Buy Back Diamonds, IDEX Online CEO Tells Retailers at JCK Las Vegas

(IDEX Online News) – Given worries about future diamond supply, recycled diamonds are going to play a bigger part in the supply chain, which is why IDEX Online CEO Abraham Stern has urged retailers to begin buying back diamonds from their customers.

Speaking about factors affecting diamond prices at JCK Las Vegas today, Stern said tapping into the “household diamond mine,” was one way for retailers to increase their profit margins – especially if they buy popular “bread and butter” items.

While Stern said buying back diamonds was a low business risk, he admitted that retailers may have to bear price fluctuations in the short term before prices ultimately rise in the long term.

This buy-back message is already reaching some retailers. Industry analyst Chaim Even-Zohar estimates that recycled diamonds sold back to the jewelry sector came to about $1 billion last year. This was around 4.4 percent of all polished diamonds sold at polished wholesale prices – and it’s likely to be higher this year.

As evidence of this, one jeweler sitting in the audience said his buy-back volume is already up three times over last year.
 
To increase the productivity of the second-hand diamond mine, Stern urged retailers to work on their buy-back communication message to build trust among their customers. “The main reason people don’t want to sell you their diamond is because they don’t know what’s in their hand,” he said. “They don’t know that if you take their diamond away to examine it, that you will give them the same item back.”

To counter this problem, he recommended that retailers make their buying completely transparent to boost customer confidence.

As well as buying back diamonds from consumers, Stern also outlined the difference that buying diamonds directly from suppliers could make to retailers. He estimated that they lose somewhere in the region of 20 percent of profit on each diamond they buy by not buying directly.

“For the average jewelry retailer,” he said, “diamonds represent half their yearly revenue. If you could extract another 10-20 percent profit on your diamond sales, you business could look completely differently.”

Recognizing the difficulties facing retailers when it comes to buying diamonds directly, Stern said tools such as IDEX Online’s free weekly Diamond Price Report and Guaranteed Diamond Transactions™ would give them the confidence needed to know not only what prices they should be paying for diamonds, but also where they can source diamonds directly at the right prices.

JCK Las Vegas runs until June 4.