NEWS & EVENTS
Now You See It Now You Don't
Zvi Yehuda: A Pioneer and Groundbreaker
Nothing excites like a BIG diamond
When’s the last time you remember jewelry consumers being excited about buying diamonds? Think back... back... farther... yeah, I can’t remember either. The fact is jewelry consumers spent the last two years listening to ads about selling their gold jewelry, not buying diamonds. Buying gold has been a life saver for many jewelers. It kept them afloat during tough economic times, and proved to be a very smart business decision, but is it time to move on? Yehuda says “yes” and they are doing more than just talking about it.
A federal jury dismisses Blue Nile suit against Yehuda Diamond Company
Following a six-day trial, a federal jury has dismissed Blue Nile Inc.`s $60.1 million claim that the Yehuda Diamond Company engaged in false or misleading advertising by comparing the prices of its clarity-enhanced diamonds to Blue Nile’s untreated diamonds. A clarity-enhanced diamond has a material inserted into the gem to make its flaws less visible. A spokesman for Blue Nile, No. 56 in the Internet Retailer Top 500 Guide, says the web-only retailer is disappointed with the decision since many consumers don’t understand the difference between clarity-enhanced diamonds and more expensive untreated diamonds. “We are puzzled and disappointed by the jury’s decision,” he says. “We feel that it does a disservice to consumers. Our goal is to make sure consumers are educated and empowered and pay a fair price after they understand what they are purchasing. We continue to believe that the decision does not help consumers.” Yehuda Diamond Company’s web site acknowledges that its diamonds are clarity-enhanced, as well as offering information about the process and why they use it. That’s why Dror Yehuda, president of Yehuda Diamond Company, says Blue Nile’s claim was ridiculous. “As long as you say what you’re comparing, you’re allowed to compare anything to anything,” he says.
Jury Rules Against Blue Nile in $60.1 Million Lawsuit
SEATTLE, Nov. 2 /PRNewswire/ -- Following a six-day trial, a federal jury here dismissed Blue Nile Inc.'s $60.1 million claim against The Yehuda Diamond Company, reaffirming Yehuda Diamond's right to compare the prices of its clarity enhanced diamonds to the untreated diamonds sold by online retailer Blue Nile. Yehuda Diamond, based in New York, has earned widespread industry and consumer loyalty for its successful competition with Blue Nile and other online jewelers, favoring consumers not only with lower prices but also with unsurpassed expert face-to-face service and full Federal Trade Commission-compliant disclosure. The suit [No. C-07-2017 TSZ], brought by Blue Nile and heard last month in U.S. District Court for the Western District of Washington, involved Blue Nile's efforts to prevent Yehuda Diamond from comparing the price and appearance of its clarity enhanced diamonds to those natural untreated diamonds sold by Blue Nile. Yehuda Diamond has consistently contended, even before Blue Nile filed the lawsuit against it in December 2007, that Yehuda Diamond's price comparisons are in the best interest of consumers. After 4-1/2 hours of deliberations, the jury agreed, dismissing both Blue Nile's federal and state claims that Yehuda Diamond had engaged in false or misleading advertising. Blue Nile, which has brought multiple lawsuits against smaller competitors over the past decade, had petitioned the jury to award it exemplary damages of $60,161,834.64, based on alleged actual damages of $20,053,944.88. "This is a momentous victory for all consumers and for free-market competition," says Dror Yehuda, president of Yehuda Diamonds. "In essence, the jury told Blue Nile that it can't use its massive size and legal muscle to prevent consumers from learning about lower-priced, quality alternatives to Blue Nile diamonds," explains Mr. Yehuda. "In recent years, Blue Nile has preferred to fight its competitors in the courtroom than in the marketplace." The jury's decision clears the path for Yehuda Diamond to continue to inform consumers of how much they stand to save by shopping at Yehuda Diamond authorized retailers, who offer competitive prices along with personalized, expert, face-to-face customer service for its clarity enhanced diamonds. By comparison, Blue Nile untreated diamonds are frequently higher-priced and Blue Nile bypasses the retail distribution chain altogether. Moreover, Mr. Yehuda vowed that his company will continue to press its own lawsuit against Blue Nile [Court Case #08-CV-9751] filed in November 2008 in U.S. District Court for the Southern District of New York. In that ongoing case, Yehuda Diamond contends that consumers who purchased rubies, emeralds, sapphires or jewelry containing those stones from Blue Nile were not informed that the gemstones had been treated to enhance their appearance. As Mr. Yehuda previously noted: "We believe Blue Nile is deliberately misleading consumers about the quality of some of the gemstones it sells" in defiance of best industry recommend practices. "When a giant retailer such as Blue Nile does not do right by consumers, it taints our entire industry." Yehuda Diamond has repeatedly endorsed full