What does this mean for a retailer?

For most manufacturers and wholesalers, recycled diamonds entering the stream is not a good thing, as they cut into already thin margins and cause prices to stagnate over the long term. They also create competition, since retailers are purchasing them from consumers rather than through traditional channels. For retailers, however, the opposite is true. As with the cash-for-gold craze, consumers are trading in their diamonds or using them to upgrade to bigger or better stones. And the good news is, the price is determined by you, the retailer, which can make for some very healthy margins.

When buying lesser-graded diamonds from vendors, the discounts offered are always deep; the same applies to buying diamonds off the street. When a consumer is looking to sell a diamond, he or she has a vague idea of what it may be worth, thanks to the Internet, which means some explanation may be required as to why you cannot match that price.

When determining your offer, there are a few factors to consider, such as:

• “¨”¨the average trade price for a similar stone;
• “¨the investment required to restore and grade the diamond; and
• “¨your selling price based on your store’s strategy.

Of course, the diamonds you buy from your clients may not always be in pristine condition.

Buy and sell

Whether mined or traded, diamonds are billions of years old, just like the air we breathe and the water we drink. Although no diamond is worthless, they are not all cut equal. Over the centuries, diamond design, cutting, and polishing have evolved tremendously, along with cut grade parameters and other grading standards. While it is true recutting a diamond can result in marginal to substantial weight loss depending on its original condition, it is also true that a better cut can increase its value, and in some cases, by quite a bit.

Chances are you may have thousands of dollars tied up in diamond inventory that you aren’t able—or prepared—to show clients in their current condition. Some may be dull, dreary, and dead, while others are just badly cut. You may even have chipped, scratched, burnt, or broken stones sitting in your safe. And while vintage fine jewellery is always in style, vintage diamond cuts may simply not appeal to your customer base.

Unlike gold that can be recycled and sold relatively easily to a refiner or cash-for-gold operation, diamonds are different, as each one has its own unique characteristics and story. The challenge you face is how to sell a damaged or badly cut diamond, especially if you are known as the trusted source for fine diamonds in your market. You can either sell it to a growing list of companies that specialize in the purchase of such goods (at greatly discounted prices), or you can find a cutter to turn this inventory into product you can present with confidence to your customers.