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Yehuda Launches Web Site to Shore Up Retailer Losses
By Victoria Gomelsky
National Jeweler - Page 46

7/16/2003

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.

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