Last week, a furore erupted in the Australian jewellery industry over The JAA promoting Rapnet. Essentially, this promotion of Rapnet (which is a website which allows buyers and sellers from all around the world to trade diamonds) was seen by many as a way of bypassing local diamond wholesalers and giving business to diamond vendors overseas – certainly not what the JAA should want to promote?!
As it turns out, many wholesalers were outraged and my “friend” Mr Hadassin bore the brunt of these outraged wholesalers.
Above: My friend, Ian Hadassin flying the Australian flag.
Whilst I don’t want to debate whether or not The JAA was wrong in promoting Rapnet, what this incident does highlight is the state of the diamond wholesaling industry in Australia.
In the old days, importing and exporting goods was prohibitively expensive for most retailers, and pretty much all consumers. This allowed wholesalers, not just diamond wholesalers, to gain a virtual monopoly of the market.
However, around 10 or 15 years ago, technological and legal changes made it a lot easier to trade internationally. This allowed retailers and even consumers to bypass the local supply chain all together and to source a larger range of products from overseas at a much cheaper price. The internet, along with tax changes, allowed pretty much anyone to purchase even small quantities from overseas without the barriers that existed before.
To combat the threat of the internet, one popular method used by the local diamond industry was to get diamonds certified at a local lab, obtain inflated grades and then push the reputation of the lab to local consumers. Whilst it worked for a while, consumer and industry attitudes changed. Nowadays, diamonds certified by reputable labs such as GIA, AGS and HRD are what the discerning diamond buyers demand.
The fact that purchases from overseas must almost always be paid with cash puts local wholesalers in a difficult position. Retailers who have cash to purchase their diamonds outright will buy directly from manufacturers, whilst retailers who don’t have the cash, will “buy” from local wholesalers on lengthy credit terms. This shifts a large portion of the role of a local wholesaler from being a diamantaire that is focused on stocking quality goods to being a banker to the poor. I’ve known this for a long time, which is why we we offer our International Selection diamonds to customers, and not diamonds sourced locally.
So, perhaps Mr Hadassin did JAA members (at least retail members) a favour after all? And maybe local wholesalers should adopt a cash-only business model to compete with overseas vendors?