Will declining profits, independent grading, and pricing be the trends in cultivating diamonds?

The reason for adding a question mark in the title is because we do not agree with some of the content described in this article. But as a to-B type of self media targeting the industry, we need to timely interpret and share various international perspectives. As for whether it is correct, accepted, and has reference value, it is still up to everyone in the industry to make their own judgment.

After all, this industry is still very young and has not yet reached the time to "characterize" it.

JCK paraphrased the views expressed by consultant Vinit Jogani at a seminar called "Understanding the State of LGD Industry Using Data" in an article yesterday. Overall, Jogani stated that——

Cultivating diamonds should form their own differentiation, and operators should also bring certain "completely different ideas" to the market, thereby creating new demands among those who cannot afford natural diamonds.

From this perspective, Jogani believes that there are seven development trends in cultivating diamonds:

1、 Retail profit decline

"Previously, retailers could sell cultivated diamonds at a price six times (at cost), but in the long run this is unsustainable. Especially when cultivated diamonds are sold in offline stores like Wal Mart, and price competition between online retailers intensifies, this is even more difficult to sustain."

"Ultimately, retailers will sell at a price of 3-4 times the cost, thereby maintaining a revenue similar to the profit earned from selling natural diamonds."

2、 Costs continue to decrease

With the advancement of technology, the cost of raw material growth will continue to decrease. In the process of cutting and grinding, the industry is making efforts to develop automation, so the cost of this area will also be reduced.

Jogani believes that one carat of goods can be obtained for $200 now, but it may drop to around $100 in the future.

"Cultivating diamonds may shift towards a certain 'fixed price model' rather than a 'single carat price model'."

"The continuous decrease in procurement costs means that there will be fewer cultivated diamonds with certificates... However, the (B-end) price reduction is positive because for retailers, a decrease in material costs is a good thing, which will allow more funds to be used for marketing."

3、 Focus on segmented markets

Only 2% of the top population will buy natural diamonds, while the remaining 98% are in the diamond cultivation market. Natural diamonds tell more of the story of luxury goods, while cultivated diamonds are the story of affordable prices.

"Cultivating diamonds will expand the entire market size."

Jogani gave an example in the article: maybe there are two to three million weddings every year, but there are also 85 million mothers celebrating Mother's Day every year. "This market is larger and will not conflict with the natural diamond business."

4、 Differentiated grading and pricing systems

"Why do we use natural diamonds to grade cultivated diamonds? Can we only use three color levels and three clarity levels?"

Jogani believes that for operators in downstream markets, a "simpler classification method" would be more useful, easier, and cause less confusion.

Jogani expects that cultivating diamonds will no longer use Rapport price lists for pricing and will shift towards a linear pricing model.

5、 Unique diamond shape

Currently, about half of cultivated diamonds are cut into circular shapes. Jogani believes this is because cultivated diamonds want to stand on the shoulders of natural diamonds and erode their market, as 75% of natural diamonds are circular.

But we should use more creativity to create more possibilities for cultivating diamonds. People can create more shapes, such as letters, stars, and so on.

"These opportunities will all come."

6、 Learn to coexist with natural diamonds

The practice of reducing the reputation of natural diamonds to gain more market share is ineffective, as natural diamonds in turn educate the public that diamonds are fake, synthetic, and worthless.

"Instead of constantly fighting and destroying each other's business, it's better for both sides to focus on creating new opportunities."

7、 Less "washing green"

Cultivating diamond producers will find it increasingly difficult to make "sustainable" statements in the future without endorsement. With the introduction of Green Guides in the United States, increased information disclosure in Europe, and ongoing marketing efforts in the natural diamond industry, the "greenwashing" approach will not be suitable for future development, especially from a long-term perspective.

As mentioned at the beginning of the article, we do not agree with some of Jogani's views, and the purpose of this article is not to adhere to his remarks as a standard, but to present all the content truthfully and allow industry partners to make their own choices.

Therefore, as we often write at the end of the article——