disclosure to consumers of any and all fillings and treatments made to valuable gemstones, including diamonds. Yehuda Diamond goes to great lengths to inform consumers of its own proprietary clarity enhanced diamond enhancement process, including prominent videos and text on its popular www.yehuda.com web site that illustrate the Yehuda Diamond proprietary technique. Testifying at trial in Seattle, Mr. Yehuda cited Blue Nile's grading of its treated gemstones, such as rubies and emeralds, to rebut Blue Nile's contention that Yehuda Diamond acted improperly in grading its clarity enhanced diamonds after enhancement. "Clearly, the jury understood the hypocrisy of Blue Nile saying that it is okay for Blue Nile to grade in this manner, but not okay for Yehuda Diamond," Mr. Yehuda noted after the verdict was announced. "More importantly, Yehuda Diamond is upfront and straightforward in telling our customers about our grading process, while Blue Nile keeps so many of its customers in the complete dark." Mr. Yehuda said that given the jury's rulings in support of Yehuda Diamond, he has asked his attorneys to petition the judge in the case, the Honorable Thomas S. Zilly, to require Blue Nile to pay Yehuda Diamond's legal fees. Yehuda Diamond is represented by Pearl Cohen Zedek Latzer LLP, a Manhattan-based law firm. Full details concerning the price-advantages, brilliance and other characteristics of Yehuda clarity enhanced diamonds can be found at www.yehuda.com. In addition, the Yehuda Diamond web site explains why it encourages all consumers to visit an affiliated local jeweler and personally examine the diamonds before they buy - without cost, obligation or pressure. For additional information, contact Dror Yehuda of Yehuda Diamond at 212-221-5985. SOURCE The Yehuda Diamond Company Dror Yehuda of Yehuda Diamond, +1-212-221-5985
Jury Dismisses Blue Nile Suit Against Yehuda
Seattle--A federal jury in Seattle recently ruled against Blue Nile Inc.'s $60 million lawsuit accusing The Yehuda Diamond Co. of false or misleading advertising because of its price comparisons with the online jeweler, according to a Yehuda news release. The ruling came following a six-day federal trial held last month in the U.S. District Court for the Western District of Washington, where Seattle-based Blue Nile filed suit against New York-based Yehuda parent company Diascience Corp. in December 2007. The suit stemmed from advertisements on the Yehuda Web site comparing the prices of Yehuda's clarity-enhanced diamonds to those of natural diamonds sold by Blue Nile, pointing out that Yehuda diamonds of the same carat weight, cut, color and clarity were priced significantly lower than those sold by Blue Nile. In the initial suit, Blue Nile contended that the ads did not tell the full story and accused Yehuda of unfair competition, copyright infringement and violations of the Washington Consumer Protection Act. Blue Nile, according to the release, was asking for exemplary damages of $60.2 million based on alleged actual damages of $20.1 million. "These diamonds are not equivalent, and Yehuda's Web site falsely represents that they are," the suit stated. "Moreover, to emphasize a false equivalence between Yehuda's artificially enhanced diamonds and Blue Nile's natural diamonds, Yehuda wholesale copied portions of Blue Nile's copyright-protected Web site and displayed the Blue Nile Web pages on the Yehuda.com homepage." However, Yehuda, which said it removed the copyrighted material from the Blue Nile Web site after one day, has consistently contended that its price comparisons are in the best interests of consumers, the releases states. After four and a half hours of deliberations, the jury ruled in Yehuda's favor, dismissing Blue Nile's federal and state claims that Yehuda was engaging in false or misleading advertising. "This is a momentous victory for all consumers and for free-market competition," Dror Yehuda, president of Yehuda Diamonds, said in the release. "In essence, the jury told Blue Nile that it can't use its massive size and legal muscle to prevent consumers from learning about lower-priced, quality alternatives to Blue Nile diamonds. In recent years, Blue Nile has preferred to fight is competitors in the courtroom (rather) than in the marketplace." Reached about the verdict late Monday afternoon, John Baird, a Blue Nile spokesman, said the company was dissatisfied. “We’re puzzled and we’re definitely disappointed by the decision," Baird said. "The bottom line here is we believe consumers are the real losers.” In the release, Yehuda also vowed to press on with the lawsuit it filed against Blue Nile in U.S. District Court for the Southern District of New York in November 2008. In that case, Yehuda contends that consumers who purchased rubies, emeralds, sapphires or jewelry containing those stones from Blue Nile were not informed that the gemstones had been treated to enhance their appearance. In response to the suit filed by Yehuda, Baird said that Blue Nile provides education and guidance meant to empower fine-jewelry consumers, and that it offers information on its site describing both gemstone enhancements and gemstone care. “We believe the lawsuit filed by [Yehuda] is merit-less," Baird said.
