Israel

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 marketplace
Under 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 difference
This 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.

Indian promise

Israel Diamond Exchange (IDE) president Yoram Dvash had an eventful start to 2018, joining Israeli Prime Minister Benjamin Netanyahu on a delegation to India in January. At around the same time, Israel announced it was relaxing its visa regulations so Indian diamantaires could remain in Israel for three years at a time, rather than having to renew their paperwork every year.
   Dvash hopes the change will help the sector. The Israeli industry should see Indian trade members as its friends and partners, he asserted. He was reluctant to disclose any broader impacts the state visit might have on diamonds, but pointed to the significance of the two countries’ trade ties, which have only existed for 25 years.
   “It’s important to note that trade between India and Israel is $4 billion [annually], of which the diamond industry is 50%,” he said. “We sell close to $1 billion in rough and polished, and buy from them close to $1 billion of polished.”
   Of course, he added, “in three or four days, you cannot [create] new projects, but you can improve the relationship.”

Article from the Rapaport Magazine - February 2018. To subscribe click here.