Declining Profits: Unavoidable Circumstances or A Management Choice?

Firstly, some of those who got my direct message regarding this article, please accept my apologies for my words that presented me as superior: I have a problem expressing myself in English some times!

• Unique Selling Proposition (USP): A unique feature, function, or attribute in a product that sets it apart from competitors and is emphasized in the marketing strategy.
• Value Proposition: The value that a company or its product delivers to customers after they use it.
• Margin: The additional amount, as a profit, on top of the product cost that customers pay for the value added by the seller.
• Difference: The amount calculated, as a profit, by subtracting the cost of a commodity from its highest acceptable/accepted selling price.

The aforementioned terms are commonly used in commerce, and while their definitions may be abstract here, they are of significant importance to those concerned to connect with the services offered by any commercial entities.

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A few months ago, I visited a few diamond jewelry factories, wholesalers, and retailers to discuss my work on anti-counterfeiting in the gems and jewelry trade and to seek partnerships for my startup.

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The conversations started on a positive note, but I sensed some uneasiness. Among various topics, my question regarding why I should buy diamonds and jewelry from them sparked tension.

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Surprisingly, the response from all of them claimed to offer the best price in the market. Allow me to illustrate how the conversation unfolded. I am combining all the discussions into one while making slight changes to the actual wording.

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Seller (Factory, Wholesaler, and Retailer): Hi!

Buyer (me): Hello!

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Seller: Would you like to see our fabulous diamond jewelry?

Buyer: All right, but what makes your diamond jewelry more appealing compared to those offered by other companies?

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Seller: I can offer you the best price for diamonds, as well as wonderful designs with world-class finishing.

Buyer: That is what every seller claims!

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Seller: Other sellers may provide lower-quality diamonds at a lower price, and since you may not fully understand the reports, you won't notice the difference.

Buyer: Will you educate me on how to read these reports then?

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Seller: Certainly! Here is the color and clarity, and the cut section is where the magic happens. All my round diamonds have a 57% table.

Buyer: Is that a preference or a standard?

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Seller: A 57% table provides more brilliance.

Buyer: How can I measure brilliance? And are there official documents published by credible institutions that confirm this?

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Seller: We only sell GIA, which is world-famous! You can visit their website for more details.

Buyer: Then why should I choose to purchase diamonds from you? The other company also offers GIA certification and a 57% table.

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Seller: Sir, if you're interested, I can show you; otherwise, we're just wasting our time!

Buyer: I apologize, but I believe trust should be based on rationality rather than blind faith, especially when it comes to diamonds.

*End of the conversation*

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I urge diamond and jewelry sellers to ask themselves the following questions:

1. What is my unique selling proposition for the diamonds and jewelry that I am cutting, manufacturing, or selling?

2. What value do my diamonds, jewelry, and company bring to the lives of my customers that others do not?

3. Why should I ask for a margin? Essentially, I am asking for the difference! There seems to be nothing differentiating my diamonds and jewelry from those of any other company.

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I recall the words of Francois Graff , CEO at Graff, who stated, "Today... the collectors want something so extraordinary that they can probably… safely… say that it will never be done again in their lifetime... or their children's lifetime."

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In simple terms, the diamond and diamond jewelry business has transformed into a trading business, like the stock market, where differences are sought.

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If this is true, why should sellers perceive themselves as selling a product when they are actually selling a commodity? Why should consumers be led to believe that diamonds and jewelry are a form of art — gifted by nature and crafted by humans?

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I remember a conversation my mom had with her jeweler over 30 years ago. He passionately described diamonds — everyone in the room recognized the uniqueness of each piece.

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With my words, I aim to disrupt the current situation and demand a change in the diamond and jewelry industry. It disheartens me to see terms like "diamond category," "diamond customers," and "diamond subscription" used by companies in other industries to express gratitude and respect, while most of the time, diamond and jewelry sellers are solely focused on collecting the difference.

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Once again, I recall the one word that helps Mr. Warren Buffett invest in any company: moat! "Is there a moat surrounding the product?" This entices him to invest and care for it as if it were his own.

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Delving deeper into the issues, I identified two product categories causing chaos in the trade: Round Brilliant Diamonds and Commercial Diamond Jewelry. Most of the disruption and misconceptions in society can be attributed to these two products.

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Yesterday, I saw a new type of fancy-cut diamond on LinkedIn, which could potentially be a unique selling proposition to a significant extent. Similarly, fine and designer jewelry offers unique designs that are not mass-produced, providing space for individuality.

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However, since it is challenging to trace imitations of cutting styles and designs, both cutters and jewelers remain fearful that their unique work will not remain a unique selling proposition for long, as exploiters are always present.

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Unfortunately, complaining is not a sufficient solution for this discomfort! However, it is the only way to create awareness about the specific problem in the gem and the jewelry world. We are all familiar with the provisions of copyright and the challenges anyone faces during enforcement.

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The solution to the problem lies in an ecosystem that nurtures and protects the entrepreneurial mindset and environment in the gems and jewelry trade.

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The margin is not the goal! It is the fruit that will be sweet, sweeter, or sweetest, depending on the real goal, which is to create a unique selling proposition and design astonishing value for the customer. This is entrepreneurship!

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If I choose to follow tradition, then I must follow trends like a stockbroker to seize the right opportunity for a higher difference.

Consedring the present situtation, What shall I choose: "Each Diamond Is Different" or "Diamonds Are Forever"?

Thank you ??

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