Virtual Diamonds-lesser quality than in-house?

[starryeyed]

Hello Everyone!

This is now my second post, since I learned so much useful information from my first post. I am very grateful for the knowledge base here!

I know this can be a very subjective question, but I''m wondering if virtual diamonds are of lesser quality generally than in-house diamonds? Do cutters use a multiple listing on stones that vendors have passed over for in-house stock because they can''t be easily sold? Do virtual diamonds tend to have more hang-ups than in-house diamonds?

 

[Lorelei]

I think it is more of a case of many vendors having a finite budget to buy in house diamonds. By accessing the databases of the cutting houses this works to help not only the customers by having a greater amount of diamonds at their disposal, but also the cutting houses and vendors by increased sales. In this way, it frees vendors up to spend their budget on the type of diamonds they wish to sell and which types of diamonds they can move quickest, and of course if they so desire and work in this manner they can bring stones in on customer request. Also we have to consider that online vendors only have so much time in which to spend cherrypicking their stock. Of course there may be less desirable diamonds out there too and a number of these are probably virtual stones.

 

[starryeyed]

Hi Lorelei. What you say makes a lot of sense. I guess I''m trying take this line of thinking one step further.

So if I were a vendor I''d want to stock clean diamonds that were "best in class" and a good value for my customers. If every vendor did this, what would remain as "virtual diamonds" would be the leftovers, of lesser quality or poorer value. Is it wrong to assume that all vendors would want to do this? Do some vendors purposely stock lesser quality stones?

 

[chrono]

Sorta and not sorta.

Vendors want stones that move quickly too for cash liquidity so their in-house stones are most likely going to be:
1. AGS and GIA certed
2. Round brilliant cut diamonds
3. The vendor's preferred colour and clarity (some safe region of possibly F to H, VS1 to SI1)

So for customers of fancy cut stones (non rounds like pears, ovals, emerald cuts and etc), those who want something different (warmer colour or an eyeclean SI2), or don't mind EGL certs may have to tell the vendor to call in virtual stones.

 

[Lorelei]

One of our dear vendors once said that now he had been in the business long enough to sell the type of diamonds HE wanted to sell, and was lucky enough to be in the position to do so. Some vendors stock diamonds in the lower colour and clarity grades, also cut grades, as there is still a market for these diamonds. Some people want size above all else and don't care about cut. Some like myself want size, but don't mind an L colour and an eyeclean I1 clarity. Some don't mind EGL grading and would rather get the generally lower price of these diamonds than GIA and AGS graded. All kinds of consumers out there with diverse requirements. But of course there are the consumers who want a certain type of diamond above all, popular seem to be D to J colours and VS to SI clarities with Superideals, branded H&A cuts, and diamonds with' nice makes' which means a good cut but not a superideal. I think the demand for Superideal cuts is growing due to technology and the ever increasing amount of realisation that cut makes such a difference, plus the tools available now to judge it. But with any business, you mainly stock what you know will sell, it is a case of business sense.

 

[chrono]

Lorelei explained it so much better than I did.

 

[Lorelei]

Date: 11/8/2006 10:50:48 AM
Author: Chrono
Lorelei explained it so much better than I did.

And I was thinking how much better YOU were at explaining this stuff than me!!

 

[JohnQuixote]

The Lorelei and Chrono team is on fire.

To summarize, think of the virtual supply as a global warehouse, where available quality runs the gamut from pawn-shop quality goods to the most premium.

Retailers have access to this global warehouse, but may also stock their own ‘in-house’ goods which fit their business model and target market. Some ‘in-house’ collections might be fast-moving, softly graded diamonds. Other ‘in-house’ collections may be only the finest cuts from the strictest labs. Still others can span a wide range of quality, or are very specific and narrow.

Most sellers will be delighted to source your diamond for you whether it comes from their own collection or is still living out there in the virtual warehouse. Our best advice is to work with professionals you trust to understand and deliver the level of quality you’re seeking.

 

[starryeyed]

I certainly understand what you are saying. Every vendor will occupy some niche - some will be the go-to guy for H&A diamonds, some will be the go-to guy for ideal-cut asschers, some will stock stones that emphasize carat weight, etc.

I guess the part that I am still confused about is the "best-in-class" idea. If I''m a vendor who stocks mostly ideal cut, F-H, VS2-SI1 stones and I have a choice between a very clean F VS2 and an F VS2 that is borderline SI1, I would probably choose the cleaner stone to present to my clients who are asking for a VS2 stone. That means the lesser quality stone is left as the virtual diamond. This can be true for two Good-cut, K I1 stones also. Wouldn''t a vendor always choose the "best-in-class" for in-house, thereby leaving the more borderline or poorer quality stones?

Does that make sense?

 

[JohnQuixote]

Date: 11/8/2006 12:21:54 PM
Author: starryeyed
I certainly understand what you are saying. Every vendor will occupy some niche - some will be the go-to guy for H&A diamonds, some will be the go-to guy for ideal-cut asschers, some will stock stones that emphasize carat weight, etc.

I guess the part that I am still confused about is the 'best-in-class' idea. If I'm a vendor who stocks mostly ideal cut, F-H, VS2-SI1 stones and I have a choice between a very clean F VS2 and an F VS2 that is borderline SI1, I would probably choose the cleaner stone to present to my clients who are asking for a VS2 stone. That means the lesser quality stone is left as the virtual diamond. This can be true for two Good-cut, K I1 stones also. Wouldn't a vendor always choose the 'best-in-class' for in-house, thereby leaving the more borderline or poorer quality stones?

Does that make sense?

The virtual list is made up of dozens of suppliers who own and control their inventory. Not all retailers stock in-house diamonds, because to do so requires a significant investment, often millions of dollars. The ones who do have in-house selections may source their inventory elsewhere, so it's not like the virtual list diamonds are "leftovers."

There is also constant turnover.

As an example: Almost all of our in-house collection is cut by one Antwerp-based sightholder. We stock our niche goods as well as a range of quality we feel fits our model and market from that source. However, if someone is seeking something we don't have in-stock there are regular new arrivals on the virtual list from other cutting houses which we can look into.

I hope this is helpful, Starryeyed.

 

[starryeyed]

VERY helpful!! Thanks John!