Jewelry Buying Tips
DailyIndia.com, NY
Online Jewelry Auction Buying Guide: There are many advantages to buying jewelry through online auctions. The first advantage is pricing. In many cases, one could never go into any jewelry store and find the bargains that abound online.
In fact, online auctions have changed the way consumers shop for jewelry. Where else can consumers find top graded gems and finished jewelry products for just pennies on the dollar?
There was a time when consumers went to what they thought was the “source” (the New York Diamond District) for their diamond purchases, however, over the years, those who want to keep up with the competition (in New York) have actually opened eBay stores and conduct auction events in order to move their merchandise quickly (especially during non holiday seasons).
Jewelry Pricing: Many consumers can’t understand why there can be such wide swings in gem and jewelry prices. First, the jewelry business is cyclical (seasonal). Some of the best prices on gems, diamonds and finished jewelry can be had during spring and summer months. This is because we (as jewelers) need to bring in the much-needed capital to make large purchases in stock for the holiday season.
This is not to say one can’t find great bargains during the holiday season, as we end up with overstock, duplicate items, last years designs and in some cases, the item just did not appeal to consumers visiting brick and mortar retail jewelers. Online jewelry auctions provides an outlet for retail and wholesale jewelers who need to sell every piece of jewelry and gem they have in stock, in order to go back to their suppliers and Global Jewelry Shows to buy more.
The more we buy in stock from our suppliers, the higher our credit limits are extended. If we pay cash for our products (and not take too many items on consignment) we end up gaining higher cash discounts, which allow us to sell near wholesale pricing. The bottom line is always affected by volume in sales. The more we sell, the higher our credit limits are extended. In addition, we cannot look at every gem or piece of jewelry based upon “did we or will we make money”. On many pieces we lose money, however, if we have volume in sales (over the long term) we can stay in business. This is where online auctions come into play.
With millions of registered users worldwide, online auction sites allows us to reach the largest possible audience we could ever hope to achieve. There is no doubt, that finished jewelry products and gems find homes (worldwide) through our Live Auction Events due to the expansive reach of internet. In other words, gems and jewelry, which do not sell due to the lack of interest on the part of consumers shopping in brick and mortar establishments, will sell through online auctions due to the vast audience available on the internet.
On another note, there are may consumers who expect to pick up 10+ carat diamond necklaces in Platinum with VS diamonds for a few thousand dollars. This is just not possible in the “real world” let alone in any brick and mortar jewelry retailer (worldwide).
Expectations of getting a bargain on sites such as eBay, run high (sometimes too high) and this is due to a few sellers, which may have to dump an item (once in a while) below wholesale cost. Those super, super bargains are far and few between, however, once someone scoops up a super bargain, they expect to find that same bargain abounding everywhere on eBay. While you’ll never find “super bargains” on a daily basis, you can find bargains from those in the jewelry trade, who just need to “move” merchandise and move a lot of it quickly in order to keep pace with the industry.
Price Swings: We are asked many times a day “how do offer such high quality gems and jewelry at prices my local jeweler can’t offer?” First, we do not operate a brick and mortar location and if we did, we would need to set up an establishment in a highly visible location (undoubtedly with high rents). Second, we would have to advertise through all media outlets in order to get the consumer into our door. Third, we would have to buy jewelry display fixtures and then staff our store.
Finally, the most expensive investment in such a store is “lighting”. Not to mention the cost of carrying millions of dollars of insurance for product lines and liability. When you walk into a jewelry store ALL of these expenses are calculated into the price of every piece of jewelry and gem you buy! This is not even taking into consideration that every jeweler ends up dealing with “the middlemen” who mark up gems and jewelry to the point where what you’ll find on sites such as eBay, cost 1000% less then what you’ll find in a local jewelry store.
Our company, splitsecondauctions.com works on two premises. One, we are the creator of the “Fine Jewels Auction at Sea” events onboard the world’s largest ocean liners. What does not sell on our cruise ship vessels ends up on eBay at steeply discounted pricing. We need to move merchandise quickly in order to re-supply and keep up with industry trends. While consumers can’t believe what they can buy for “pennies on the dollar”, we also face an uphill battle with brick and mortar jewelry establishments in the United States. Our industry is one of the only industries in which the competition is so fierce that you’ll find a war being waged between online jewelers and brick and mortar jewelry retailers.
