The jewelry supply chain
When do we sell well?
When things go south
An alternative to buying jewelry through retail
- Buy jewelry from sell-as-in services (Auction houses)
- Buy jewelry from B2C services (Online retailers)
- Closed Cycle: Repair your jewelry and wear it again!
- Sharing economy: Rent jewelry today!
- C2C platform: Buy jewelry from X or Y, NOT brands!
- Inspiration: Get inspired by an old ring you own!
- “Grimma Effect”: Invest in reborn jeweler!
- Fall for an amazing strategy!
- What if we went beyond that service?
The jewelry supply chain is simple to understand
You just need to decompose every element of jewelry and understand how it is produced:
First comes the diamond or gemstones. Generally, it is mined in Africa, South America, and Asia. Conditions are indeed hard to live in and miners are underpaid. Once a rough is found, we need to study the potential result we could get from it, before selling it at a reasonable price to a rough diamond dealer where it is then cut into various shapes that optimize its value.
Experts certify each stone following criteria (for diamonds, 4C’s: Cut, Color, Clarity, and Carat) which optimizes its market price. Each diamond is sold to jewelers at the best price they get (through middlemen) then set onto the jewelry.
At the same time, precious metals (gold, metal, etc…) are also mined, sold at stock prices and used to shape the jewelry. Finally, a skilled jeweler puts together both elements and creates a mold defining the perfect design. The supply chain does not end here. The jewelry is generally well marketed showcasing the storytelling of the inspiration it was drawn from in order to increase its chances of a sale. Old jewelry can be counted as unsold jewelry from past collections. Most of the jewelry produced nowadays are unsold!
92% of pieces, to be exact.
When do we sell well?
The average 21st-century client wants to invest by buying timeless pieces that will then be handed down to future generations. Heritage brands have enormous archives that have withstood the test of time.” – Robert Burke.
In times of crisis, luxury clients no longer purchase jewelry they do not actually need. They prefer getting something out of what they own, embracing the value of their existing inventory.
Whereas the brands’ strategy is to sell new products and dispose of the older stock increasing their profits as fast as possible. Profit is what keeps companies running, so investing in a new marketing strategy is on point.
Finance departments need to keep positive treasuries and cash flows moving to keep the chain running… It is a beautiful story when everything works out well together and consumers buy enough. The year is prospered.
Consumers love spending the best value for anything they purchase, love lower prices for more. They always want more things; simple and less are indeed more. More things don’t always mean new: modern consumers would rather exchange their old products for new ones.
Let’s think about it for a second, the value of jewelry keeps increasing every few years in parallel with trends, gemstones rarity and metal costs. More importantly, it usually holds emotional values and is supposed to stay yours forever, handed down from one generation to another one without downgrading its value. Unfortunately, it doesn’t work like that. Jewelry gets old, out of fashion, brakes and a simple 2-year warranty is not enough for a lifetime of wear.
When things go south
If not and it’s generally most cases, it’s quite another story: the company doesn’t sell much, less budget is allocated to designing new collections and none to new marketing strategy and action plans. Time for investments! Investments mean getting a large amount of money out of their vault (or sometimes, money they do not own or investors’ money). Unfortunately, the press gets the word out fast enough for a possible “bad” reputation. Above all, luxury brands start to expand to the outlet, proposing sales options and alternative products with lower quality; that destroys the long-lived brand. At that point, consumers stop believing in the magic of the brand, products, and its recognition. A clear result is when they stop spending their leisure money on luxury products they feel they do not actually need anymore. As a result of that changing behavior, unbranded jewelers do not sell as well as they used to, branded jewelers, on the other hand, are reducing more their margins, and cutting jobs.
An alternative to buying jewelry through retail
Buy from sell-as-in services (Auction houses)
A traditional way of selling your old, broken and dusty jewelry is, of course, selling it to an auction house. The auction house estimates the price without considering the intangible value of the jewelry.
It has no past, only valuing the originality of the stones, the brand cost and the price of metals and craft that comes with it. The auction house organizes a sale where investors and connoisseurs buy the jewelry piece or sets of jewelry (depending on the value or importance of the jewelry). Drouot is one of the most successful auction houses that is not sustained by visitors and investors only. It also sustains the growing auction houses using its services, space to sell their jewelry. Last year, it was appealed as a global vintage marketplace that provides vintage items contact between sellers, dealers and end buyers.
Buy jewelry from B2C services (Online retailers)
1stBids is one of the websites that proposes direct auction sales of jewelry pieces from auction houses to final consumers. The jewelry once again loses its sentimental value. The cost of the jewelry is still calculated through the price of metal and craft, the values and rarity of the stones and finally the brand that carries the design. These website services are website-only platform and the process is shortened. Price could go higher. This maintains a close control on the margin since the company is the only salesman that wins over the customer requests. B2B means direct contact between entities is needed. Collector Square is the European leader in the online second-hand sale of luxury bags, watch- es and jewelry. It provides pieces of thousands of products from their website to buy directly from their stocklist at discounted prices. Gleem.co doesn’t exist anymore but used to provide a better interface than Ebay for higher bids items. It is a package of insurance, appraisal, and marketplace exclusively online. 1stBids is the digital marketplace that revolutionizes how antiques and luxury goods are bought and sold. During the time, the service learns to provide items at any budget varying customers expectations and needs even providing bespoke demands.