Jury Dismisses Blue Nile $60M Claim Against Yehuda Diamond
Press Release: Following a six-day trial, a federal jury in Seattle, Washington dismissed Blue Nile Inc.'s $60.1 million claim against The Yehuda Diamond Company, reaffirming Yehuda Diamond's right to compare the prices of its clarity-enhanced diamonds to the untreated diamonds sold by online retailer Blue Nile. Yehuda Diamond, based in New York, has earned widespread industry and consumer loyalty for its successful competition with Blue Nile and other online jewelers, favoring consumers not only with lower prices, but also with unsurpassed, expert, face-to-face service and full Federal Trade Commission (FTC)-compliant disclosure. The suit [No. C-07-2017 TSZ] brought by Blue Nile and heard during October in U.S. District Court for the Western District of Washington involved Blue Nile's efforts to prevent Yehuda Diamond from comparing the price and appearance of its clarity-enhanced diamonds to those of the natural untreated diamonds sold by Blue Nile. Yehuda Diamond has consistently contended, even before Blue Nile filed the lawsuit against it in December 2007, that Yehuda Diamond's price comparisons are in the best interest of consumers. After four and a half hours of deliberations, the jury agreed, dismissing both Blue Nile's federal and state claims that Yehuda Diamond had engaged in false or misleading advertising. Blue Nile, which has brought multiple lawsuits against smaller competitors over the past decade, had petitioned the jury to award it exemplary damages of $60,161,834.64, based on alleged actual damages of $20,053,944.88. "This is a momentous victory for all consumers and for free-market competition," said Dror Yehuda, president of Yehuda Diamonds. "In essence, the jury told Blue Nile that it can't use its massive size and legal muscle to prevent consumers from learning about lower-priced, quality alternatives to Blue Nile diamonds," explained Yehuda. "In recent years, Blue Nile has preferred to fight its competitors in the courtroom, rather than in the marketplace." The jury's decision clears the path for Yehuda Diamond to continue to inform consumers of how much they stand to save by shopping at Yehuda Diamond-authorized retailers, who offer competitive prices, along with personalized, expert, face-to-face customer service for its clarity-enhanced diamonds. By comparison, Blue Nile's untreated diamonds are frequently higher-priced and Blue Nile bypasses the retail distribution chain altogether. Moreover, Yehuda vowed that his company will continue to press its own lawsuit against Blue Nile [Court Case #08-CV-9751], filed in November 2008 in the U.S. District Court for the Southern District of New York. In that ongoing case, Yehuda Diamond contends that consumers who purchased rubies, emeralds, sapphires or jewelry containing those stones from Blue Nile were not informed that the gemstones had been treated to enhance their appearance. Yehuda previously noted that "We believe Blue Nile is deliberately misleading consumers about the quality of some of the gemstones it sells" in defiance of best industry recommend practices. "When a giant retailer such as Blue Nile does not do right by consumers, it taints our entire industry," he added. Yehuda Diamond has repeatedly endorsed full disclosure to consumers of any and all fillings and treatments made for valuable gemstones, including diamonds. Yehuda Diamond goes to great lengths to inform consumers of its own proprietary, diamond-clarity enhancement process, including prominent videos and text on its popular www.yehuda.com website that illustrate the Yehuda Diamond proprietary technique. Testifying at trial in Seattle, Yehuda cited Blue Nile's grading of its treated gemstones, such as rubies and emeralds, to rebut Blue Nile's contention that Yehuda Diamond acted improperly in grading its clarity-enhanced diamonds after enhancement. "Clearly, the jury understood the hypocrisy of Blue Nile saying that it is okay for Blue Nile to grade in this manner, but not okay for Yehuda Diamond," Yehuda noted after the verdict was announced. "More importantly, Yehuda Diamond is upfront and straightforward in telling our customers about our grading process, while Blue Nile keeps so many of its customers in the complete dark." Yehuda said that given the jury's rulings in support of Yehuda Diamond, he has asked his attorneys to petition the judge in the case, the Honorable Thomas S. Zilly, to require Blue Nile to pay Yehuda Diamond's legal fees. Yehuda Diamond is represented by Pearl Cohen Zedek Latzer LLP, a Manhattan-based law firm. Full details concerning the price advantages, brilliance and other characteristics of Yehuda clarity-enhanced diamonds can be found at www.yehuda.com. In addition, the Yehuda Diamond website explains why it encourages all consumers to visit an affiliated local jeweler and personally examine the diamonds before they buy — without cost, obligation or pressure. For additional information, contact Dror Yehuda of Yehuda Diamond at 212.221.5985.
