Growing up as the son of a diamond dealer was a unique experience, to say the least.
As a young boy, I vividly remember visiting the office on Saturday afternoons with my sisters to spend time with our ever busy father, a diamond dealer by trade for well over ten years before I was born. While most kids would play make-believe treasure hunts at home, perhaps hiding their most memorable souvenirs or chocolate coins, our treasure hunts consisted of scouring the once tiny 370 sq. ft. carpeted office floor for 1 pointer (0.01ct diamonds) scattered and hidden amongst the microscopic threads. Every little stone we found brought both my sisters and me, as well as our father, a sheer sense of accomplishment. To my sisters and I it wasn’t abnormal, to us this was life. We were simply too young to understand how privileged we were to actually be hunting for one of nature’s most wonderful treasures, in a tiny carpeted office at that.
I remember asking, “how much is this worth, Papa?”, to which he would exclaim, “it’s not worth that much, Nikhil, but if you find enough of those, that will be your college education.” Though my simple, innocent mind could not comprehend the scale of value in his remark, it still spurred me to keep on hunting, for finding these little treasures was so significant, so real and so exciting.
Fast forward twenty years: I am back in the same office hunting for diamonds again — but not on the carpeted floor thankfully.
As a newly recruited, second-generation diamond wholesaler/dealer working under the wing of my watchful father, I am constantly reminded how the entire industry is built on relationships and family ties. Nowhere else is this more apparent than today’s large jewellery exhibitions and trade shows — a diamond dealer’s bazaar.
I first visited a diamond trade show back in 2012, in Hong Kong. According to report on the diamond industry by Bain & Company, Inc., the Hong Kong show is the largest annual gathering of polished diamond dealers as well as all stakeholders in the industry. Since my first visit to the Hong Kong show, my perception of the industry has never been the same.
Maybe these pretty charts will help you gain some perspective:
The changing scope of channel share, Source: Bain & Company Inc., ‘The Global Diamond Industry’, 2011
The Diamond Industry Value Chain, Source: Bain & Company Inc., ‘The Global Diamond Industry’, 2011
Over the years, the point of sale for diamonds has slowly shifted from regional offices of people like my father — to these trade shows in cities like Hong Kong, Las Vegas and Basel (pretty awesome cities for business trips if you asked me). It’s evident from the chart above how many private stakeholders there are in the industry, and even the publicly listed companies trace their roots back to generations of family-owned businesses — all of whom find their way to the jewellery smorgasbord that is the Hong Kong show.
The Hong Kong show is like a glamorous fish market, the air is filled with the constant drone of incomprehensible chatter and the intermittent, just as confusing, announcements over the loudspeaker. There are people of all ethnicities, backgrounds and religions, armed security guards juxtaposed against backdrops of glorious jewels and sexy models. Very sexy models. It’s like a festival, but without the live bands, only booths of diamonds, gems and pearls — and the occasional Indian dude poking fun at his Israeli supplier over a cup of Nespresso.
So why does all this matter when buying a diamond anyway?
Above: A rare glimpse into the Hong Kong International Diamond, Gem & Pearl Show, March 2015
Because this is how diamonds are really bought.
For as long as I can remember, my father was always traveling. As a child, it never occurred to me that his absence meant anything more than what it was — Papa was gone for business, period. Papa was gone for weeks on end and probably travelled almost 150 days out of the year. We would receive countless souvenirs and gifts from such faraway places as Antwerp, Tel-Aviv, New York & Johannesburg. However, what I’ve only recently been exposed to is the way in which he was doing business. The process of how his business was conducted cannot be described with words alone.
Despite the diversification of sales channels and an influx of a new generation of dealers, those in my father’s generation know only one way of doing business: it is what is known as “mazal und broche” or "mazal" for short— a Yiddish statement meaning ‘luck and blessing.’ Even though the diamond industry is now dominated by Indian dealers, traders and manufacturers, this moral conduct has transcended all cultures and ethnic groups within the industry. Million dollar deals are done over nothing more than a handshake and these precious Yiddish words. Yes, you read that correctly, just a handshake.
But, things are they are a changing.
“Million dollar deals are done over nothing more than a handshake and these precious Yiddish words: ‘mazal und broche.’”
Above: A deal is done over a handshake and the words "mazal und broche"
Above: Owner & Founder of Facets Singapore, Suresh Hathiramani, at the Hong Kong trade show, mingles with respected individuals of the Diamond Industry.
So, what has changed?
Today, when any one of my friends asks me, “how do I even get started with buying a diamond?” I ask them, “well, if you didn’t know me and what my family does, how would you begin?” There is one answer that almost always comes up: Our friend Google.
