint over and over again. In fairness, at least this time she asked about the situation in a different way.

In the prior threads I did see that a WF representative did offer 70% cash back for the ring within a year of purchase which I must say is quite generous. So knowing your worst case is losing 30%, I would try Ebay and other private sales to see if you could sell it for 80-90% of what you paid. Getting 100% back seems unreasonable to ask for at this point. Lastly, you have a year with the WF 70% policy. Maybe in that year time, the stone can be used for another present, etc and you will have more time to think about it.

 

[panda08]

Date: 8/26/2008 1:17:47 PM
Author: goobear78

Date: 8/26/2008 1:16:22 PM
Author: stone_seeker

Date: 8/26/2008 1:10:55 PM

Author: purrfectpear

The answer to your title question is yes.

Have I missed a thread where OP has offended some people? I see an unusual amount of terse and mean replies to the question posted.

I was thinking the exact same thing. I must be missing something...

Ouch. I looked at OP''s previous posts and she had an unfortunate situation with WF''s return policy that WF was unable to resolve to her satisfaction. It seems like OP is having a hard time letting it go and has repeatedly posted on the situation, thus the harsh words.

 

[SilverLily]

Date: 8/26/2008 1:16:22 PM
Author: stone_seeker

Have I missed a thread where OP has offended some people? I see an unusual amount of terse and mean replies to the question posted.

It is not the number of threads that she has posted...it is the content. Though she may not intend to come across this way, her posts give the impression that she is trying to get WF to bend the rules for her by publicly airing her grievances. WF has done nothing wrong, but she will not let it go.

 

[decodelighted]

Bottom line: the VENDOR didn't want that particular stone. If they had wanted it, they would have bought it for their own inventory. But they didn't buy it. YOU did. Or, rather, your fiance did at your direction. And, now, I suppose you wish for the vendor to act at your direction too? Or treat you like a special snowflake?

The policy is the policy is the policy. Do not attempt to out-smart, out-analyze, out-wit, out-play, out-last the policy. No further analysis required from me. But feel free to post of your woes at one of the many consumer-service-oriented web forums. But I warn you, you'll find their comment sections pretty brutal for those seeking *special* treatment ... rather than regular old respectful but rule-abiding customer service.

 

[cara]

Well, this thread has certainly taken a nasty turn.

Cali, if you are still reading, I think the general point is that WF does have a stated policy that, under some circumstances, does not end up being to their financial benefit - a small upgrade done close to the time of the original purchase may not be in their strict financial interest. They even had a case that was posted a while ago where someone traded in a stone for a smaller one with worse clarity (but higher color) and it was some trivial amount more - like $6 or something. That clearly was a money-loser for WF, but they decided to keep their upgrade policy simple with few restrictions because most of the time, people do more substantial upgrades, AND AND AND, the upgrade policy is a huge selling point among their desired diamond-fanatic clientele - so it is a money losing feature that wins them business and ties their customers to them for future transactions - a long term bonus.

Taking back virtual stones once they have payed off their supplier and giving you cash back is a whole different ball of wax. A huge difference is that, in an upgrade, they take back your first stone and give you another diamond in compensation (plus you give WF some more money because the stone is bigger or whatever) whereas for a return the customer receives dollars. Once you have your cash back, you are not tied to them for a future purchase. And they have this stone in inventory that for whatever reason, is not one of their standard products. And their encounter with you reduced their available cash until they manage to resell your diamond.

Their buyback policy loses you 30% of the purchase price but compensates them for all the negative aspects (from their perspective) of taking back a stone they thought they had sold that is not one of their standard items. You have identified an policy senerio (an upgrade) in which WF might lose money (or not earn much money) under the terms of sale it offers, but that doesn't mean that they should accept different return terms that are also not great for them but which they did not agree to prior to the sale. Sucks for you, but maybe its time to put the ring away and see how you feel in a few months (before your buy-back year is up). Or just return it right now for the 70% and move on...

 

[LaurenThePartier]

Although I am sorry that your timing was off and that you had a back-up stone you did not know about before OKing this purchase, you still missed the return date. You must have loved this stone prior to finding out you had a freebie locked away in a safe. My advice is to just keep it. Or take the upgrade policy offer.