Here’s a good example. Let’s say you purchased a 10+ carat VS Diamond & Platinum Necklace on eBay for $6500.00 (the average retail price of that item would be $35,000.00+ in a local jewelry store). Now let’s say you take the item you won on splitsecondauctions.com and brought that item into your local jeweler for his opinion of its value. In nine out of ten cases, the local jeweler will say you got “robbed” as he could offer the same piece for less. In no other industry, is the competition so fierce that wars are waged between online jewelry sellers and retail brick and mortar operators. Why does this happen? Because you did not buy the item from your local jeweler, they lost a sale and hope to recover you as a customer.
When we’re faced with such a situation, we have one question of the brick and mortar operator and the buyer, “if you can sell that necklace for $6500.00 we’ll send you $65,000.00 for ten of them”. We have never been taken up on our offer (to date) and our customer comes to the realization that they got the deal of a lifetime!
Appraisals: Just what is an appraisal? It’s a piece of paper expounding on value (whether that value be determined by Estimated Retail Value or Insurance Replacement Value). It’s also, no doubt, a sales tool, which can or should be used by a prospective buyer to come to some kind of determination of value on a piece of jewelry.
When you buy a piece of jewelry from a jewelry store, they may offer you an appraisal. If the appraisal was performed by a third party appraisal firm then you may have something of value in your hands.
If the appraisal was performed by an “on-site” gemologist employed at the jewelry store, the question of “who’s working on who’s behalf” comes into question.
Buy a piece of jewelry online and go into any jewelry store and just because you did not buy the item in that specific store, you’ll more than likely be told you paid too much.
The Acid Test: Take your favorite piece of jewelry (a piece you have owned forever) and bring it to that local jewelry store and ask how much it’s worth and they’ll give you an estimate. Better yet, get it appraised by their “on-site” gemologist. Then ask them if they’ll buy the piece from you for the quoted estimate. The answer will be a resounding NO! (unless they can grab it from you for pennies on the dollar).
Take the piece to a pawn shop and they’ll offer you some variation of the spot price of gold (if the piece is set in gold) and if the piece has a diamond – what until you hear just how low they can go.
Jewelry is just like any other consumer product. Buy a car, drive it off the showroom floor, bring it back to the dealer a week later to sell it back and see what they offer.
However, jewelry and gems do have one outstanding feature. Insurance companies offer their customers the ability to increase their loss policies (for jewelry) each and every year upwards by 5%!
The biggest buyer of jewelry a few years back was not a national jewelry store chain or any combination thereof -it was a Major Insurance Carrier!
This may answer the question of what type of an appraisal consumer’s should seek! Insurance Replacement Value appraisals are based upon “true” values upon which an insurance carrier will either replace the lost item (at the replacement cost stated within the policy) or their right to replace the item at their own cost (of course discounted to them, which they receive due to the enormous quantity of replacement pieces they purchase each and every year due to loss).
Estimated Retail Value appraisals can be helpful determining “retail value” but if such an appraisal is presented to your insurance carrier, your premiums will be high and if the insurance carrier has the right to replace the item at their cost (and not hand you over a check for value) then you’ve paid through the nose for extra coverage you did not require.
If the item is so unique that you feel no insurance carrier in the world could replace the item – seek out the most qualified gemologist you can find to determine value.
Quality Assurance Report… A QAR can be useful in just determining if a piece is authentic. In other words, you just purchased a 3 carat diamond which is set in Platinum. Is it a 3 carat diamond? Is it set in Platinum? The least expensive way to find out is to bring your piece to an independent appraiser and ask for a QAR.
The Last Word… Remember, every appraisal in the world is based upon an opinion. Nothing is set in stone except the ring on your finger. Every appraisal in world has disclosures protecting the appraisal company from legal action. The most widely known gemological lab has been under fire by the FTC however, consumers flock to them for appraisals based upon brand name recognition.
Remember, always buy a piece of jewelry or gem based upon what that piece brings to you!
Please note that this article represents the views and opinions of the author and not those of www.dailyindia.com.
