Round Diamond with Baguettes

So what else can retailers do to increase profitability? BUY DIAMONDS FOR STOCK! Most jewelry stores do not do this – they either have diamond companies leave stones with them and pay when they are sold, or they call a dealer when they have a specific need. This practice is old and antiquated and in my opinion; those days will be over soon. Twenty or thirty years ago, jewelers could get items on consignment and make DOUBLE their money on it. Not anymore! Consumers are too educated for that. The internet has leveled the playing field in a big way.

In my business, we’re kind of a hybrid between a retailer and diamond dealer. We buy a lot of diamonds from the public, at auction, from dealers, from other jewelers, or any place where we can find good deals. So we OWN all of our diamond inventory. We sell to retail customers and to the trade on a regular basis. It gives us a huge advantage in the diamond world because we know where diamond dealers will buy (because we sell to them) and we know what their prices are. Any savvy jeweler can buy diamonds from dealers at a better price than their “list” or “consignment” prices. How? Pay cash up front. It’s that simple – just buy for stock.

How much can you save? That all depends on the stones you are buying. In my estimation, you can save anywhere from 10-30%. Think about it, diamond dealers/manufacturers are GIVING you inventory and WAITING to get paid. Don’t you think there is a HUGE premium on those stones for that reason? Well there is! Everyone wants to get paid right away these days.

If you were in your diamond inventory for 20% less, not only would you be increasing your margins, but you could also give your customers better deals, and these days, that’s important. Go try to tell Rolex, Cartier or Tacori that you want to pay them right away but want to get 20% off – hell, they won’t even give you 5% off!

Now, the argument against this is that jewelry stores have to pay for their high end jewelry lines and watches, so their cash flow doesn’t allow them to buy diamonds. This doesn’t make sense to me. If you buy into a bridal, jewelry or almost any watch line, (expect a few that hold value) you are usually buying a name brand. If you get stuck with items that you can’t sell, you have to take pennies on the dollar when you liquidate. Diamonds, on the other hand, are very liquid and if you buy right, you won’t lose a nickel when you have to sell. Doesn’t that make sense? It’s important to own something of value and pay a good price for it.

I would love to hear some thoughts from retailers on this subject.

P.S. I own a lot of diamonds and can sell to you for less than any dealer!

Nelson Hepburn AKA Brian Cuban

Well a guy named Brian Cuban did that the other day with Joe Paterno. That name may sound familiar to you because he’s the brother of billionaire entrepreneur and Dallas Mavericks owner, Mark Cuban. He reminds me of Martin Short’s SNL character in the skit “Lifestyles of the Relatives of the Rich and Famous” where he played Nelson Hepburn, Katherine Hepburn’s cousin who sells hot dogs in Central Park. It’s hysterical. (I could not find the video) If you google the word “tool”, Brian Cuban’s picture should come up. Let me tell you why.

I became fb friends with him after he wrote a letter to Mark Zuckerberg condemning Holocaust denial groups on Facebook. I am Jewish and very pro Israel and when I wrote this blog post in July of 2009 agreeing and applauding Brian, he reposted it and we became connected, etc. So for the past 2 1/2 years, I’ve seen his endless banter on Facebook and RIP’s to everyone, and I dealt with it. After all, he’s a relative of the rich and famous.

The other day I see a status update, from Brian, “Joe Paterno passes away at the age of 85″ – this was Saturday night and Joe died Sunday. Then there were five more posts from him blasting CBS for running the story too early etc, etc.

I commented on his update. I can’t do a screen shot since he unfriended me but it went something like this:

“Why did you post this? Just to be the first guy to say that he died?”

I got this response:

“I posted it because CBS ran the story so fuck off”

Then he unfriended me so I couldn’t reply. I guess he didn’t know that I invented the word unfriending. (literally)

So I went over to twitter and messaged him – below is the conversation – start from the bottom:

This is a guy who, according to his bio, “is a Dallas attorney and speaker in the areas of the 1st Amendment and hate speech on the internet…” He even wrote a book about hate speech and social media. WOW! What a hypocrite. He called me an idiot, ass and a tool. I stooped to his level only once but it was “schmuck” and Yiddish doesn’t count.

