In response to nonexistent profit levels and soft demand for diamonds, many of the largest Indian diamond companies appeared to recently change their marketing strategy. Realizing that the current system was all about the “lowest price” and that this was becoming destructive to their bottom line as well as the health of the diamond industry, these companies began listing their diamonds on Rapnet at the “list” price instead of at their discounted price. It was an attempt to revert back to market-making via personal communication as opposed to the cheapest price on a computer database.
I believe this was an attempt to avert the ongoing race to the bottom in which everyone is a loser. I believe that this was a good move with regard to restoring the health of the diamond industry.
Unfortunately Martin Rappaport felt it necessary to show the world that he is the only one with power to control the dynamics of the diamond market. And so he lowered his list prices to strike back.
This is unfortunate. The market was starting to recover from the abyss of January and early February. I sensed that there was a healthier attitude and increasing demand. Now, by lowering the list, demand will again stagnate as buyers will be afraid of diamond price deflation which could become a self fulfilling prophecy.
We, as diamond professionals, have an obligation to protect the integrity of our trade. Profit margins are senseless at all levels. More importantly, the appeal of diamonds in all aspects has been destroyed.
I yearn for the days when there was a “diamond market”. At that time there was also a thriving market for diamonds.