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Diamond mark-ups exposed

Diamond mark-ups exposed

(4:33) Brand name jewellery stores keep the information about their diamonds a closely held secret. But is there anything special about their diamonds that justify the high price tags?

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COncernedCitizen COncernedCitizen (204 days ago)

It's called capitalism and there is nothing wrong with selling at what the market will pay. Why sell an item for $20,000 if someone will be willing to pay $40,000. It doesn't make good busines sense to always reduce your price.

Some companies would rather sell 1 item at a GPM of 55% versus 10 of them at 5%. So you have a choice between selling a lot of an item at a low GPM or a small amount of them at a high Gross Profit Margin. Walmart's philosophy is to sell a lot of low GPM products in high volume but the cellphone case kiosk in the mall sells a few high GPM products instead. They pay pennies for a case and sells it for $15 to $20 each.

In the case of diamonds, they do not want a saturated market (the product lasts forever) so it is a business decision to sell them at a high profit margin. There are so many unsold diamonds in safes in New York being held back to keep the price of diamonds high when it isn't really as rare as they make it appear.

The reason that salesperson stated where their diamonds come from because it's important to some people to not buy a blood diamond which are usually from West or Central African countries like Sierra Leone. Although there are no active mines in Wyoming and Montana, there is one in Arkansas.

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Original comment

It's called capitalism and there is nothing wrong with selling at what the market will pay. Why sell an item for $20,000 if someone will be willing to pay $40,000. It doesn't make good busines sense to always reduce your price.

Some companies would rather sell 1 item at a GPM of 55% versus 10 of them at 5%. So you have a choice between selling a lot of an item at a low GPM or a small amount of them at a high Gross Profit Margin. Walmart's philosophy is to sell a lot of low GPM products in high volume but the cellphone case kiosk in the mall sells a few high GPM products instead. They pay pennies for a case and sells it for $15 to $20 each.

In the case of diamonds, they do not want a saturated market (the product lasts forever) so it is a business decision to sell them at a high profit margin. There are so many unsold diamonds in safes in New York being held back to keep the price of diamonds high when it isn't really as rare as they make it appear.

The reason that salesperson stated where their diamonds come from because it's important to some people to not buy a blood diamond which are usually from West or Central African countries like Sierra Leone. Although there are no active mines in Wyoming and Montana, there is one in Arkansas.

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Guest: (204 days ago)

Market works when all or at least most relevant information are known, this isn't the case here.

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Market works when all or at least most relevant information are known, this isn't the case here.

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TheBob TheBob (204 days ago)

Good job nobody's told Tiffany's that their market isn't working.

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Good job nobody's told Tiffany's that their market isn't working.

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Guest: (204 days ago)

Tiffany's is selling brand, prestige, luxury, status. People are willing to pay for that.

But, if information asymmetry is revealed, they look stupid and gullible, and won’t pay anymore.

It's an illusion all participants enjoy and maintain.

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Tiffany's is selling brand, prestige, luxury, status. People are willing to pay for that.

But, if information asymmetry is revealed, they look stupid and gullible, and won’t pay anymore.

It's an illusion all participants enjoy and maintain.

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TheBob TheBob (204 days ago)

I think we probably agree.

I'd guess a lot of people buying from Tiffany or Cartier are happy to pay over the odds because what they're really buying is the opportunity to tell people they have something from Cartier (rather than they have a diamond that you could get cheaper somewhere else).

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Original comment

I think we probably agree.

I'd guess a lot of people buying from Tiffany or Cartier are happy to pay over the odds because what they're really buying is the opportunity to tell people they have something from Cartier (rather than they have a diamond that you could get cheaper somewhere else).

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Guest: e53 (203 days ago)

you need to consider the fact that there are many costs involved: insurance, security, staff, designer, mining, manufacturer, gold, turnover, quality check, credibility, marketing and etc.

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you need to consider the fact that there are many costs involved: insurance, security, staff, designer, mining, manufacturer, gold, turnover, quality check, credibility, marketing and etc.

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Guest: (203 days ago)

Yes, if you talk about competitive market, but diamond business is a form of cartel.

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Yes, if you talk about competitive market, but diamond business is a form of cartel.

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Guest: e53 (202 days ago)

natural diamond is hard to find ..

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natural diamond is hard to find ..

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Guest: (202 days ago)

And 84% of them go through one district in Antwerp.

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And 84% of them go through one district in Antwerp.

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Guest: e53 (202 days ago)

but the price comes from a product which is made by a company.

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but the price comes from a product which is made by a company.

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Guest: (202 days ago)

Assuming that video is correct. We can purchase same quality diamond from Tiffany’s for 80000 dollars or from competitor for 20000 dollars.
Is Tiffany’s so inefficient that it needs extra 60000 to cover its costs? Is that possible in competitive market?

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Assuming that video is correct. We can purchase same quality diamond from Tiffany’s for 80000 dollars or from competitor for 20000 dollars.
Is Tiffany’s so inefficient that it needs extra 60000 to cover its costs? Is that possible in competitive market?

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Guest: e53 (201 days ago)

"same" is hard to define because we know each piece is different and the seller is reliable or not.

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"same" is hard to define because we know each piece is different and the seller is reliable or not.

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Guest: (201 days ago)

Actually, it's not.

A lot of diamonds have serial number engraved by GIA, which acts like personal ID, so we can identify a diamond and find out which characteristics it has. This also guards against fraud.

Now, we only need to take pictures of their stated characteristics in Tiffany’s and compare them to ones on Blue Nile.

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Actually, it's not.

A lot of diamonds have serial number engraved by GIA, which acts like personal ID, so we can identify a diamond and find out which characteristics it has. This also guards against fraud.

Now, we only need to take pictures of their stated characteristics in Tiffany’s and compare them to ones on Blue Nile.

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Guest: e53 (200 days ago)

you can search diamond in Africa too.

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you can search diamond in Africa too.

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Guest: (200 days ago)

And your point is?
Blue Nile is company in America.

Do you work at Tiffany’s?

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And your point is?
Blue Nile is company in America.

Do you work at Tiffany’s?

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Guest: e53 (199 days ago)

you need to look into details, and not everything is the same.

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you need to look into details, and not everything is the same.

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Guest: (199 days ago)

If you talking about Tiffany's magic, that is not the same. Tiffany’s magic is strong.

Physical characteristics can be compared, that is one reason they mark them with serial numbers.

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If you talking about Tiffany's magic, that is not the same. Tiffany’s magic is strong.

Physical characteristics can be compared, that is one reason they mark them with serial numbers.

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Guest: e53 (199 days ago)

if you have the time and willing to take the risk, that's your choice and you're comparing your idea with few old companies in the industry.

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if you have the time and willing to take the risk, that's your choice and you're comparing your idea with few old companies in the industry.

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Guest: (199 days ago)

Bullshit.

They are old and greedy companies preying on gullible idiots.

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Bullshit.

They are old and greedy companies preying on gullible idiots.

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Guest: e53 (198 days ago)
Latest comment:

nothing is free. if you want it, you have to pay in one way or the other, and in your case maybe time and risk.

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Latest comment:

nothing is free. if you want it, you have to pay in one way or the other, and in your case maybe time and risk.

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