Rami Baron, the president of the newly formed Diamond Dealers Club of Australia, explains why Australia needs its own bourse.
What is the Diamond Dealers Club of Australia (DDCA)?
The DDCA is the 29th bourse of the World Federation of Diamond Bourses (WFBD), the diamond trading and ethics body which provides its members with an environment for the trading of diamonds.
The club aims to promote the sale of diamonds in Australia and to increase consumer awareness as to what they should expect in terms of protection when buying diamonds.
Who can joint the DDCA?
The DDCA membership is open to all who derive a source of income from trading in diamonds – eg, diamond dealers, wholesalers and retailers who are actively involved in the buying and selling of diamonds and/or diamond jewellery.
What are the benefits of being a member?
The club provides strict ethical guidelines, sound business practice and protection of its members through its affiliation with the WFDB, whose charter it is to uphold traditions, principals of mutual trust, consideration and friendship among members.
There is a strong push by the WFDB to promote the WFDB Mark to the consumer. Club membership will allow our members to use the mark to promote their business as being at the highest standard of ethics in our trade. As the consumer is constantly searching for signs of confidence, it is our aim to work with our members and the media to raise the mark’s profile and drive diamond sales in Australia. We believe the mark will become recognised as the symbol of ethics, good business practice and morality.
Additionally members have direct access to international bourses facilitating worldwide trade – The WFBD comprises 29 exchanges in 20 countries with a combined membership of 15000 individuals and/or companies and encompasses the activities of more than 25,000 diamantaires.
How does WFDB membership benefit the Australian jewellery industry?
Being the official representative of the WFDB in Australia, we have raised our profile worldwide, enabling our members to promote an international image and status. We bring the Australian trade into the world forum and expose the Australian jewellery trade to the changes and trends which are occurring worldwide in the diamond trade. Rather than finding out about these changes and trends at the end of a cycle, Australian WFDB members can now have their hand on the ‘pulse’.
In addition the WFDB is an organisation which has enormous stature worldwide, which has the obvious benefits of differentiating jewellers and retailers who are able to meet the strict criteria in becoming a member. This is essential in today’s highly competitive environment. Those jewellers who travel overseas to source diamonds will now be able to enter any one of the bourses worldwide and expand their network of suppliers and contacts.
Why was it necessary for Australia to have its own separate diamond club?
Like any industry or product category, it is impossible to cover the specific needs and constantly changing demands we are faced with without becoming specialists. Diamonds (in dollar terms) account for 60 percent of jewellery sales in Australia and not to have a strong representation is leaving us as we were – floating with no direction.
The Diamond Dealers Club will create that special purpose vehicle for our trade. From a legal perspective every country has its own laws and regulations; this means every bourse will have a constitution which works within its own country’s laws – as well as the WFDB constitution.
What is your relationship with the JAA?
We have an excellent relationship with the JAA, so much so that we extended a complimentary membership to the CEO Ian Hadassin. The two organisations have excellent opportunities to work together where possible, and more importantly ensure that a common message is being sent out to members, in terms of ethics and standards. The JAA represents the jewellery industry as a whole, whereas we are specific to diamonds.
What have been your biggest achievements in your first ten months as president of the DDCA?
There is no doubt that the trip to Shangai (in May 2008) for the World Diamond Congress was the pinnacle, in that we presented and received acceptance to the WFDB as the 29th Bourse. Although we are a small club we have already launched a member website with internal notifications and updates as well as a seminar program which we hope to take around Australia to promote the club and explain its benefits.
What have been your biggest setbacks in the same period?
Beginning a new club is never easy and there is a limited understanding of what a diamond bourse is in Australia. The traditional model of a bourse has changed worldwide and as such instead of it being a very restricted organisation the aim in to broaden the appeal and benefits beyond just diamond dealers. For this reason we, and in fact the WFDB, see the importance of encompassing retailers.
What are your short term goals for the DDCA?
Firstly to grow our membership. Certainly not easy in these times! The cost of our membership is high. This club is not for everyone, and unless the diamond dealer aspires to be at the highest level of our industry and understands the longterm benefits, this club is not for them.
A club is only as strong as its members and its ability to bring to life their aims, goals and directives. We are very confident that being a member of our club will be highly sought after. All members will know the credibility that is associated with being accepted as a member and in time, those looking to buy diamonds will look for the decal on the manufacturer, wholesaler or retailer’s business as one of the essential ‘tick boxes’ before they consider ‘doing business’ with them.
What does the DDCA believe are the biggest issues currently affecting the diamond industry in Australia?
