Sightholder Sells To the Public

Israel’s R. Steinmetz and Son, one of De Beers’ largest sightholders, has bought a controlling interest in retail Web site www.diamonddepot.com. The Miami-based site is headed by Alan Lipton, formerly chairman and CEO of Jan Bell.

Diamonddepot.com stirred controversy with newspaper ads that not only said it was owned by “De Beers’ largest sightholder” but also included the De Beers and Gemological Institute of America logos and a picture of De Beers’ special-edition Millennium diamonds. (Steinmetz is one of 14 Millennium sightholders.) To some people, the ad implied that De Beers endorsed—or was participating in—this new venture. But both Lipton and De Beers executives denied any De Beers connection.

After the ads appeared, London’s Sunday Telegraph reported that De Beers “had asked [Steinmetz] to tone down use of the De Beers name for fear [that De Beers] will be in breach of a U.S. Justice Department ban forbidding it from marketing to the public.” Since then, the De Beers logo has disappeared from the ads. The ads still mention that Steinmetz is one of the world’s largest sightholders and still display the Millennium stones, but they now say that Steinmetz “supports” GIA, which also complained about the use of its logo.

Lipton concedes using the logos was a “mistake.” About the issue of a wholesaler selling to the public, he says, “I’m sure some retailers aren’t happy. This eliminates middlemen. That’s what the Internet is all about. But I don’t think this will put retailers out of business.” He says his site has two strengths: access to a consistent supply and the ability to make decent margins. “We’re not in this to lower prices,” he says. “We want to increase them. The difference between us and our [Internet] competitors is we can make profits at these levels, and they can’t.”

Isaac Dekalo, president of the U.S. branch of R. Steinmetz and Son, says, “The Chicago office is a franchise of the Steinmetz organization and has absolutely no part in this venture. I’m taking heat from my retail customers, but I wasn’t consulted.”

One retailer who’s not sitting passively by while suppliers reach out to consumers is Sterling, the nation’s second largest retail jewelry chain. In a stern letter sent recently to its vendors, the company warned against selling to the public.

“Any direct sales to the consumer changes our relation from vendor/customer to competitors, which will cause us to carefully reconsider our business with you,” the letter states. “We urge that you give careful consideration to your retail strategies so as not to jeopardize what has worked for both of us in the past.” The letter was signed by Sterling’s chairman and CEO, Terry Burman, and executive vice president Harriet Schreiner.

Schreiner declined to comment on the letter, saying it was a “private matter” between the chain and its vendors.—Rob Bates

De Beers Introduces New Anniversary Ring

De Beers’ U.S. marketing agency, J. Walter Thompson, recently introduced the company’s newest product: the three-stone diamond anniversary ring. The stones symbolize past, present, and future.

Wedding anniversaries account for 30% of the diamond jewelry acquired by married women. “Next to the engagement ring, a diamond on an anniversary is the most emotional purchase you can make,” says Seth Grossman, a Thompson researcher. He notes that De Beers’ research shows that couples look at their anniversaries as a time of reflection. “Each stone represents one facet of their life together,” Grossman says.

The ring will be touted in magazine ads and in a TV commercial featuring a couple in a movie theater watching a film of their life. “When we tested the TV spot, women were crying. We had never seen that before,” says Richard Lennox, De Beers account director. The ring will be heavily promoted, consuming more than a third of De Beers’ total ad budget this year.

The ads also say a three-stone ring is “most exquisite” with a center stone of a half-carat or more. “Because of the rich emotional symbolism surrounding the woman’s diamond jewelry purchase on an anniversary, customers are willing to pay a higher average price,” Grossman says.

The marketers say the three-stone ring is not meant for any particular anniversary. The TV couple appear to be in their mid- or late 30s.

De Beers will continue to advertise the traditional diamond anniversary band, its other anniversary-related product.—Rob Bates

Miadora.com Gives Away $100,000 Diamond Necklace

Internet jewelry retailer Miadora.com gave Susy Zelaya a Christmas she won’t soon forget. Zelaya, of Monte Rio, Calif., won the Miadora Diamonds Sweepstakes, which included a 43.3-ct. t.w. diamond necklace in white gold worth $100,000.

To make sure she had an appropriate occasion for wearing such a bauble, Miadora also treated her to a day and night on the town, including a limo ride to San Francisco for her and her husband, a makeover at a downtown boutique, a new red silk dress to wear to a performance by the San Francisco Ballet, and a one-night stay in the presidential suite at the historic Sir Francis Drake Hotel.

Miadora inaugurated the Diamonds Sweepstakes to help kick off Miadora.com, which went live in September. A random drawing in late October determined the contest winner.

Zelaya, who says she registered for the sweepstakes on a whim, was one of 50,000 entrants. “I was drawn to the necklace as soon as I saw it,” she says. The necklace was part of Miadora’s estate collection.

“Miadora is delighted to present this necklace to Ms. Zelaya,” says Miadora president and CEO Barry Gilbert. “We can’t think of a more deserving winner. We feel she is someone who will truly appreciate the delicate beauty and artistic integrity of the necklace.” Zelaya has a degree in fine arts and pursues painting, drawing, and ceramics.—Richard Dalglish

Upscale Watchmakers Oppose Online Sales

Upscale watchmakers are starting to fight the unauthorized sale of their watches on the Internet. In the past couple of months, Rolex, Raymond Weil, Montblanc, and Baume & Mercier have all warned their authorized dealers not to sell their products online. If they do, they may be dropped as authorized dealers.

Baume & Mercier in December went a step further and placed a full-page ad in the Wall Street Journal urging consumers not to buy its watches from online sites. The ad warned cyber-shoppers to “beware of so-called ‘deals’ on our products on the Internet.” These promotions, it says, “have not been placed by authorized Baume & Mercier dealers.” The ad specifically mentions Ashford.com, which went online last year and is one of the ‘Net’s biggest sellers of top-name watches. Ashford may have been cited because it formed an alliance in late 1999 with Amazon.com, one the Internet’s largest e-tailers, to provide watches and jewelry to Amazon’s customers.

Kenny Kurtzman, CEO of Ashford.com, says Ashford is the exclusive online distributor of 50 of the 300 watch brands it offers and concedes that “some of the watch brands we sell we don’t get from the brands themselves.” But he says they’re legitimate products, obtained through other sources. “Over time, the [watch] brands will realize the Internet is here to stay,” says Kurtzman. “The Internet is not about exclusivity but about providing choice for customers.”

The Baume & Mercier ads advise cyber-shoppers that only its authorized brick-and-mortar dealers can provide “an authentic Baume & Mercier timepiece … not a counterfeit or second-hand good presented as new merchandise,” a validated warranty certificate, and “expert after-sale service.” While Baume & Mercier will service genuine Baume & Mercier watches bought through the Internet, it will do so at the customer’s cost. It won’t provide its normal 24-month warranty support.

The ad referred readers to Baume & Mercier’s own Web site for a list of authorized dealers.—William George Shuster

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