The Blue Nile/Diascience Corp. (Yehuda Diamonds) Legal Battle Heats Up
In our original report on our pair trade idea: long Signet (SIG 26.69 ^2.30%) Jewelers/short Blue Nile (NILE 57.77 ^2.09%), we highlighted the risk that a lawsuit against Blue Nile could pose to the company. Earlier this year, Diascience Corp., (aka Yehuda Diamonds) filed a lawsuit against Blue Nile alleging that the company’s website: “does not disclose for each and every specific gemstone offered for sale whether that gemstone has been subject to clarity treatment/enhancement or what that clarity treatment/enhancement is”. Diascience Corp. alleges that gemstones sold on bluenile.com are in fact enhanced. These are serious allegations. We are not qualified to speak to their veracity of the allegations, but the plaintiffs claims could be highly damaging if true. Modified gemstones are worth considerably less than those that are without enhancement. We think the suit could create significant risk for Blue Nile. Trust in your jeweler is absolutely essential. Blue Nile has differentiated itself from its other web-based competitors through the price point it offers consumers and the trust it has established with its client base. In many respects, the consumer is buying the jeweler, not the stone. We think consumer trust in Blue Nile could be significantly impaired to the extent that details about the suit gain traction in the media, or a ruling is eventually made against Blue Nile . Jury Rules Against Blue Nile in Suit Against Yehuda Diamonds Yehuda Diamonds issued a press release today touting its recent legal victory over Blue Nile in a separate suit. You can read the full release here. Blue Nile had followed a separate suit against Yehuda Diamonds seeking damages of $60 million. Blue Nile alleged that Yehuda Diamonds used false and misleading advertising when it compared the price of its clarity enhanced diamonds to those sold by Blue Nile. The suit was dismissed by a jury in the state of Washington. Now that Blue Nile’s suit against Yehuda Diamonds has been dismissed we expect the focus to return to Diascience Corp (Yehuda Diamond)’s suit against Blue Nile. The suit is now in the discovery phase. That portion should be completed by the end of this year. Blue Nile shares could witness increased volatility if the suit goes to trial, or a settlement is reached. We continue to view long Signet Jewelers/short Blue Nile as a compelling pair trade idea. We view Signet Jewelers as the best investment vehicle in the specialty jewelry space based on its strong geographic footprint, well known brands, and growing web presence which has enabled the company to gain significant market share in the downturn. Additionally, the company is effectively long gold, silver, platinum and diamonds, which should lead to margin expansion in an inflationary environment. For Blue Nile, we think shares could see considerable downside if the Diascience Corp. lawsuit escalates. Additionally, we think the fundamental short thesis is equally compelling: 1) the company has a significant operating margin conundrum, it is promotional in a downturn and squeezed by higher commodity costs in an upturn, and 2) the company will face increased competition from more sophisticated web-retailers (AMZN (119.42 ^1.98%)) and established onsite specialty jewelers that are expanding their web-presence. Clearly, these concerns are not yet embedded in the valuation of NILE shares. The stock now trades at 71.6x consensus FY09 EPS and 56.8x consensus FY10. We see downside in NILE shares towards $30 if investors embrace some of the fundamental flaws in NILE”s business model and/or the Diascience lawsuit creates a substantial amount of negative publicity. As always, please act accordingly….
Yehuda Diamonds Vows to Fight Any Blue Nile Action Aimed at Halting Price Comparisons
New York, NY (PRWEB) February 8, 2008 – The Yehuda Diamond Company has told a federal court in Washington State that it has done nothing wrong in comparing the price and appearance of its clarity-enhanced diamonds to those natural non-enhanced stones sold by competitor, Blue Nile Inc.
