 |
| Sign in or Register Home |
|
|
|
| Buy | Sell | Education | Forum | Directory | Blog | |||
 |
||||||||
|
||||||||
| HOME : FORUM : EDUCATION : JEWELRY : Auctions : If you cannot sell it, don't you think the price should go down not up? |
|
|
|
Thread Tools | Search this Thread |
Post#1 @
08-27-04
, 05:08 PM
I have been watching this dealers auction on a ring. The price had been going down, then about 3 auctions ago, the start price started rising(he has never sold the ring). What could be the rationale for such changes? I know that diamond prices are rising, but this is an old ring. He already bought the ring, its cost to him is not going up. http://cgi.ebay.com/ws/eBayISAPI.dl...mMakeTrack=true http://cgi.ebay.com/ws/eBayISAPI.dl...item=4917202410 http://cgi.ebay.com/ws/eBayISAPI.dl...item=4914766184 http://cgi.ebay.com/ws/eBayISAPI.dl...me=STRK:MEWA:IT |
|
|
|
|
Post#2 @
08-27-04
, 05:17 PM
Perplexing. Can't figure out a rationale for that one... 
|
|
|
|
|
Post#3 @
08-27-04
, 06:15 PM
The possibilities, as I see them, are... 1. The seller sold another item he/she believed was comparable and decided this item was worth a little more based on that sale. 2. The seller believes buyers might be scared off if the price seems too low. 3. The seller is disorganized and relisted the item based on a false memory of what the price was or just typically prices things "on the fly". 4. The seller has no business sense and is trying to recoupe ebay relisting fees by raising the price to cover previous sunk cost. 5. The price is set by a customized Magic Eight Ball. |
|
|
Post#4 @
08-27-04
, 06:36 PM
Very sound reasons, each one of them...good thinking... 
|
|
|
Last edited by yogimel : 08-27-04 at 06:36 PM.
|
|
Post#5 @
08-27-04
, 09:07 PM
This probably sounds really stupid, and I know NOTHING about the retail business...but doesn't a vendor's investment in an item increase the longer he holds it in inventory? Insurance costs, tied up money, etc.? Would this explain why the price of the item has gone up? widget PS: Oops, I guess this is a variation of JC's #4...  widget |
|
|
Post#6 @
08-27-04
, 10:23 PM
Quote:
Only if the seller is a very bad businessman. Retailers make money off of turning inventory. If they sell an item with 100% markup but it takes all year to find a buyer, then they made 100% (which probably won't cover their rent and labor costs). If they only make 2% off an item but can always sell it the same day they buy it and they sell one every day then at the end of the year they would have made 730%. You don't have to be a math wiz to know which is the better option. Retailers are typically measured by two things - average margin and inventory turn, that is how much you make off each item (on average) and how many times a year your inventory turned over (or how many times you made that margin). If an item isn't selling, then the retailer has valuable capital tied up in an item that just sits there. They are far better off to lower the price and make less but get their money out of the item so that they can instead put it into something that will sell. There are certainly retailers who specialize in "hard to find" and "unique" pieces and almost by definition their inventory turn will be slower than mass marketers. Of course, if investory turn slows then margins have to go up in order to return the same profit. That is why you don't tend to find great deals in specialty stores. |
||
|
Post#7 @
08-27-04
, 10:34 PM
One other thought... the phenomena we are discussing right now is the reason we are seeing the current boom in on-line diamond sales. The traditional mall jeweler pulls in a limited number of real buyers and turns inventory very slowly. Because of that, they need a much higher margin to stay in business. The online outfits go the other direction. They tend to buy diamonds that stay in reasonably high demand and turn them reasonably quickly. There is a reason why on-line searches don't turn up a lot of 8 carat flawless diamonds. It isn't that they don't exist, but rather that there aren't enough buyers for that type of stone to be able to turn them quickly so it isn't worth stocking them. Anyway, that ability to turn inventory allows the on-line stores to keep margins and prices low, which brings in additional customers which further increases their ability to turn inventory, and so on... You don't need an economics degree to see the trend analysis for this industry. Let's just say that I wouldn't recommend buying stock in any of the mall stores. |
|
|
Post#8 @
08-27-04
, 11:58 PM
Thanks, JCinAtlanta... VERY interesting, and very educational! widget |
