Tuesday, 13 March 2012

Buying diamonds off the street – Part I

I had a great discussion recently about buying diamonds from customers.  There’s a bit of a stigma to “used diamonds.”  We (or at least I) talk about how the gold you’re wearing might have been part of King Solomon’s treasures, or from Cleopatra’s jewels.  Why do we cast such a negative light on used diamonds?  They’re so durable that a used diamond is almost always indistinguishable from a new one.

Martin Rappaport is encouraging retailers to buy-in used diamonds because he can see a genuine supply problem coming.  Also, as baby-boomers who have bought a lot of diamonds over their lifetime start handing-down diamonds to the next generation, there will be a lot of people looking to redeem them for cash.  Are we going to leave it to pawn shops to rip people off for their valuable diamonds?  If we don’t give a client a fair price or trade-in for a used diamond, what does that tell them about the value of new diamonds?

First, let’s talk about sentiment.  Does having a fresh grading report remove the curse of a failed engagement or marriage?  In my mind, repolishing a diamond makes it seem like I’m selling a brand-new diamond.  Where do you sit on this issue?  Should we buy-in engagement diamonds and set them into pendants, earrings and fashion rings so that we don’t have to worry about dooming a marriage to failure?  I’m not superstitious, but I worry about my clients being so.  If they fall in love with a ring and then I reveal to them that the diamond is “used,” “pre-owned” or “pre-loved,” I might lose that sale.  I personally have a hard-time with not disclosing this issue.

Second, you open a can of worms when you officially offer diamond buying to your clients.  You’ll have to say “no” to some people because the size or quality aren’t something you can effectively resell.  If you don’t already buy gold, you might have to establish systems to conform with municipal laws and procedures regarding such transactions.  Clients might assume that any one of your designs contain some or all used gemstones.  The pricing issue might cause some consternation among those who recently bought something for $4,000 and believe that they’ll be able to recover the majority of that value when reselling.

These are heavy issues.  I’ve got two more articles to discuss some of the ins and outs…

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