It’s true, we ‘Google’ anything and everything today, and for a typical consumer, it makes sense. Why wouldn’t you start by a simple Google search? Companies spend hundreds of thousands if not millions on SEO and search marketing in an effort to steer you towards the convenience and efficiency of buying a diamond online. Don’t get me wrong, I’m all for e-commerce and the plentiful ways it enriches our society, but somewhere in the process, tradition is dying, and tradition is a beautiful thing.
This doesn’t mean that the tradition within the trade is dying per se, what I’m really getting at here is how the interaction between the customer and the retailer has shifted. As Barry Schwartz put it so eloquently in his 2004 best selling book and subsequent Ted Talk, there is a serious paradox of choice that is occurring with almost all consumer goods. In the case of diamonds, it has resulted in these precious stones being commoditised to the point of losing some of their respect and appeal in the luxury goods sector. Schwartz argues that with an abundance of choice, consumers feel liberated, but ironically the opposite is true. The consumer is instead overcome by a sense of paralysis as they move towards a decision to buy.
The ease of purchasing a diamond today stems from the countless online sales channels and brick & mortar outlets, providing a seamless and hassle free sale that gets the consumer like yourself exactly what you want. The difficulty? In the consumer’s eyes, it’s this same abundance of choice and information. Some of it is highly useful, but a lot of it frustrating, outdated and even distorted, causing confusion and hesitation in the minds of the consumer.
The ease of buying a diamond today has come with a cost, but that cost doesn't always translate into savings at the retail level. Instead, it rides on the shoulders of everyone in the middle of the value chain, and therein lies the true difficulty. As individuals, we want to make the best decision based on the numerous options we have today in purchasing a diamond or any product for that matter. According to Shwartz, we may end up regretting this very decision when our peers show off their bigger, better diamond they got for perhaps even cheaper because we are never truly satisfied with our decisions when we take on the responsibility of such complex decisions.
“…..we are never truly satisfied with our decisions when we take on the responsibility of such complex decisions ”
Above: Suresh Hathiramani greets a long time supplier & friend at the Hong Kong International Diamond, Gem & Pearl Show, March 2015
So who should help us choose?
Surprising to most, the above picture is a genuine first interaction of many diamond traders at a trade show. The level of intimacy and deep relationships that can span up to twenty years means your diamond has more than just a price, a certificate and a grade attached to it. It means your diamond has been nurtured with respect and been passed on with careful hands and a tremendous amount of trust.
The importance of relationships in this business is unparalleled. Although all businesses rely on solid relationships between suppliers, customers and other stakeholders, the relationships within the diamond industry are deep rooted in generations that are privy to intimate family details, even as specific as the allergies of each other’s children. This characteristic of the industry relationships is also important in the relationships with our customers, and for an individual, the relationship with your jeweller is akin to that of your family doctor.
In an ironic way, buying a diamond today has never been so easy, yet so difficult, but that is where tradition, trust and faith in your jeweller becomes an increasingly important factor.
Wearing a diamond has a powerful emotional significance. For many people, their first diamond purchase is synonymous with their first true love and commitment to a spouse. The wonderful thing about commitment to a loved one and love itself is the very nature of accepting the other’s inherent flaws, and like a priest at the altar, your diamond dealer or local jeweller can help you identify the flaws in a diamond and guide you into committing to accept flaws at a cost. In love and marriage that cost is compromise. With diamonds that cost is monetary.
Purchasing a diamond is not actually easy, so who do you need to trust to really buy a diamond?
It’s all about trust.
It’s quite simple really, you have to trust the institution you purchase from. Unlike the myriad of articles that exist out there explaining all the parameters of the ‘perfect’ diamond and how to get the best ‘value’ for your money in terms of the 4Cs, I’ve spent the last eight minutes addressing the true reason why you as the consumer find it difficult to purchase a diamond. If you’re more concerned with the former, I haven’t forgotten about you either.
It all comes down to the paradox of choice concept and the deteriorating pool of true diamond experts in the world. What’s lacking today is not information or price transparency, it’s quite the opposite actually. Because of scrutiny and negative sentiments recently attached to the diamond industry, what’s lacking today is consumer confidence. There are many reasons for consumers to lose trust in the industry. Out of desperation and a siege mentality, the industry has responded with a slate of cheap marketing tools and heavily institutionalised transparency, yet consumers still lack trust.
How can you blame them? Any person or company's reputation is only as good as their weakest link, and, in the case of the diamond industry as a whole, if someone or some company goofs up, everybody suffers in the process.
To really buy a diamond is to place trust in the institution, in the industry, and believe that your first diamond purchase isn’t just an investment in an expensive rock, but an emotional investment too. In the spirit of mazal, for us diamond people, knowing that ‘she said yes’ or ‘Mom cried with joy’ covers more than just our margins. The years of experience from countless journeys travelled by my father have now been passed down to me. They have taught me that those moments we love to share with our own families we love to share with our customers too. Those special moments in life cannot be assigned a value. So how do you really buy a diamond? With trust.