Loose diamonds listed as .49 to 1.25 ct, and minimum VS2, colourless
to I in colour…this is why attention needs to be paid to Costco’s
move into loose diamonds. They are selling better quality
consignment goods from a major supplier, and the fact that they
don’t own the stones allows them to “dump” them at a low margin,
taking a small spread. The supplier is going to find themselves with
few friends as well.
I am aware that they have sold jewellery for some time, and it is
generally of fairly adequate quality. I have been told by a Costco
employee who is involved in the jewellery dept. that their margins
on finished goods are 17%…and that is for jewellery that they
purchase from the manufacturer. If they are not buying and holding
loose diamond inventory, they can sell for an even lower margin.
Selling loose stones is remarkably easy. Take a look at the number
of diamond vendors who do VERY well on the internet. Check out
www.diamondtalk.com to see the love-in that goes on between loose
diamond vendors and the public.
They need the cooperation of jewellers to make it all work, though,
and , I guess, my advice to all involved is to walk away. You don’t
have to play, as doing so eventually reduces your ability to sell
diamonds as part of your service.
Many of the locals that I have spoken to have stated that they will
not offer service to those who buy loose stones from Costco or the
internet. It makes sense to be hesitant about helping customers who
mistakenly think they can save a pile of money by buying loose
stones and having a jeweller set them. Costco has a return policy,
and you may be able to convince the customer to return the stone and
buy from you. It worked once for me, and I got referrals from that
same customer.
But the main reason for the post was to help convince Costco that
they are stepping over a line that will hurt them, and everyone else
involved. They are making a mistake, and should be aware of it
before it makes a mess of things.