The path from diamond dealer to consumer
is, in general, a long one. Traders such as those sitting in the Israel Diamond
Exchange (IDE) mainly sell loose diamonds to other dealers or to retailers,
possibly on memo, and hope they make a sale to a customer. But the IDE believes
it has a way of shortening the distance between its members and the real people
who want their diamonds: On February 6, it will launch a partnership with
Chinese e-commerce giant Alibaba Group that could potentially open up a massive
new market to the Israeli diamond trade.
Virtual marketplaceUnder the arrangement, 150 IDE members
have formed a virtual online store, providing them with the scale and branding
that the bourse can offer. To buyers on Alibaba’s e-commerce sites, it will
appear that one unified entity, the IDE, is selling the diamonds. The store —
which will operate out of a room inside the Ramat Gan exchange — will begin by
selling to traders and jewelers before expanding to consumers.
Alibaba, headquartered in Hangzhou, China, mainly attracts buyers
in China and Hong Kong. However, a significant proportion of sales on the
platform originate in other key markets, meaning the partnership provides many
global business opportunities for Israeli dealers, IDE president Yoram Dvash
pointed out.
“It’s a big jump for us,” Dvash told
Rapaport Magazine. “You don’t need expansion or offices, or to fly over. You
have hundreds of millions of potential customers.”
Deals that make a
differenceThis is not the first deal of its kind
that the exchange has signed. Israel has previously secured bulk deals with
California-based online marketplace eBay. Since April 2016, the nation’s
dealers have been collaborating with one another to supply diamonds to online
jeweler James Allen, an Israeli-developed retailer that Signet Jewelers
recently acquired for $328 million.
That united effort has created business
for the local trade that might not have existed had individual companies
attempted to sell to James Allen on their own. In 2018, the James Allen partnership will result in about $30
million worth of sales, Dvash estimated based on last year’s performance. He
hopes the return on investment from Alibaba will be bigger still.
This all has
the potential to boost Israel’s polished trade, which has been declining in
recent years. Exports of polished diamonds slumped 20% in 2015 and fell another
6.4% in 2016 due to weakened consumer sentiment and growing competition from
India. A recovery in Asian markets and steady US demand appeared to have put a
hold on that downward trend in 2017, with polished exports approximately equal
to the previous year, Dvash noted. However, full data was not available at
press time on January 26.
Deals such as these may slowly help bring
those figures back up.
Article from the Rapaport Magazine - February 2018. To subscribe click here.