In defending itself against a lawsuit filed by Blue Nile, Yehuda Diamond said in a related statement that “consumers have an absolute right to know how much they stand to save by shopping with us and we will defend that right vigorously both in court and the marketplace.”
Yehuda Diamond, which has earned widespread industry and consumer loyalty for its successful challenge to leading online jewelers, sells its clarity-enhanced diamonds exclusively through respected retail jewelers, who offer personalized, expert, face-to-face customer service. By contrast, Blue Nile bypasses the retail distribution chain.
Blue Nile, which seeks to stop Yehuda Diamonds’ pricing comparisons, filed its lawsuit on December 18, 2007. In its complaint, Blue Nile acknowledges that “clarity enhancement can improve a diamond’s apparent clarity by one or two grades.” But Blue Nile contends in its complaint that Yehuda Diamonds’ comparisons to its prices are “misleading.”
“What would be misleading would be to prevent consumers from being able to make the choice between our clarity-enhanced diamonds and those Blue Nile sells without clarity enhancement,” said Dror Yehuda in a company statement. “The public needs to know that our prices, which come with unsurpassed expert service, are – plain and simple – lower than Blue Nile’s prices.”
Full details concerning the price-advantages, brilliance and other characteristics of Yehuda quality-enhanced diamonds can be found at www.yehuda.com. In addition, the Yehuda web site explains how it encourages consumers to visit a local jeweler and personally examine the diamonds before they buy – without cost, obligation or pressure.
Best Kept Valentine’s Day Secret: Bigger, Quality Diamonds for Less than Online Jewelers
It is the truth that the big online jewelers would much prefer you not know.
This Valentine’s Day, and everyday, you can buy quality, visually stunning natural diamonds and diamond jewelry from a local, respected, expert jeweler for as much as 30% less than the online peddlers charge.
Gentleman can pocket the savings or reinvest them into an even larger, more brilliant stone. Either way, her diamond will be one she’ll cherish for a lifetime.
The secret – known to tens of thousands of discerning buyers -- is Yehuda Diamond Company, a family-owned jeweler for three generations that has mastered the science and art of diamond cutting. Yehuda Clarity Enhanced Diamonds are visually identical natural diamonds that actually look better than their same-size counterparts thanks to an enhancement process developed by the company in Israel in 1982.
When light passes through a Yehuda Clarity Enhanced Diamond it is not reflected by the naturally occurring ‘feathers’ that are present in most diamonds. The result is that your sweetheart’s diamond is more visually stunning than similar non-enhanced diamonds.
“Bigger and brighter are two words no woman has ever objected to hearing,” says Dror Yehuda, a grandson of the company’s founder. “Bigger and brighter also describe the smiles you’ll receive every time she wears her Yehuda Diamond.”
Unlike online-only retailers who offer “buy it before you ever see it” diamonds, Yehuda Diamonds works exclusively with local retailers who invite you to come in and personally examine the diamonds – without cost, obligation or pressure.
“The truth is really diamond clear,” Mr. Yehuda says. “You can buy a Yehuda Clarity Enhanced Diamond that you’ve personally inspected from a reliable local jeweler or you can pay much more and take your chances buying from an online peddler who may, or may not, stand behind its jewelry.”
All Yehuda Clarity Enhanced Diamonds include a lifetime guarantee, backed by a solid, reputable business.
To learn more about how Yehuda Diamonds stack up against the online peddlers, visit www.yehuda.com.
Yehuda Diamond Company Appoints New V.P.
Yehuda Diamond Company is pleased to announce the appointment of our new Vice President of Sales & Marketing, Mr. Yonatan Ben-Israel.
For the last 3 years, Yonatan was the VP of Sales & Marketing at L.I.D. Ltd. Diamonds New York. He previously worked in the marketing department at Polo Ralph Lauren’s headquarters in Paris, France.
Yonatan earned his MBA from Ecole Superieure de Gestion, one of France’s most prestigious business schools.
We are confident that Yonatan brings great knowledge and experience to our company.
Ad Expert Tells Jewelers To Be Generationally Correct
JUNE 06, 2006 - Las Vegas -- Retailers who want to sell more jewelry may want to listen to the music their kids are playing on their iPods.
That's because jewelers must consider cultural shifts, often clearly indicated in popular music trends, when it comes to reaching consumers, says Roy Williams, a bestselling author and advertising guru.
