Buy from the bourse on eBay

The Israel Diamond Exchange (IDE) and the online giant eBay announced an agreement allowing IDE members to sell direct to the consumer on eBay’s popular sales site. Members wishing to expand their online sales via eBay need to provide proper documentation to prove their membership status and will receive training in eBay marketing and rules. This move will open new markets for IDE members and support eBay’s efforts to bring in larger, more stable vendors.

IDE President Schnitzer commented:

“We are experiencing an international revolution in all that is concerned with market, not just in the diamond sector. Today, it is possible to market diamonds directly from our offices via the Internet. The eBay company has 150 million consumers.”

The IDE is entering a market with a problematic reputation. Poor grading, wrong identifications, overstated descriptions, doctored photos and other significant miss-representations are endemic in the jewellery, gem, and diamond categories on eBay. Their rules for sellers are stringent but they can be very confusing and are often inconsistently enforced. The playing field as it exists today is far from level.

The IDE dealers are in a position to be brutally price competitive with current online diamond sales platforms like Blue Nile and can leverage the stringent IDE vetting and reputation as highly trusted vendors. They will be on their own playing field with uniform grading standards and consistent, predictable pricing.

Dave-20140910_Rapnet-bans-EGL-reports For the first time the public will have direct access to diamonds at the manufacturer level; bypassing the traditional supply chain and taking dealers, wholesalers, brokers, and retailers out of the picture. Consumers can buy diamonds from trusted sources at rock bottom prices. Current eBay diamond sellers, often home based family businesses, will not only face downward price pressure but will be considered suspect without the power of being an IDE member This could be the final blow for many of the smaller eBay diamond vendors.

On a broader view this is a step toward the commoditization of commercial grade diamonds at the consumer level. With fewer steps between the manufacturer and the final consumer, there is less chance of grading inconsistency or price manipulation. Similar to gold, diamonds will be sold at daily market prices.

Brick and mortar jewellery retailers may see already dwindling margins shrink to less than nothing. Selling centre stones in a bridal set could be a loss-leader service to close a sale of the settings. Profitable diamonds will need to come from the secondary markets of estates and liquidations.

This partnership of eBay and the IDE by itself is certainly not the end of the world and will ultimately be good for the consumer. But this is only the first of many. There are bound to be similar deals between online vendors and other diamond bourses. This is just the first ripple of the inevitable flood of direct-to-the-consumer supply streams.

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