Jeweler Exchange Policies
As I’ve stated before, jewelers—the good ones, anyway– spend tremendous amounts of time on communication and setting expectations with clients. But one troublesome issue that arises every now and again is return policy. Why do some jewelers and diamond sources provide clients one, two or four week windows of time to exchange or return product when others will provide only a day or two… some won’t allow exchanges or returns at all. Why does a jeweler who guarantees me that I bought something at only a few percentage points above wholesale refuse to give me wholesale price for my diamond now that I don’t need it anymore? Anyone have questions like this? I just finished trying to spell out as linearly as possible the reasons for these various scenarios to a client. I’m hoping he now understands, although I can see by the look on his face he’s struggling to accept the logic when he’s sitting on a diamond that he has no use for after the breakup.
It’s a simple matter really. The jewelry industry is like every other industry that deals in the manufacturing, or brokering of a product. When the “order” is made by a business for an item (be it diamond or finished good), that product is exchanged for cash. It was purchased for x dollars, and represents debt, until it’s exercised in a sale to cover the debt and turn a profit. In times past, jewelers were notorious for selling at exorbitant markup. They would buy for x, and sell for 100% more than x. Some would sell for 300% or more. But the fact still remains, only that difference between the sale price and the debt belongs to the jeweler. Now depending on potential margin, some might consider it worthwhile to offer clients a particular window of time to reconsider their purchase. Think about it. You buy a diamond from a manufacturer for say $5000. You sell it for $10,000. A huge selling point is your 30 day return policy. For a 100% return of $5000, I think many business owners would consider delaying the conversion of the sale to profit or more merchandise for 30 days. That’s one scenario. Let’s say you don’t work on 100%. Say you’re closer to 15-20%. Now the sale brought you $1000 return. Will the $1000 profit jeweler be willing to wait 30 days to exercise his money? What if he’s working on 5-10%? You get the picture. It becomes less and less practical for low margin jewelers to give fancy return policies to their clients. Now imagine if the item that the jeweler sold was actually on memo from a vendor!! The only way the customer is going to get an exchange policy is if the jeweler received one from his vendor. So when you see 30 day return policies, recognize that such policies are being extended to you b/c they’re being offered to the jeweler. Also keep in mind that when jewelers get these types of terms, they usually don’t get bottom dollar prices.
When evaluating you jewelry purchase, keep in mind what components of the piece and what components of the “service” are of value to you. Don’t be fooled into thinking return policies or exchange programs are free. They aren’t. You will be paying on one end, the other, or both for anything that delays a business from exercising their profit.
As a professional diamond dealer I actually have particular clients that for one reason or another really need a window of time to return or upgrade something. If I’m getting the sense that they value that service, I make sure ahead of time that I work that “expense” into the sales price. I’ll also let them know that I’m doing it. In all actuality, it’s like borrowing money. Take a diamond worth $5k out of my possession for a month is the exact same as taking cash from me. It’s money I could be using for something else. Now, if the potential margin is large enough or if I haven’t myself had to pay for the item yet, then extending to clients a window of time to return or exchange items can, like you said, be a very worthwhile selling point.