Billed by some as the "Wizard of Ads," Williams gave a presentation sponsored by the Yehuda Diamond Co. on Saturday morning during the Las Vegas jewelry shows. He described how generational changes in attitudes and overall world views occur every 40 years and noted that advertisers must be in tune to these changes. He said the most recent shift, which began in 2003, ushered in a "we" period or "civic generation" of connectedness and teamwork.
That's in contrast to the last 40 year "idealist generation" period which he says was characterized by a "me" attitude.
Williams demonstrated these 40 year cycles using examples from touchstones such as music, advertising, pop culture and literature. In terms of its relevancy to jewelers, he notes that they must give consumers ad messages that are real and honest. While people will still buy jewelry, he says they want to be approached in a way that is less romanticized and more personal.
He gave the example of signs consumers find on the respective doors to the women's and men's rooms at the California-based Robbins Bros. engagement ring stores. The messages are meant to be a humorous and honest take on what a future bride and groom may be going through as they prepare to buy the ring.
"They buy the ring in the bathroom," Williams says. That's because the advertising works on a level that consumers can relate to. Advertising that is overly romanticized won't work with modern consumers, he says.
"We're more and more violently rejecting artificiality," he says.
Williams runs Wizard of Ads Inc., a company that aids business owners worldwide with their advertising and marketing strategies. Author of multiple books centering around his insights gained over the past 20 years of working with small business clients, Williams also travels the world to lead seminars for CEOs, consultants, educators and journalists, packaged as the three-day seminar series, Wizard Academy.
A Helping Hand
Yehuda Diamonds Sales Soar in 2003
(New York City) - What would you be willing to do if your staff could increase sales by 46%? Dror Yehuda of Yehuda Diamonds is apparently willing to do almost anything.
It all started at an office meeting last September. Yehuda's sales staff was very happy and energized after attaining significant sales increases through the summer. Dror got caught up in the excitement and was an opportunity to further motivate his top-notch sales staff. He vowed to shave his head if December's sales were up by 50% over December 2002.
Unfortunately for Dror the target goal was slightly lowered. "As I was a bad negotiator, they came up every day and asked, 'and if we go up 49% you won't shave your head?' and every time I gave in another point," he said. "At 46% I stopped."
That 4% turned out to be critical. At 6:30pm on December 31st, the 46% goal was met. And Dror, true to his word, sat down and got shaved.
Through it all, Yehuda Diamonds had a huge end to an outstanding year, and Dror learned a valuable lesson, "Never underestimate the ability of people to deliver when they have a chance to humiliate their boss," he said.
The Internet - Practical and Better - Is Back
Because online shoppers can move so easily from retailer to retailer, price is indisputably a factor. Yehuda, with its market position of offering clarity-enhanced diamonds at significantly lower prices than untreated diamonds of similar appearance, is launching a consumer site to exploit that strength. Like Jewelry.com, the site will not sell directly but will drive shoppers to affiliated retailers. Yehuda says it will spend $1 million over the next year on advertising to attract shoppers to the site.
Just months ago, the word “Internet” wasn’t uttered in polite society. The subject was taboo, and any abject souls unfortunate enough to be connected with it were pariahs. Men could pick fights in bars by referring to someone’s mother as a Webmaster.
Pre- and post-2000 played out a classical case study of euphoric speculation in the boom-and-bust cycle of the World Wide Web gold rush. Toward the end of the manic stage, even the most conservative investors were hard-pressed to resist throwing their hats into the ring. Venture capital poured into tech start-ups characterized by business plans with attractive facades but little depth or founding in reality and, often, executives with paltry experience to execute them. But the emperor, it turned out, wasn’t wearing any clothes. And when the illusion crashed and burned, the fire was stoked by vault-loads of feel-good paper wealth. Average Americans looked on dazed as their nest eggs vanished. The Internet went from sexy to loathsome at broadband speed. In hindsight, the same people who had leaped aboard became the Net’s most acute critics. Internet jokes edged their way into stand-up routines. The lesson: Don’t hit an American in his wallet.
Dread and Anguish
The early days of the Web—let’s say 1997—were marked by dread and anguish. Traditional brick-and-mortar jewelers quickly grasped the potential for outsiders virtually anywhere on the planet to invade their local markets. I recall one nationally recognized jeweler pleading, “Can’t National Jeweler do something about the Internet?”
