“Buying diamonds off the street is a good business move.”
Michael Derby, senior business consultant,
Focus Business Management Institute
BUY SMART: As long as you get a price that is lower—significantly lower—than wholesale, it is a good buy. Many times your wholesalers or other diamond suppliers are willing to purchase diamonds from you—especially bigger diamonds, as they are getting harder to source.
TURN IT AROUND: We had one client who was offered the opportunity to purchase a seven-figure diamond. He asked [for] a few days to get financing. In that time, he found a wholesaler willing to purchase the diamond from him; got a short-term loan to cover the purchase; and ended up…profiting several hundred thousand dollars in about two weeks.
PROFIT POINTS: If someone has an Internet mind-set, you can use a street buy to offer a lower-priced diamond but maintain a great markup. If the diamond is a lower color grade, you could have it irradiated to produce a beautifully colored diamond. You can recut and/or polish the diamond to enhance its brilliance.
BRING IN BUYERS: Consumers [know] they’re able to sell jewelry. Unfortunately, many end up at a pawnshop. By educating the public that you buy diamonds, you set up a profitable section of your business and establish a new customer base.
“Buying diamonds, in the long run, could be a very bad idea.”
Slade Lewis, owner, Lewis Diamonds & Timepieces
FROM HERO TO ZERO: When you are buying from noncustomers, you could be the hero they are looking for when you give them a price that is higher than anyone else in town. But to a customer that originally bought the diamond from you, you could end up being the “rip-off jeweler” when you don’t offer them what they paid originally. You can even be higher than everyone that bids on the same diamond by double, but if you sold it to them, they will expect you to give them close to what they paid—no matter how long it has been since the purchase.
BEWARE BAD PUBLICITY: This can cause a very sticky situation that, frankly, can be avoided by telling them you just don’t buy back diamonds. Having anybody leave your store with a bad taste in his or her mouth, especially with today’s technology, can be a huge detriment.
BE A DIAMOND DETECTIVE: You have to cover yourself against fraud as well. The diamond could be stolen, fracture-filled, or even fake. So unless you are a detective in your spare time with a GIA graduate degree and have a state-of-the-art diamond lab with every new industry tool on speed order, I would not buy diamonds from the public.
For more on the issue on JCKonline.com:
+ Move Over Gold-Buying