Diamond trader and brick & mortar crusader Melvin Moss is back at his provocative best in his most recent diatribe, "The #Diamond Family is Dysfunctional". He argues that major diamond miners producing too much rough at prices unsustainable for the rest of the industry (which deals with underpriced polished) and are extending their reach across the pipeline at the expense of everyone else - particularly retailers. "The diamond pipeline is dysfunctional", he writes. "Miners have a primary obligation to their shareholders. The overall health of their downstream partners is of secondary concern ... The large diamond mining companies are the industry disruptors. They are infiltrating every level of the diamond pipeline. They sell polished diamonds via online auction. They are retailers. They brand loose diamonds and finished jewellery. They own laboratories. They list on commodity exchanges. They sell diamond detection equipment. They sell rough to manufacturers and they buy used diamonds off the street ... There is very little that they won’t do."
The main victim, he argues, are the brick & mortar retailers. "Mining companies and manufacturers are focusing on Internet sales. Eliminating the middleman is the name of the game. They feel that the traditional ambassadors of diamonds, the brick and mortar jewellers, are superfluous. The physical encounter, ‘the touch and feel of luxury’, is not needed. The diamond industry, unlike all other luxury products, wants to commoditize. Emotion and luxury is to be replaced by price and a diamond report." In doing so, he suggests they might be undermining their own ambassadors. As a Canadian wholesale diamond supplier(the first in Canada to attain RJC certification), he takes particular issue with Dominion Diamond Corporation's exclusive contract between CanadaMark and e-commerce jewelry retailer James Allen. "Selling direct to the public depreciates diamond worth. Retail diamond prices fall." Citing the trend we drew attention to last month, namely that Millennials are omni-channel shoppers that still desire to purchase at physical retailers, he is concerned that miners and manufacturers are going too far in the attempt eliminate their partners, and in doing so may undermine the very gains they sought to achieve through vertical integration.