“Pure play” jewelry retailers appeared. The names of those dot-coms are nearly forgotten already, perhaps banished from memory—Adornis.com, Miadora.com. The premise, as in so many Web concepts, was basically, “If you build it, they will come.” And these companies based merchandising strategies on expectations that vendors would vie for inclusion. Instead, established jewelry retailers “convinced” manufacturers to circle the wagons, countering with their own “official” industry site. That site, Enjewel, succeeded in keeping the beast at bay, undoubtedly contributing to the newcomers’ downfalls. Considering that small to midsize companies invested tens of thousands of dollars in Enjewel, there was surprisingly little outcry upon its own demise. Perhaps it was a case of “money well spent.”
Also stacked against the first generation was the problem that Web users’ expectations substantially outpaced the technology. Download times were painfully slow over dial-up modems, especially for jewelry photos, a necessity for online jewelry retailing. While the concepts of escrow payments and return policies were being developed, they were far from ironed out. Moreover, consumers were yet skittish about online credit card payments. It was all just too new.
No longer. Throughout the entire boom-and-bust cycle, virtually linked communities, like worker bees or carpenter ants, droned onward, building their colonies in a distinct parallel existence to the get-rich-quic
Yehuda Launches Web Site to Shore Up Retailer Losses
New York — Most retailers would agree that online diamond sales are contributing to the steady erosion of their profit margins, but few know what to do about it. By now, many must be thinking, “If you can’t beat them, join them.” Well, the Yehuda Diamond Co. of New York is offering them a chance to do just that—with a twist. The clarity-enhanced diamond manufacturer launched a new Web site on July 1 that displays thousands of its loose diamonds and pieces of diamond jewelry. Once a customer orders an item, the company ships the stone to a retailer in the customer’s area, and the customer is instructed to go to the store to view the diamond and, ideally, complete the sale.
“I am the only one who is giving [retailers] a chance to compete with the Internet,” said Dror Yehuda, adding that he wants his retail partners to compete with top-draw diamond sites, such as Blue Nile and Diamond.com. “We’ll be at least 20 percent cheaper than these sites, and customers can see the diamond with no obligation.”
The secret to his low prices is, of course, the Yehuda clarity-enhancement process, which fills the feathers and fractures that detract from a diamond’s value with a resin-like material, thereby allowing the company to sell bigger diamonds at prices people can afford.
Yehuda will spend $1 million over the next 12 months promoting the site on search engines to direct Web consumers to its home page. From there, a network of 2,000 retailers will share the wealth. Dror Yehuda said that retail partners are rated on a scale of one to 13, based on the amount of business they do with his company (one being best). Those with the highest ratings are awarded the biggest territories.
The site’s loose diamonds, most of which are graded by the EGL, begin at $2,500 retail, and jewelry begins at $1,500 retail, a tactic that Yehuda said is designed to avoid setting prices on lower-priced, higher-profit merchandise.
“This is the biggest thing we’ve ever done,” he said.
Beyond the 4 Cs
Enhancing the stone At the Yehuda Diamond Co. in New York City, Dror Yehuda fixes flawed diamonds in a process called clarity enhancement, replacing imperfections with resin-like material that "fools the light and makes the diamond look clear and beautiful."
"I could tell you how we do it, but then I'd have to kill you," joked the diamond fixer.
"Our diamonds cost 30 percent less, so people can save money or go bigger," he said. "Most people go bigger."
His sales of 2-, 3-, 4- and 5-carat diamonds have ballooned, he said.
"There's no such thing as a diamond that's too big," he said, adding that he had just sold two 5-carat diamonds for a pair of earrings.
Whether you're buying an engagement ring or an anniversary present for your mate or a glittering bauble for yourself, there's more to learn about diamonds than the traditional 4Cs of cut, clarity, color and carat. (Start with the accompanying sidebar if you need to brush up on those basics.)
Big changes are occurring in the way diamonds are produced and marketed. With the entry of wholesale retailers such as Costco into the diamond trade and online sites hawking the stones as well, competition for customers is fierce.
The U.S. retail diamond jewelry business accounts for nearly half of the $56 billion in worldwide annual sales. Americans bought $4.3 billion worth of diamond engagement rings alone last year.
During a three-day show in December, the Tigard Costco store sold $300,000 in high-quality diamonds of varying sizes to shoppers on a budget as well as those of means, the store reports.
"I don't know where all the money's coming from," says Megghan Harruff, a Costco diamond buyer. But her sales are "growing, growing, growing," she reports.
