De Beers Officially Jumps Into the Diamond Buyback Business
De Beers has given the go-ahead to its diamond buyback company—the International Institute of Diamond Valuation (IIDV)—after an 18-month pilot.
The New York City–based service was opened in 2014 with four participating jewelers; its website now lists 14. For now, it is available only to jewelers who carry its Forevermark diamond brand, but it may make the service available to other jewelers, though that will “likely be a different business model that we are still developing,” says Tom Montgomery, De Beers’ senior vice president of strategic initiatives.
There won’t be geographic exclusivity for the service, he says.
The launch has several differences from the pilot:
– The IIDV has put up a consumer-facing website, which allows consumers to sell jewelry online. The service has them fill out a submission form, send in their jewelry, and they will then receive an offer within three business days.
– The company has answered the persistent question: How will it sell the diamonds? It has launched a trade site, which can be seen here, which lets wholesalers browse the IIDV inventory, which is now in the low seven figures in value terms.
The company has also bought pieces on the market to round out parcels.
“We want to sell the goods rather than try to accumulate them,” says Montgomery. “We are a business. This is not an endeavor or activity we expect to be loss making. We don’t expect it to be a huge profit generator, but we expect to break even in the next few years.”
As before, consumers who trade in diamonds through jewelers have two options: They can get an in-store valuation, which results in a price quote within an hour, or consumers have the option of sending the piece to theIIDV lab, which takes longer but generally results in higher offers, it says. Retailers get a commission for sending in the piece if the consumer accepts the offer.
The company’s site boasts its prices “are consistently, on average, higher than our competitors,” and that it will buy any type of diamond jewelry or diamond—no matter how big or small.
“Our commitment to consumers is to make a bona fide offer for every piece with at least one natural diamond in it,” says Montgomery. “So far the lowest offer we have made is $25. The highest is $6 million. We do believe we have to back up the claim that every diamond has value. When I did mystery shopping a lot of times I was offered nothing for my diamond. That is a terrible message to give to consumers.”
The company sets its prices based on the market, which differs from some competitors, Montgomery says.
“They try to analyze what they think they can buy it for and then they arrive at a gross margin for whatever they sell it for,” he says. “We start at the top—what we believe we can pay the consumer [based on the market]. We believe that is far more transparent and fair to the consumer. We don’t ask what price they would be willing to let the stone go for.”
The company’s lab in New York City is not affiliated with the De Beers lab—the International Institute for Diamond Grading and Research (IIDGR).
“We do not do grading per se for consumers or the trade,” he says. “This is not connected to the IIDGR with respect to grading services. They are distinct business units. We talk and we use some of their equipment. However, we have no real association with the grading activities that they are doing.”
The service will primarily be marketed with paid search, Montgomery says.
“We want to go after people who are strongly interested in selling rather than people who might want to sell something they have forgotten about in their jewelry box,” he adds.
The company currently has seven employees in its office, but may scale up to 20. One of them, Jon Lap, used to work at rival jewelry-buying service Circa.