Trust and confidence are the most important factors. From a diamond dealer’s perspective they need to be sure that the retailers they are working with are viable commercial businesses.
The retailers needs to be able to market their diamonds with absolute confidence that they are dealing with wholesalers who can guarantee they work within the Kimberley process and that they too are strong viable businesses.
There will always be a critical relationship between those in the diamond industry in respect to credit. The retailer often relies on their supplier to provide consignment goods, goods on approval and often extended credit terms. These often generous conditions are provided purely on the basis of ‘trust’ and very little, if any, contractual terms. The building of these relationships and a strong framework on which to grow in these very difficult trading times will be the difference between those who succeed and those who fail.
Every country has its own laws and regulations; this means every bourse will have a constitution which works within its country’s laws as well as the WFDB constitution.
Some wholesalers have chosen to go direct to the public and that is a commercial decision. It must be said however that as frustrated and angry that their retail customers (and retailers generally) feel about this action, they need to appreciate that it is as a direct result of commercial reality.
The wholesaler will argue that they are merely a ‘bank’ for the retailer and with bad debts and little ‘customer loyalty’ there is no choice.
The DDCA is not here to make a judgement on how members should run their business; its purpose is to promote the diamond industry and ensure its members are conducting their business in an honest and trustworthy manner.
What impact are synthetics having on the local market?
At the moment the supply is limited but the greatest danger are unscrupulous dealers selling synthetics as natural. The DDCA and the WFDB are aware of this problem and have taken steps to protect the members and the industry.
This will assure and protect the consumer.
The synthetic diamond will eventually play a large part of the diamond jewellery market. There will always be a segment of the market which is looking for something that looks like the ‘real McCoy’ but costs much less. No one can predict the impact it will have on the local market; the only thing one could surmise is that traditionally the Australian market is a conservative one so the uptake may be slow. However if a major supplier puts considerable backing to promote these stones and they are well distributed, the impact could be much greater.
The most important aspect of natural diamonds is their history and unique properties; there will always be the greatest demand for the natural and exquisite beauty that only a natural diamond possesses.
What is the DDCA’s stance on synthetic diamonds?
The growth of this segment is undeniable as it has been in other areas of the jewellery industry, pearls being the best case in point. The issue will always boil down to one point – ‘Disclosure’. Choices for the consumer are inevitable. The question is how to create greater differentiation, both real and perceived, to enhance the natural diamond trade and, as a club, to educate the consumer and the trade as to the differences.
The DDCA has strict rules and guidelines which are set out by the trade worldwide. These rules and methods of dealing are the best and most efficient way to combat the negative effect the synthetics may have on the natural diamond trade when these issues arise.
What is the DDCA’s stance on the internet sale of diamonds?
The DDCA has no issue with internet diamond sales. It is only interested in promoting all diamond sales over other luxury items. The position we take is the emphasis on ethical behaviour. We are interested that diamonds sold from the Web in the Australian market originate from bona fide Australian businesses, which wherever possible can protect the Australian consumer.
The DDCA is vehemently against and will look to expose the ‘ghost sites” where there is no real business in Australia. Any behaviour which may constitute a customer being duped into a purchase, or not receiving what they believed they were buying, whether it be via the web or other means must be exposed and dealt with by the full force of the law.
What do you think are the biggest challenges currently facing diamond dealers in Australia?
The biggest challenges are the same as faced by all businesses. How do they generate sales, protect margins, and maintain sound business practices in terms of credit controls and terms. The market is changing and the question every dealer must ask themselves is where do they position their business. Will they be a wholesaler, a wholesaler and retailer, or a wholesaler and manufacturer of diamond jewellery etc?
The biggest mistake the traditional merchant will make is thinking that they can be everything to everybody. One must specialise, and build on the relationships. ‘The grass is not always greener …’
Another problem rearing its head is the influx of substandard cheap diamonds which force prices down, not through equal quality for price, but through miss-graded and over-stated qualities. These stones are marketed on price alone – which is the consumer’s first priority. The trade needs to focus on education as quality as extreme discounting is a ‘no win’ scenario.
What benefits does the average diamond jewellery buyer gain from the DDCA?
The DDCA is all about the marketing of diamonds and diamond jewellery, The DDCA’s focus will be on helping Australian diamond dealers and jewellers show the diamond buying consumer where to buy safely in Australia from an Australian business.
Promotion to the public is important to the future of the local market and the DDCA is committed to this end. The world is becoming a smaller place, and the Australian market has come under pressure from overseas merchants, via the internet as well as the dealers selling directly.
The DDCA together with a public relations company, is building a strategy to enhance the DDCA profile and, more than anything else, define a point of difference.