Cheap Wholesale Fashion Jewelry
Q.Lets say I buy a diamond ring for say 10k, and had it insured for replacement value. Let's say the ring was lost/stolen almost immediatly after I bought it. My insurance company is able to get a suitable replacement, yet they only pay 3k for it. I don't understand how this price gap occurs. How is the insurance company able to buy diamonds at such better terms? This seems to only happen with jewlery. I have often heard the term "estate value", but don't understand how the marketplace works. Thanks for any explanations
A.Not just jewelry, but almost any luxury item where store sales volumes, relative to the cost of inventory and doing business, are low. think furs, furniture, and even things like fashion clothing. The usual retail markups are at least 2 times the wholesale costs, and often as much as three times. While this sounds like obscene profits, it actually isn't, in most cases, by the time the business figures it's actual profit after costs of doing business. Remember the store may have several million in inventory sitting there just to sell you one ring, and they not only have to buy it first, but have to insure it as well. Some saving occur by selling you stones they get in on memo, rather than having in inventory first, but then they pay more for them, lessening their margin. Most jewelry stores are happy if, at the end of the year, their net profit margin equals or beats things like the stock market. If it didn't, they'd close the business and put the money in stocks, after all. Anyway, also consider what the insurance company is doing. The appraised value they issue coverage for is usually a value that's set at the highest normal retail price one is likely to find. NOT the cheapest you could find by careful shopping. Often not even the average price you'd pay by going into the average local store (It SHOULD be at that level, but often isn't). Appraisals, when issued by the selling store, are often bad this way, since a high appraisal makes the store look good, and the insurance company sure isn't going to complain, unless your policy allows you to take a cash payment of the covered amount in case of loss. So to begin with, insurance appraisals are often at the high end. If this is actually what you paid, you may have bought the diamond at a rather higher priced store than you needed to. Some stores with lots of reputation and "class", like Tiffany, Cartier, or others with similar marketing arrangements, don't need to discount their wares at all. Others, the more common lesser known stores may sell the same quality goods for a LOT less, and still be happy businessmen. And for diamonds, you'll find you can often get larger stones, in the price range you mention, for as little as ten or fifteen percent markup over the wholesale cost, if you shop the internet carefully. Next, consider what the insurance company is buying, and where. They buy a LOT of stuff for replacements. That gives them clout, and they use it to negotiate discounts for prices below normal jewelers wholesale costs. In trade, they're not too picky sometimes about meeting exact specifications. Often, your appraisal, which is all that binds them to a given quality standard, may not be as fully detailed as one might wish, and in those cases, the insurance company won't be choosing the best possitlbe stone that fits the appraisal, they'll choose the cheapest that fits, unless you complain loudly or something, which most people don't do. So often, the insurance company is able to buy a stone that is not only obtained at a discount well below the usual wholesale costs, but is slightly lower in quality in some subtel detail or other. Those subtle details can make a substantial difference in quality. To protect yourself properly with insurance, use an appraisal which YOU paid for, not the selling store, and which is prepared by a qualified independent jewelry appraiser. This is ideally NOT someone at a store, but someone doing only jewelry appraisal, with qualifications to prove competence. Second, when buying jewelry, understand that there are many places to shop. The most exclusive shops will charge more for the same merchandise. Sometimes you'll get additional value for your money in exclusivity of design, or customer service, or just the panache of name value. Often, though, all you get is the assurance of quality that you percieve to come with the exclusive name. It may well be deserved, but it's costing you money to shop there. If you educate yourself to what makes quality and value in gems and jewelry before you go shopping, you can find many sellers who still make enough money to keep themselves happily in business, yet don't need to triple their costs as a markup. Such sellers probably won't be located in the highly exclusive neighborhoods with very high property rents, and won't be spending millions per year an advertising. But they're there if you look. And remember, this doesn't just apply to jewelry. If you think the markup is high in fine jewelry, you should see the markups on the cheap three dollar per pair costume jewelry earrings at Kmart. That sort of stuff is often marked up five or ten times it's cost, just to pay for the couple feet of real estate the display takes up, plus the cost of shoplifting losses... And that nice new shirt you got at Macy's, Lord and Tayler, Saks fifth avenue, or other fashion retailer, at least a three time markup. Often more. And remember that this is needed, if the business is to stay viable. It really is not raping or cheating the consumer. Running a store isn't cheap
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