But, please understand, a policy is in place for a reason, and not bending the policy for one customer is not bad customer service.

 

[WinkHPD]

Date: 8/26/2008 10:40:56 AM
Author: DiaGem

Date: 8/26/2008 9:55:30 AM
Author: denverappraiser
What are you missing?

#1. Vendors with any sense are pretty selective about what they put into inventory. Not every one has the same sorts of criteria so they don’t all want the same things but certain stores do better with certain items and it only makes sense that they invest their limited capital in those items. WF, in particular, promotes a pretty narrow niche of stones that meet their ACA requirements and their inventory reflects it. Since this stone was special ordered, it presumably isn’t one of those and, all things being equal, they simply don’t want to own it.

#2. One of the advantages to the vendor of the whole special order system is that they don’t have to pay for the stone until you do. That means that they don’t have their money tied up in it and it’s the key to how so many relatively small companies can offer millions or even hundreds of millions of dollars worth of selection. It’s a massive virtual consignment system. The same stone from their regular source is BETTER than buying it from you. You they have to pay up front, from them it’s a consignment.

#3 It’s very unusual, and very generous, to offer a trade up program on these sorts of deals. The vast majority of dealers will simply NOT ACCEPT a $10k virtual stone as a tradein on a $10.5k new purchase for exactly the reasons outlined above. I wasn’t aware that WF would be willing to do such a deal. You’re quite right, this is a money losing offer for them that’s being extended in the name of good customer relations. In light of how this one is working out, they may rethink that program before making a similar offer to the next customer.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

Its nice of WF to offer this..., doesn''t really make economic sense...

If I was in your shoes..., I would thank them

for that kind of generosity!!

YEAH! Diagem and I are in agreement on something!

Wink

 

[Garry H (Cut Nut)]

Calgirl you should be getting the message by now?
This is a very nice diamond that you wish to return. I believe you did not want to pay for their top of the line stones, which speaking as an expert, it is my opinion that no one has ever been able to prove they can pick a diamond like yours from the the most precise H&A''s stone.

Another feature of the money back deal is that an org sets its rules, and its sales staff typically try to do the best for their clients by bending the rules. And other clients hear about a rule being relaxed and say "why not me too?"

Fair is fair.

 

[tiffanyornot]

Even though caligirl08 is getting some criticism, I think it is in part deserved. Also, from the other message boards I frequent, this is one of the most polite and courteous message boards. Notice that no one criticized caligirl08 for posting in her first two threads related to this and only on the third try were posters a little peeved.

I disagree with the reasoning that it is ok that merchants follow their policies at all costs (i.e., I don''t know why just because there is a policy or a paper on the wall that it makes everything seem much more legitimate) and I know personally that Tiffany''s bends over backwards to accomodate folks. Of course, merchants can bend the rules, but Whiteflash chose not to in this particular situation so judge it on that basis, regardless of the economic reasoning underlying this decision. I also happen to think that Caligirl08''s reasoning is sound in that an upgrade and a return doesn''t appear to be all that economically different.

However, one additional thing that Caligirl08 misses is that if you return it, you no longer have an existing relationship with WF regarding the e-ring. For example, when you buy a car from BMW, it is not only more likely you will buy a BMW in the future, but you will refer more people to buying BMWs, you will get your car serviced at BMW, etc. You become an ex-client rather than a current client in terms of the e-ring (not sure if you have anything else from WF).

I think though it''s unfortunate, your fiancee should have spoken to your parents and asked for permission. I don''t see that he did that, so it''s his mistake for not doing that and having to suffer the consequences of paying for the stone. If I was a parent, I would want to be extended that courtesy which would have avoided this mess altogether. Also, he should have possibly been economically smarter instead of spending possibly too much.

Last, a lot of folks are offering some great advice about making your mom''s diamond into a pendant. I don''t think you have yet responded to whether this is possible. This silence is particularly interesting coming from you since in this thread from over a month ago, https://www.pricescope.com/community/threads/comment-on-whiteflash-policies.90433/, you stated "Chances are that I would have kept the WF ring since my bf purchased it for me."

What is the status now? I suppose many of us are annoyed because your intentions are unknown. Bits and pieces of information are not helpful, and I suggest you paint a bigger picture for us for pricescope to be capable to help you.