RAPAPORT... To the Editor,
This is an open letter to the diamond industry from manufacturers to wholesalers to retailers. My family has been in the diamond trade for over 60 years and is third generation. We have always been forward thinkers in a conservative, slow-to-change industry.
Our industry has great traditions steeped in rich heritage. We have always believed in personal dealing and direct contact with clients. The internet business model (e.g. Blue Nile, Amazon, etc.) is here to stay and compete against brick-and-mortar jewelers in the sale of certified diamonds to the consumer.
As a graduate gemologist and professional in the industry, I am sure all will agree with me that a trusted jeweler is needed to guide any consumer through the nuances involved in purchasing a diamond. Therein lies the dilemma: the internet model has low overhead and no sales tax and can work with unlimited dealer inventories. The industry relies on the brick-and-mortar wholesalers to bank the goods and the brick-and-mortar retailers to sell the less-desirable goods not sold on the internet, as well as the majority of small goods.
All is fair in a free-market economy. However, dealers and manufacturers who supply the pure internet companies should not have the advantage of unloading goods on the brick-and-mortar wholesalers and retailers. In a sense, they are altering the foundation of the chain of distribution for a short-term gain. If there were no brick-and-mortar wholesalers and retailers, there would be a mountain of goods back in the hands of manufacturers. The wholesalers who exclusively supply brick-and- mortar jewelers and brick-and-mortar jewelers with their own loose diamond stocks house several billion dollars of diamonds — a debt burden that the manufacturers and mining companies could not afford.
Therefore, we need to galvanize the industry by putting our loyalty on the side that matters to each of us. At United Gem, my company, we make a pledge to our clients not to supply pure internet companies or list goods directly on the internet to consumers. If all brick-and-mortar wholesalers only dealt with companies that did not sell to pure internet models, it would isolate those that do.
All the industry would have a choice. I feel the result would be a limited selection of goods for the internet companies and a larger selection of goods for the brick-and-mortar companies. This would enable the traditional jeweler to compete on a more even playing field, especially with the “added value” they give over the impersonal internet experience.
We, as an industry, are at the crossroads to decide, as internet companies are growing and brick-and-mortar is not. If we make a more equitable division of the industry, the traditional brick-and-mortar retailer will regain a significant amount of the diamond market share they have been losing. After all, where is the romance in buying off the internet?
The retail jeweler does add value to the consumer purchase in so many ways. Now, having the lion’s share of the available goods would enhance that position. If this concept is interesting, join me in taking your suppliers to task and getting their assurance they can have it only one way: either pure internet or traditional retailer.
Richard D. Goynshor, G.G.
United Gem, Ltd
Chicago, Illinois
Dick@United-Gem.com
The opinions in the Letters to the Editor column do not necessarily represent the views of the Rapaport Diamond Report or its staff.
Article from the Rapaport Magazine - October 2006. To subscribe click here.