To increase your diamond profits, know the mentality of the person you are buying from and take advantage of it, Ari Chitrik of Citra Trading said in a seminar on “Making Money on Diamonds.”
A diamond manufacturer is typically under tremendous pressure to sell his stones.
“A manufacturer is always sitting on a powder keg,” Chitrik said. “He has to get those stones out the door before the next box arrives. It doesn’t matter what he thinks the stones are worth. He has to pay market price because he doesn’t have the time to go for a better one.”
Manufacturers are also less willing to deal with smaller customers. “Everyone has a horror story of calling a manufacturer and not getting the time of day,” Chitrik said. Dealers, however, pay more attention to the needs of smaller customers and charge less of a mark-up because they have low overhead. But they often have a small inventory. Buying off the street can get you excellent prices, Chitrik said. Yet this requires immediate payment and, with treated stones on the market, can be risky. Larger retailers should do business with manufacturers, and smaller ones with dealers, Chitrik noted.
He also made these points:
* Buying for stock gets you better prices. “When you use consignment, you generally pay more,” he said. That’s especially true for call items. “The person on the other end of the phone knows you are hot for that stone.” Chitrik added that studies have shown that retailers make more money on items they own.
* Forge a relationship with your supplier. “Otherwise you are just waiting for the other person to blink,” he said.
* Focus on turnover. “Don’t fall in love with your box of diamonds,” Chitrik advised. “Unless it turns over, it does nothing for you. Let your customer fall in love with your diamonds-not you.”
* Buy a “package” of diamonds with specific parameters. “Make sure your suppliers know what you need, and your employees are focused on what they should buy,” Chitrik said.
* The most important “branding” a retailer can do is of the store itself. “All the brands you have are worthless if the customer feels like he is entering a used-car lot,” Chitrik noted.
* Market research has shown that the important factor in deciding whether a customer buys in your store is the friendliness of the staff. Send “mystery shoppers” to make sure your staff is treating customers correctly.