Forevermark is debuting an e-commerce site that will sell direct to consumers, but like other brands is using a model that will credit sales to participating retailers.
According to Forevermark US president Charles Stanley, some 90 percent of consumers start the diamond-buying process with online research. But only about 18 percent of all diamond jewelry is purchased online—and the numbers for pure-play sites have remained static at about 7 percent of the market.
“We believe the clicks-and-bricks model is the strongest way to go, particularly for us,” Stanley says.
The model works like this: When a consumer purchases a Forevermark diamond, the system will give the customer a choice of local jeweler based upon the computer’s IP address. The consumer will then have the option to have the item shipped to his residence or to that jeweler. Whichever option is selected, the retailer will receive the money from the sale and assume responsibility for service and returns—even if it played no role in the sale.
What is unique about this set-up—but required by how the brand works—is that Forevermark’s manufacturing partner will ship the item, rather than the jeweler or the brand, as in other models. (The item will be shipped in a nondescript box so the consumer is not aware of this.) The jeweler will receive the payment, keep the agreed-on margin, and remit the rest to the vendor.
“The transaction is all completed through the jeweler,” says Stanley. “He’s responsible for invoices and customer service aspects. He can get a full margin sale.”
The program will be piloted in California.
The company has also enlisted Diamond Asset Advisors, a diamond-focused investment company headed by a former De Beers executive, to offer financing for retailers’ Forevermark purchases.
“We recognize our partners are faced with challenges in financing their diamond inventory in an environment of tighter banking regulations,” says Stanley. “This is an exclusive leasing arrangement done on a 100 percent loan-to-value basis, which is typically not the case.”
Retailers pay a monthly interest rate and have to repay the loan only when the stone is sold.
“Unlike a consignment arrangement, the retailer controls the Forevermark diamond inventory without the risk of it being called back,” he explains. “The interest is about 9 percent annually, about 1 percent a month. The premiums on consignment merchandise are 20 percent, even if you turn the stone around quickly.”
The program mainly applies to loose goods. Diamond Asset Advisors will conduct due diligence on the retailers prior to the loan.
The brand is also expanding its exceptional diamond program, a new marketing vehicle for diamonds 5 cts. and up. Diamonds in the program are accompanied by a customized booklet that shows where the stone came from, including the weight of the original rough.
The program initially involved just the Julius Klein Group, but has been expanded to include Premier Gem and will include more stones and jewelers.