Along with more ways to buy diamonds, there are more brands and signature cuts; more ways to enhance a flawed diamond (or fool an unsuspecting buyer); more emphasis on bigger diamonds, at least in some quarters; and finally, more controversy about diamonds that are sold to finance civil wars in Africa.
With all that to think about, no wonder some of the best advice we heard in interviews is to find a good jeweler who knows diamonds, and trust him or her to guide you. A good one will be credentialed from a professional gem organization such as the Gemological Institute of America and will have been in business for many years.
"Talk to several jewelers," advises Elizabeth Stephens at Michael Nutter Ltd. in Vancouver. "And remember that the person behind the counter may just be a salesperson selling jewelry." If you're serious about buying a diamond, you want to deal with the resident expert.
Robert Hensley, a student of diamonds in Fairfield, Iowa, runs two Web sites designed to help people research the gems before they buy. At Diamondhelpers.com, visitors can take tutorials to become grounded in the basics and more. At FindMyJeweler.com, he helps people find trustworthy jewelers, he says. (He does not yet have any Oregon jewelers registered at the relatively new site.)
Hensley says he searches out and recommends smaller shops that offer "expert guidance with integrity and that give the consumer honest, helpful information."
Only a small percentage of people buy diamonds on the Internet, he said. Among those who do, the average sale is $5,000
Big Diamonds Get Bigger As Brides Age, Compete
Another, "clarity enhancement," involves filling flaws to make lesser-quality stones look more perfect. That's what Yehuda Diamond Co. does, and the New York manufacturer says its clarity-enhanced stones sell for about one-third less than nonenhanced versions -- and that business has grown fivefold in five years. "It's good for me that women want to show off," says company president Dror Yehuda.
Maybe Chris Lynch shouldn't have waited seven years. By the time he proposed to his girlfriend, his friends' sweethearts had two-carat diamond rings, leaving Mr. Lynch nowhere to go but up. His 27-year-old fiancee's new solitaire: 3.13 carats. "She now has one of the biggest on the block," says the Iowa telecommunications executive.
Gentlemen, here's a new reason to fear commitment: ring inflation. Even in these times, the benchmark size of an "impressive" diamond has crept up, from a single carat in the 1990s to two or even three today. Diamond behemoth De Beers Group says sales of stones a carat and larger have outpaced smaller ones -- up 81% from 1996 to 2002. And it's not just at the fancy places: One big Southeastern mall chain, Reeds Jewelers, just began stocking two-carat solitaires in October. And warehouse retailer Costco says it's selling $20 million a year of diamonds from 1.5 to more than six carats, after introducing them two years ago. "Amazing, given the economy," says Megghan Harruff, a merchandise manager.
Behind the run on large stones: Older brides with higher expectations, megarock celebrity engagements (thanks, Jennifer Lopez), and new technologies that can make flawed diamonds look more perfect. Competition from Internet vendors, meanwhile, has helped to make big rocks cheaper. The industry has been happy to push them, too, with stores running new bigger-is-better campaigns and one national chain taking out newspaper ads for multicarat rings -- with no-interest financing.
Still, life with a large stone isn't always happily ever after. Some of the attention these rings draw is surprisingly negative. From an investment standpoint, most big stones at best keep pace with inflation. And the elation may be short-lived: Even a spectacular stone, many wives say, can start looking average after a few years. (They even have a catchphrase for it: "diamond shrinkage.")
For Christine Henderson, it wasn't that her rock shrunk -- her lifestyle just got bigger. When the 40-year-old mom got engaged a few years ago, she was delighted with her one-plus carat ring. Then came her husband's lucrative Wall Street career and early retirement to Palm Beach, Fla., and something befitting the couple's new station in life: a seven-carat, canary-yellow diamond. "I really thought I wanted a three-carat ring, but then I thought, 'Set your sights big,' " Mrs. Henderson says. "We grow up."
The $27 billion U.S. diamond-jewelry industry -- $4.3 billion of that is engagement rings -- is taking that sentiment to the bank. It's De Beers, of course, that controls much of the world's diamond market and popularized diamond engagement rings, and then persuaded grooms to spend two months' salary on them. But while past De Beers brochures assured buyers that "Smaller Is Beautiful," last summer its marketing arm came out with a campaign pushing larger diamonds. Caption under a small stone: "Where'd you get that diamond?" Under a much bigger one: "Where'd you get that man?"
Even grooms in good financial shape
The Technology Behind Bigger, More Beautiful Diamond