[Jewelry making - Article 00003] - Re: [Orchid] BlueNile Vs. "wholesale"

[David L. Huffman]

========[ Invite a Friend - http://www.ganoksin.com/invite.htm  ]========

Continue from:
http://www.ganoksin.com/orchid/archive/200503/msg01741.htm

Hello Richard and Kevin;

    Interesting theories. I know about the Supplier of Choice program,
    and everybody knows what the new economy is becoming. More and more
    retail is being concentrated among fewer and fewer entities. So, if
    De Beers is streamlining it's distribution to funnel stones towards
    it's biggest customers, namely Wal Mart and the Internet, it would
    make sense that the only leverage they'd have with these companies
    would be the threat of them going directly to the consumer
    themselves. I think GIA, in anticipation of this concentrated market,
    sees the issue of cut grades as necessary. It's the final step in
    commodifying diamonds, and they will be the ones paid to provide the
    credentials. And I've seen some of these certs on Blue Nile's stones,
    and they are mighty generous, in my opinion. 

    I think that the small retailers are not only being betrayed by De
    Beers, they're also being betrayed by GIA. It was the small retailer
    who helped De Beers convince consumers that these tiny little rocks
    should cost as much as new cars, and it was the small retailer who
    convinced the public that GIA was THE standard in judging how well a
    diamond stood up to the expectation that some schmuck should pony up
    a couple months salary for one or he would forever seem a
    cheap-skate. 

    But, there is one big problem to all this.  De Beers, the more or
    less perfect monopoly, has always tightly controlled supply.  It is
    inevitable that if they are to supply the quantities that Wal Mart
    and the Internet are going to move, the market will have many times
    more stones in the supply chain and the price will have to fall
    accordingly.  Has De Beers become senile?  They can resist dropping
    their prices to their distributors, but they can't stipulate the
    margins.  What could happen is that as the retailers compete, they'll
    cut prices and have to move more product to keep their profits up. If
    De Beers thinks they'll have Wal Mart and Blue Nile dependant on them
    in the way that the old site holders were, they'll be comparing
    apples to oranges. A few years down the road, the demand from the
    distributors will naturally fall off. And these are diverse venues,
    they'll focus on other products. Even Blue Nile could, overnight,
    move their focus to another product. Look at Amazon. Books to CD's
    in a heartbeat. Check out the book, "The Fifth Discipline" and read
    the chapter on "the Beer Game". 

David L. Huffman

____________________________________________________________________
T h e   O r c h i d   L i s t
Open Electronic Forum for Jewelry Manufacturing Methods and Procedures
____________________________________________________________________
Orchid FAQ:
~ http://www.ganoksin.com/orchid/faq.htm
Orchid Archives:
~ http://www.ganoksin.com/orchid/archive
Orchid Galleries:
~ http://www.ganoksin.com/orchid/gallery.htm
Invite a Friend:
~ http://www.ganoksin.com/invite.htm
____________________________________________________________________
Tips From The Jeweler's Bench - Article Archive
~ http://www.ganoksin.com/borisat/tip_sear.htm
The Jeweler's Selected Bibliography List
~ http://www.ganoksin.com/jewelry-books
Buy Orchid Jewelry:
~ http://www.ganoksin.com/shop
____________________________________________________________________
-Unsubscribe:
-Email: orchid-request AT ganoksin.com Body=unsubscribe subject=blank
____________________________________________________________________