After this exchange I looked around twitter and found that I am not alone. Whenever someone questions him, he curses them out and blocks them. What a baby.

So I’m just telling it like it is. Now he’s all into Paterno after he was “embarrassed to be a Penn State alum” when the whole debacle started. I just saw him bumble and stutter through a TV interview and he’s one of those guys that can’t talk like a normal person – he can only hide behind the computer. This guy is a complete lunatic. (and a Steelers fan, go figure) Keep riding those coattails Brian!

What a beautiful buzz...

Good times in NYC

Check out this video of The Sloth – wasn’t into this song before the other night…awesome tune!

Set 1: The Sloth, You Enjoy Myself, Back on the Train, The Moma Dance, Funky Bitch, Maze, Roses Are Free, Halley’s Comet > Run Like an Antelope

Set 2: Crosseyed and Painless > Simple > Lifeboy, Guyute, Mike’s Song > Chalk Dust Torture-> I Am Hydrogen > Weekapaug Groove, Show of Life > Character Zero

Encore: Loving Cup

I had to add this one:

DiamondFans

A facebook page we started in March 2008, DiamondFans, has grown to over a million fans or “likes”. I’ve been talking about DiamondFans for a while and it’s been an wild ride up to this point. I’d say it’s become a great asset for my business and personal brand. If you’re looking for ways to benefit from your facebook page, I can only tell you how it’s helped me and Samuelson’s Diamonds.

1) PR

The page has gotten Samuelson’s Diamonds a tremendous amount of media coverage. From trade magazines to local and national publications, we’ve been there. Pretty cool for a 90 year old small family business to be ranked ahead of most national and international brands.

Click here for the press release titled, “Baltimore Jeweler Beating Ravens to 1 Million Fans on Facebook.”

2) RELATIONSHIP BUILDING

DiamondFans has gotten my foot in the door, meeting and building relationships with the best and brightest in the jewelry and tech industries. I’ve been a featured speaker at numerous jewelry trade shows and even shows like Etail. So I’m thankful for that and I’ve learned a lot and continue to learn from it. We have gained new clients and customers from all over the world and that has been unbelievable.

3) WEBSITE TRAFFIC

Let’s not kid ourselves. A page with a million fans generates some serious web traffic for whatever it is promoting. In this case it’s diamonds, diamond education, and my business of course. Back when facebook tracked IMPRESSIONS (which they do not do anymore), we were recieving 300,000 impressions per link. The clicks follow. Now facebook is tracking “people reached” and “people talking about this” which is actually a much more useful stat. I wonder if twitter could do this – which brings me to my next post which may be titled, “Is It Better To Have A Million Facebook Likes Or A Million Twitter Followers?”. Let’s just say this – a lot more people are reading our DiamondFans posts than most celebrity tweets. There aren’t many who even have a million followers. Tweets are really useless jumble compared to the interaction on a facebook page. It’s so much richer with pix, videos, comments, likes, etc.

4) INSIGHTS INTO TASTES AND TRENDS

If I ever want to know what kind of reaction a diamond or piece of jewelry will get, I poll the DiamondFans. I can see what metals, trends, diamond shapes and jewelry people “like” and I learn from it as a diamond dealer and jewelry retailer. You can’t ask for a better way to test the waters.

CONCLUSION

I know most people will be looking for #5 to be SALES. It really doesn’t have much to do with direct sales so if that’s all you’re looking for, you may not find it on a fan page. If you’re looking to communicate with your customers, pages are very effective. If you’re looking to get visitors to your website and more people to notice your brand, it’s great for that too. However, I do think that Facebook may build an easy, user friendly platform to sell product on your page. Some are doing it now but through outside apps which don’t seem to work as well – plus facebook can’t make any money from that. Either way, I do know that we are doing more business than we were 3 1/2 years ago.

So who knows where this will go?  I’m loving it and I think it’s doing a lot of good for people who LOVE DIAMONDS LIKE ME!

THE SKINNY:

The merchant receives 50 or 60% of the coupon that is bought and the other share goes to the daily deal site. We negotiated a 60/40 split on this one.