|
|
Post#9 @
08-28-04
, 05:06 PM
Maybe the seller just had to raise a certain amount of money by a deadline and had several items priced to move. Items already sold have covered that, so now he or she can wait forever and get maximum money out of this ring. |
|
|
Post#10 @
08-28-04
, 11:49 PM
Possibly because Rapp has consistently gone up for the past few months. |
|
|
Post#11 @
08-29-04
, 11:43 AM
There are lots of different theories that people use in their pricing models. People get MBA’s is this stuff. For a stocking dealer, either online or on the street, it only makes no sense to sell something for a price based on what they will be able to replace it for, not what was actually paid. This means that if their expected cost on a 1.00 G-VS2 goes up, it only makes sense that they should raise the price on the one that they currently have in inventory. Why? Because as soon as they sell the one that they have, they are going to have to replace it with a new one that’s going to cost them more. Think of it this way. If a dealer has a stone that they paid $4000 for and they have to sit on it for 3 months before they sell it for $4400. They then go into the market and find that the replacement is going to cost them $4,500. They come out of the deal with an inventory that looks the same but with less money in the bank! Customers and the IRS call this a $400 profit. I call it a dreadful mistake. The opposite of this is also true. Assume that the same dealer buys a stone for $4000 and they find that they can’t sell it for $4400. They shop around and find that prices have dropped and they can now buy it for $3,600. Maybe they overpaid, maybe the prices changed, it doesn’t really matter. It’s not selling because they’re getting creamed by their competition. Paying too much was, perhaps, a mistake. Refusing to sell for the current market prices and letting your customers walk away is definitely a mistake. The reasonable solution is for the dealer to lower the price to $4,000 and sell it for ‘cost’. When it moves out, they replace it with a new one at $3,600. They end up with the same inventory and more money, which is the whole point of being in business. The key in both of these cases is to base selling price on estimated replacement cost, not on historical accounting figures. Neil Beaty, GG ISA Independent Appraisals in Denver |
|
|
Last edited by denverappraiser : 08-29-04 at 11:47 AM.
|
|
Post#12 @
08-29-04
, 05:56 PM
Quote:
Hi JC, Welcome. Good points in your posts. I think it should be pointed out that few internet diamond sellers actually stock the diamonds they list, they simply list inventories of wholesalers. Which means that in these days of ever increasing prices, it is easier for the B&M or other diamond seller that stocks diamonds to compete on price. Let me explain. (1) sellers that buy for stock will always get better prices than sellers that memo in (borrow) stones to show. (2) in todays market with frequent price increases, the disparity in costs/prices can be much more buying something today as opposed to even 2 months ago. B&M's that stock diamonds can easily compete on price if they choose to and want that person as a customer. Brian |
||
|
Last edited by knoxdiamonds : 08-29-04 at 05:57 PM.
|
|
Post#13 @
08-29-04
, 06:19 PM
If you cannot sell it, don't you think the price should go down not up? I agree from one side of the transaction. But... Looking at the other side of this, I would say not necesarrily. Speaking in general, but should apply to auctions. My theory is, sometimes things can be priced so low that many people will assume there is something wrong with the product or seller. Also, with the item priced low, you may get customers that are not ready to buy but are educating themselves or you may get unqualified people simply kicking tires I was once selling a used car (nice older corvette) for about $2000.00 less than other comparable cars. The people that came and looked were by and large tire kickers and wanted to make offers, etc. I waited a couple weeks, relisted the car in line with the other prices stating the price was "FIRM" The car sold that weekend. I have noticed this same phenomena with slow moving jewelry items, that I will mark below cost (just to turnover). Now, If they don't sell right away, I will scrap them and make something else. Brian |
|
|
|
|
Some great points guys. Thanks for sharing a view into your world. |
|
| Read Messages in: | Auctions | All forums | ||||
| Newer: |
|
|
||||
| Older: |
|
|
| Thread Tools | Search this Thread |
|
|
| Contact Us - Guidelines - Privacy Policy - Refer a Friend - Top^ |
|
|
|