Closed Cycle: Repair your jewelry and wear it again!
if branded: Refurbishing jewelry is a process that takes time but builds a long term relationship between old customers and the brand itself. The customer visits the brand where the jewelry is from. The brand values the quality of the piece and how it can be improved depending on the budget of the customer and the availability of the brand. If agreed, the brand takes it back, refurbishes it, redesigns or repurposes the jewelry. This method maintains an immaterial value by replacing it into another life. This is the core of reviving jewelry without losing its value or even upgrading it. This method increases the brand awareness of loyal customers. It is used by many houses but mostly Van Cleef and Arpels is the master.
if unbranded: Refurbishing jewelry is a process that takes time but builds a long term relationship between old customers and the jeweler itself. This method is generally used in some countries such as France, Lebanon or even India. Most jewelers use this method redesigning jewelry for their clients with lower cost but without conserving the style or craft of the old jewelry design for example if it is a Cartier or Tiffany piece. This method maintains an immaterial value by replacing it into another life. This is the core of giving another life of jewelry without losing its value or even upgrading its value.
Sharing economy: Rent jewelry today!
Sharing products is the new trend. What can you share with whom? Well, tons of platform every day are surfacing the internet providing mass items to haute couture dresses. For how long? Well, it depends, it could vary between an hour to a few weeks. How much? There are few different options which differ from good value for money, for time and for quality. Rent the runaway is one of the most famous services that provides thousands of options for you to pick in a single click. Flont is a good option but for jewelry only. It is the cheapest service to provide a good variety of items from 129 to 400$ for 4 days. Brands such as Chopard, Mikimoto and Gucci and independent designers such as Sabine Getty are input in a rental for single events including insurance. A good way to discover jewels is Glitzbox based in London. Exactly like for cosmetics, Glitzbox lets you discover a selection of jewels at your taste, buy the one you want and return the ones you don’t.
C2C platform: Buy jewelry from X or Y, NOT brands!
Direct contact between consumers is always a better idea to sell your jewelry online. Basically, it is easy to register, propose jewelry and sell it to the consumer. The jewelry’s basic price is proposed by the seller, the platform is used as an auction service or a selling platform. The seller sets the price and the buyers start to bet. The basic price is set by the seller depending on the value of the jewelry piece. Generally, the storytelling is mentioned but not in the first stage. The seller has the liberty to sell the jewelry in proper packaging or not depending on their need. This limits the selling process.
One big problem: Lots of fakes are in the market due that the website or service doesn’t provide a double check of the merchandise sold on the website. Then & Now is a curated retail experience which collects apparel, accessories and lifestyle merchandise which include vintage sellers and new markers. It draws a clear blurry line between sellers and buyers in the vintage industry. Main Collectivemarketplace fuses vintage, antique and handcrafted goods. “There’s antique stores. There are consignment shops… but there wasn’t really a place where you could mix all of these things together at a consistent location,” Davis says. “You’ll have markets here and there, but there’s none that’s at one place, constantly, all the time for vendors to be able to show up of all different types of crafts.”HiCommerceis also a revolutionary project that helps consumer find products online and provide a better quality service directly from their neighborhood’s experts. The app acts sort of like a concierge or personal shopper, letting a customer looking for an item at a certain price point in a shorter distance range.
Inspiration: Get inspired by an old ring you own!
This method consists of drawing inspiration for the archives of the company, such as sketches, old models, books or even old collections. The company renewed the design to upgrade it into jewelry that sells today. Sometimes, it gives life to old jewelry that was never supposed to be produced. This method is used mostly by all companies even if not clearly precise. It is mostly advertised through social media. Most of the time, this method does not have the purpose of giving new blood to a jewelry piece but to advertise the brand’s heritage and image.
“Grimma Effect”: Invest in reborn jeweler!
It’s not unusual to see famous designers long passed away revive. Future generations usually take over the empire than as soon as they can’t hold the company anymore, they sell it to a big corporation that will define the future of the empire and probably the transformation to a mass luxury company. Grima jewelry is quite the opposite in fact. “His jewels are so timeless; people are realizing they are never going to go out of fashion,” said Francesca Grima, “wearability and modernity were key to his aesthetic”. 10 years later and a generation has passed to the company’s bankruptcy after years of the best designs handcrafted in England. Fortunately, It is not over yet for this flourished family business, as the daughter’s revival of the brand has just begun. Auction houses such as Christie’s and Tajan has been at war with London-based Bonhams being not able to reach any Grima jewelry from foreign investors or clients. Grima has been buying back the archives pieces recovering its collection for a mega 80 pieces sales happening in the heart of Bond Street in London. The biggest private collection sale has attracted many press releases, debates and has been the core of the revival of the brand. A strategy that could lead to a complete revival of the company inspired by its heritage. This strategy has been an inspiration for my capstone among its marketing strategy.
Fall for an amazing strategy!
Hermes has excelled in providing the high- est quality of leather bags with the lowest attention spam. Hermès is beginning a worldwide touring cycle of exhibitions focused on the culture and heritage of the French luxury house. The house has been around for centuries and continues to surprise us with incredible art collaborations that attract many visitors for the same reason: a dream. Both exhibitions in Shanghai with its heritage displays revive the brand to its core value and brings any client to an endless experience and many discoveries.
“The consumer wants timeless pieces that are also investment pieces. Heritage brands have enormous archives that have withstood the test of time.” Robert Burke
Cartier has been known for its high-quality jewelry carefully manufactured by the highest crafts in the world, with the highest importance in quality and tone variations. Not only do they excel in this service of providing the dream for their customers, but Cartier is also known for their excellent after-sale services such as the “shining service” which consist of refurbishing jewels from their clientele after a certain period of time. Of course, it’s not forever but still remain a good service for many customers that care to pass on their jewels to the next generation that will live another life with the same jewelry, creating other memories. No modifications are made, but just a general cleaning service.
What if we went beyond that service?
Why not repurpose your inventory before selling it? Or even just get the best online appraisal before choosing to repurpose or sell your inventory. The emerging resale market has opportunities to partner with local jewelers to renew this inventory. ExJewel is the result of that plan.