THE DEAL

The deal was $40 for $100 store credit. Plain and simple. Click here to see the actual deal. From the very beginning, I told them that $100 store credit at a diamond store doesn’t really mean anything to anyone. The deals needed to be for a higher dollar amount. They insisted that they do this all the time and this was the deal to run. We ran it and sold only 36. Out of that 36 people 18 redeemed their coupons. That means that Groupon and Samuelson’s kept all of of the expired coupon money. That’s how these guys make a TON of revenue – only a 50% redemption rate! Some people did spend a little more and half never showed up, so I’d say we broke even on it. Remember, in this case, when a customer buys an item for $100, Samuelson’s Diamonds only receives $25 of that. So unless they spend more, we lose on the deal. One could argue that you may lose, but gain a new customer. The Groupon customers were not our customers, probably because of the lower dollar amount offered on the deal.

Now Groupon called me for another deal. They will no longer do a half off deal, but now they want me to do $199 for $500 – that means that I get $119 for an item that we sell for $500 – I can’t do it. Then, they asked that I do a “Grouponicus” deal which is a product deal. So basically I have to find a pair of diamond studs that cost me $120 that “retail” for $500 to break even. IT CAN’T BE DONE UNLESS I OVER-INFLATE THE RETAIL PRICE. I am not willing to inflate a so called “retail price” to satisfy Groupon.

Here’s an example of a bogus “Grouponicus” deal. They ran a deal on a strand of pearls that were $79 with a “retail price” of $450. IT WAS A LIE. That means the merchant was getting $40-50 for each strand, that’s it. No upsell, no nothing. Everyone in the jewelry industry knows that freshwater pearls are available for $15-$20 a strand. So he (and ultimately Groupon) was lying on the $450 retail, being that it only cost him $20 – that is not ethical.

I will say that the only advantage is that we got a huge increase in traffic to our website that day and a little advertising from it. I don’t think I’ll do another. It’s really just a one-off. The other thing is that running a Groupon can be brand damaging. We sell fine diamonds – not cheap stuff. Groupon is more suited to restuarants.

Now, I did run a Living Social Deal that is not expired yet. This was a $250 for $500 and a $500 for $1,000. This was a better deal for us as merchants because the dollar amount was higher and the customers were better. I will give a full report in January when it expires.

THE TAKEAWAY

If you’re a jeweler, stay away from these deals. They will only annoy you because you really do have to give some stuff away. If you’re a restaurant, it may work out for you. Just remember, it’s to get a customer in the door for the first time, not to make money…

Goin' Viral!

A little while ago, I wrote a post titled, “Stop Sharing!”. My friend who works at ShareThis was mad about that one, but I was talking about business practices, but not fun stuff like pics, videos and blog posts. Well today a pic went around of a clever Halloween costume. A guy in dressed as a Jack Daniels bottle and his little boy dressed as a pack of Marlboro’s.

Here’s what Timothy Straub said on his page when this first happenned:

O.k. WTF? What is going on with my FB page. Yesterday I got 2 friend requests from people I don’t know. Today I find out I have 18 more. I have gotten 2 from people I do know and accepted them, but what’s up with all the others, all of the sudden? Anybody else have this happen?

This obviously wasn’t intentional. Then when he realized how much his picture got shared he said:

Due to the increased demand for my friendship I am now implementing a new friend accepting policy. If you so desire to be my friend please make your request the usual way through Facebook. But then also include a message explaining who you are and why you would like to be my friend. Requests without this extra documentation will be considered to be less important than those with. If I cannot determine who you are by your profile picture and info available to everyone on your wall I will be forced to assume you are phishing and deny your request. Please understand that my viral status has forced me to take these actions. Thank you for your understanding.

He actually made a rule about his friend requests. Right now, this picture has been shared almost 10,000 times!! This is a guy with only 117 friends! Does anyone else find this fascinating? That’s some BIG numbers.

