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Coleby Nicholson
Coleby Nicholson

Chicken or the egg!

If retailers have the right to stop dealing with suppliers anytime they want, why can’t suppliers do the same? COLEBY NICHOLSON ponder this question in an ever changing business environment. 
A furore erupted in May after JAA CEO Ian Haddasin issued an email inviting members to join Rapnet, the internet diamond trading platform. Not only was it bad enough that the JAA was seen as giving a glowing endorsement to one overseas company that competes with its own members, it was done without the Board’s knowledge.

After being quickly contacted by angry members, Haddasin issued a ‘clarification’ saying, “I wish to personally apologise to those companies [supplier members] and to assure them it was never our intention that it be seen as message from the JAA not to continue to support local suppliers.”

A group of Australian diamond merchants then issued an open letter to the JAA. It pulled no punches, saying that Hadassin’s email endorsing Rapnet was “misinformed and misleading” and accused him of “attacking” the wholesale diamond market.

The diamond dealers raised many valid and legitimate concerns about Hadassin’s email while the JAA said it was merely keeping retailers informed about “the world at large”. 

Throughout the uproar I was contacted by many suppliers and retailers all voicing their opinion on a range of issues.

Essentially there were two camps; those who said retailers buy from overseas suppliers because some local diamond dealers sell direct to the public and those that said some local dealers sell direct to the public because retailers buy from overseas suppliers.

A classic case of the chicken or the egg!

Both sides were passionate in their stance and it reminded me of when Pandora first announced that it was closing accounts. At that time too I was contacted by angry retailers saying things like, “We helped make Pandora what it is” and “What right does Pandora have to stop supply?”

Throughout that episode and the more recent diamond dealers’ fracas, one thing became very clear, many retailers took umbrage to suppliers running their business the way they saw fit.

While I can see and understand both sides’ arguments I often found myself saying, “If retailers have the right to stop dealing with suppliers anytime they want, why can’t suppliers do the same?”

Any time a retailer makes a decision not to trade with a supplier for whatever reason, they simply stop ordering and when I ask why suppliers shouldn’t be able to choose who they trade with, I’m met with silence.

There are many reasons why retailers stop buying from suppliers including: poor service, pricing, poor sales, change of focus, slowing trends and so on. But equally there are many reasons why suppliers stop selling to retailers including: poor payment, poor sales, lack of commitment and, in more recent times, lack of brand management.

But back to the diamond dealers issue … one very irate reader contacted me saying that it was “unethical” for wholesalers to sell direct to the public. I responded saying that while I’m not an apologist for diamond dealers, wholesalers selling direct to the public was nothing new and nor is it illegal.

I also added that there is no rule book on what is, and isn’t, ethical in the industry therefore what might be unethical to one person might be quite ethical to another. I’m sure there are diamond wholesalers who sell direct to consumers but I am also aware of retailers who say they are wholesalers. I am also sure that there are retailers who take diamonds on consignment, sell them and don’t pay their accounts on time.

I’m not sure if it can be proved who first started operating outside their traditional channel, wholesalers or retailers, but I do know that the world is changing. What used to happen doesn’t anymore and what was “right” yesterday may not be any longer. Buyers and sellers will not always agree; they each arrive at a point from different directions and they both do so in an ever more complex world.

Focusing on what came first, the chicken or the egg, won’t achieve anything nor will denying someone else the right to manage their business the way they see fit.

Vital Diamonds International

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Tuesday, 02 June, 2020 07:15am
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