Why is it so hard to realize wholesale prices?
Everyone who is familiar with my site here knows that value is a flexible concept. Most appraisals are about an estimate of replacement retail prices at specialty jewelry stores for things in new condition.
It’s about what a store might ASK for something.
That obviously includes some important limits and, in most cases, private sellers can’t realize those values, but what about wholesale prices ? Stores have to get their stuff somewhere, why not you?
There are internet sites that are happy to tell you the ‘wholesale’ prices on things, and there are plenty who call themselves wholesalers who will be happy to sell you something for those prices.
Isn’t wholesale price the price dealers pay for the things they sell? Isn’t this what you can get when selling to a dealer?
In a word, no.
The problem comes from a few basic issues.
1) Terms of sale. In most cases, jewelry stores buy their goods with special financing called ‘memorandum’. This means they don’t have to pay for a while and they can give the goods back to their suppliers if they don’t sell through for them.
They come with warranties, and they come with advertising support (sometimes). The sellers are looking for a relationship and are hoping the stores will make a series of purchases.
Your terms are more like “Give me cash now and you’ll never see me again. Good luck with it”.
In most markets, if dealers buy something from the public they have forms to fill out for the police and holding periods before they can sell it during which the police have the right to seize it without so much as a thank you, much less a refund. Obviously, these are importantly different, and the offset is the price. Buying from the public, or OTC as it’s called, is cheaper. Sometimes quite a lot cheaper.
2) Condition. Retail replacement appraisals are about new. Sales by the public are, by definition, used. Sometimes it’s badly used, sometimes it’s barely detectable but for the final consumer this is often an important topic. Used engagement rings, for example, often have something of a stigma attached to them, especially if they’re fairly recent designs. When those turn up in ‘estate’ cases or pawn shops it usually means divorce or death. That doesn’t bother everyone, but bothers enough, and the offset is in the price.
3) Style. Jewelry is, at it’s core, a fashion product, and fashion changes like the wind. A few years ago, princess cut diamonds were hot. Not so much now. Diamonds are dropping anyway but princesses are especially difficult to sell.
A jeweler with a safefull of princesses can plan on holding them for years before they can sell through. That may be ok, but the offset is wholesale prices. At the right price they’ll buy just about anything, but the right number of princesses to have in stock for 2025 is zero. Expect a fraction of what the Internet is telling you is ‘wholesale’. Heavy gold things are another example.
They’re just not popular at the moment, especially with the high prices of gold. There’s a reason you don’t see these in the cases of your local jewelry store. They’re expensive, they don’t sell very well, and they’re easy to damage. They don’t want to tie up the inventory dollars and they don’t want to load and unload them from the showcases every night. If you sell one of these to a dealer, it’s nearly certain that the plan will be to recycle the gold, not to polish it up and put it in the case.
4) Warranties. Certain items, like tennis bracelets, can and often do have hidden issues. Hinges break. Stones fall out. Clasps fail. Selling a used tennis bracelet is asking for a long term series of complaints and possibly a series of free repairs that can go on forever.
Count how many of those hinges are there. As with the above, that may be ok if the price is low enough, but they’re unlikely to bid anything more than the scrap value on the gold.
5) Material problems. A lot of old jewelry, especially mass-market things, have pretty low-quality materials. Poorly matched I2 diamonds. Missing stones. Miskarated gold. That sort of thing. In the age of lab-grown diamonds they’re almost impossible to sell other than as repair stones. Gold is fairly easy to calculate but the stones in a 1 carat tennis bracelet are often worth less than the cost to get them out.
What about ebay and the like? Mostly ebay is a trainwreck for inexperienced sellers, and Facebook almost always is. The reason people shop there is that they’re looking for a deal, and they’re looking for YOU.
Fraud abounds. Be aware of the terms of sale and the return policies associated with these platforms. eBay, in particular, has terms that override what you say in your ad. If you’re not an experienced seller, and maybe even if you are, I would steer clear.
The answer here is to make sure you, your appraiser, and your buyer are all on the same page. Sometimes it’ll be based on the gold content. Sometimes it’ll be about the designer, or at least the design. Sometimes it’ll be about the gems.
It will almost never be about the retail replacement value, and usually not about what you think is wholesale. The bright side is that bids are usually free with the warning of don’t let them do destructive tests.
Files, scratches, that sort of thing. If you’re expecting to get a premium because of the stones or the designer, that premium is likely to drop away if they put a big scratch across the top of the stones test the stones or leave a file notch in the gold. The second part is to reset your expectations.