Now can YOU think of a viral idea for YOUR business? It’s pretty hard to do it on purpose…

Let’s talk my favorite subject – DIAMONDS. Diamonds are an interesting category because they are not trading as a commodity on any exchanges (yet), but they certainly can be treated as an asset with real value in the market. Most jewelers don’t want to tell customers about diamonds as a commodity, or the value of diamonds in the wholesale market. They would rather “romance” the sale – much like the current and past Debeers ad campaigns. Most people in the diamond indusrty are still resistant to

This 9.19 Carat Emerald Cut Diamond Signed by Van Cleef and Arpels sold for $656,500 at Sotheby's in September

transparency. Well, it’s a new world and I’m here to educate and help people make informed decisions about diamonds, whether they are buying or selling.

Back in June, I wrote a blog post, JCK Las Vegas 2011 – Diamonds Are King!, and besides discussing how much fun I had in Vegas, I talked about the how the diamond market was BOOMING. I was getting top top dollar from buyers, especially from India and Asia, where the demand seemed to be high. Since that time, and especially in the past month, I’ve noticed a lot of hesitation from buyers. They are afraid to buy because they don’t know what’s coming worldwide – Europe is a mess and the US isn’t much better off. Bottom line is that each business has to prepare for natural downturns in the market and adjust accordingly. It’s like any business. My personal opinion is that diamonds will come back up as we get closer to the holidays and make a strong run into 2012.

Martin Rapaport, who some may say is the diamond market maker, summed it up recently with this quote:

“The diamond trade must accept the fact that diamonds are part of the real world and that diamond prices go up and down. Price volatility is to be expected and accepted as a normal part of doing business. Firms should develop strategies for dealing with downward moving markets. Smart sellers recognize that inventory cost should be based on replacement cost rather than historic cost. They remain profitable and support market prices by selling cheap and buying cheaper. Lower prices are a healthy part of the economic cycle as they create excellent buying opportunities and higher profits for smart buyers who ensure that diamonds remain an excellent value in uncertain times.” said Martin Rapaport, Chairman of the Rapaport Group.”

Like any smart investor, we look at a little downturn as an excellent buying opportunity. If you’re in market for a diamond, it’s a GREAT time to buy. Just remember that, “Diamonds are part of the real world…”

Of course, I’m not looking to get rich writing a book about The Grateful Dead, I prefer to just listen. However, when it comes to buying/selling jewelry, I take it very seriously. About 3-4 years ago, I was asked to speak at the JCK Las Vegas Jewelry Show – the topic, Social Media of course. I said yes and went with a friend, who owned an email marketing company, to give a talk. The first year it was not very popular, but once Facebook caught on, it got more a lot more attention. I went on to speak at JCK for a few years and at The Couture Show, the JA Show, The Instore Show and other jewelry trade shows. After doing all of this, I sat back and thought about why I was doing it. Although my father was proud, he often asked me, “Why are you giving away your secrets? Don’ tell nobody nothin’!” For me, it was a combination of ego, the need to become an industry thought leader, and not being able to say no…and also somehow buying into the myth that the more I talk about this stuff, the more I will grow as a businessman. After about the third year, I had spent a lot of my time on this and was not getting paid for my time. (directly) I did make some nice connections, but my time is money and most of these trade shows did not pay, except for a trip. So I stopped, sat back, and watched the other guys talk about the same topics. Well, since then, we’ve been doing a lot more actual business and using my techniques to make real money, so I’m happy – although I’ll admit I miss it a little.

However, something recently happened to me that validated my father’s words. I told another person/acquaintance/friend about what I was doing in the diamond buying industry. Not every detail, but a little. My current partner also spoke to him since they used to do business together. Now he’s copied my site and even took some identical pictures and logos from my site. I’m not really worried about it because once you have a website up, it’s for public consumption. Also, the other site happens to be a terrible offering. However, it did remind me that’s it’s not always cool to tell people about your business or post about your business, even if it gets a lot of “likes” and comments. Remember, no one cares about your business more than you do and everyone has an agenda, whether they admit it or not, or whether it is conscious or not. So my lesson is BE CAREFUL OF WHAT YOU SHARE – online or real time. The one thing that I do take comfort in is the fact that it’s all about EXECUTION and I am confident that we know how to do that!

“The story teller makes no choice. Soon you will not hear his voice.
His job is to shed light, and not to master.”