The new De Beers is many things: a miner, marketer, retailer, and brand owner. Now it also may become a secondhand diamond dealer.
The gem giant has launched the International Institute of Diamond Valuation (IIDV), a New York City–based lab meant to handle off-the-street diamond buying for retailers.
“All the research we have done indicates that the consumer experience with secondhand diamonds isn’t that good at the moment,” says De Beers spokesperson Lynette Gould.
De Beers’ solution is the IIDV, which will provide two services for retailers who have customers who want to resell diamonds. In the first, “quicker but less accurate” option, the retailer does an in-store valuation of the stone and then sends the info to the IIDV, which responds with a market price quote.
In the second, the retailer sends the piece to IIDV’s New York City headquarters, which takes the piece out of its mounting, cleans it, and evaluates it using technology like De Beers’ synthetic spotter DiamondView. After a few days, the lab supplies a market price quote.
The quotes are based on a “comprehensive database of 100,000 diamonds,” explains the IIDV’s site, which says they are meant to be the “highest possible price one could achieve…on the secondary, wholesale market,” in part because the stones are examined out of their mountings. (If the piece is shipped back, however, it will be out of its mounting, requiring the jeweler or customer to remount it.)
Once he or she receives the quote, the consumer can reject or accept the offer. If it’s accepted, the retailer will pay the amount and get reimbursed by the IIDV, which will add a small markup for the retailer.
The IIDV will take control of those stones, but it isn’t sure what it will do with them. “It’s likely that IIDV will sell them through the wholesale level,” Gould says. “It’s just an exploratory program so we’re expecting fairly low volumes.”
The retailers also have the option of buying the stone for their inventory at the IIDV price, in which case they will forgo the markup.
Currently, the idea is being tested with four U.S. jewelers, representing 15 doors, all of which sell the Forevermark, although the program is separate from that De Beers–owned brand.
Gould argues that it offers the retailer certain benefits, including the markup.
“A number of retailers have said they don’t have the resources to deal with this,” she says. “De Beers has the best technology available to help the retailers here. Not least, they don’t need to tie up their own money, so we’re improving their cash flow.”
Retailers still have to follow local laws regarding purchasing and reporting of secondhand goods, she adds.
De Beers’ motivation is improving the trade-in experience, she says.
“We hope that by offering fair value this will encourage other players to up their game so the consumer experience is improved,” she adds.
While the IIDV site is accessible to consumers, they will only be allowed to send their diamonds to the IIDV through retailers. There are no plans to market the service except through paid search ads, Gould says.
Gould stresses the program is strictly a test, meant to gather information about the diamond reselling process. It will run from this September through next year.
Mitchell Marder, formerly of S. Bichachi Blumenfeld Diamond Company, will be president of the four-person IIDV office, Gould adds. De Beers senior vice president of strategic initiatives Tom Montgomery will be the CEO but will not based in New York City full time.