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A Couple Is Dismayed by The Buyback Amount Offered by Their Jewelry Retailer

Is there a better way the retailer could have handled this issue?

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IN THE HEART of a bustling city stood a jewelry store renowned for its personalized customer service and large selection of diamond engagement rings. It was a place where many generations had come to purchase special diamond pieces to celebrate important milestones. So when Richard and Molly decided they would take their relationship to the next level, it was only natural that they would find themselves standing before the elegant showcases of this revered establishment.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Megan Crabtree is the founder and CEO of Crabtree Consulting. Before founding Crabtree Consulting, Megan had a successful professional career in the jewelry industry, which culminated with high-level positions at several of the top firms in the retail and manufacturing sectors. Reach her at mcrabtree@crabtreeadvisory.com or visit us at www.crabtreeadvisory.com where you can set up a live chat or a 30-minute free consultation.

 

The couple had heard countless tales of the store’s impeccable craftsmanship and the expertise of its jeweler, Emily. With an air of excitement, they stepped through the polished glass doors to find the perfect engagement ring that would become a reflection of their unique love story. This was the day Molly had been anticipating for weeks. Now that she was standing in the store, she couldn’t help but feel a bit overwhelmed by the seemingly endless ring options. Thankfully, with Emily’s help, Molly and Richard found “the one” — an exquisite diamond engagement ring boasting a 1-carat center stone that retailed at $8,000 and a semi-mount adorned with 0.20 carats of diamonds retailing at $2,000. The total price: $10,000.

Before completing the purchase, Emily explained the store’s 100% lifetime trade-in policy to the couple. This policy allowed them to trade their current diamond for a new one. As long as they met the minimum requirement of at least double the trade-in value, they would receive the full purchase price of the initial diamond deducted from the new one. Emily made sure to emphasize that this policy only applied to the diamond, not the semi-mount or other components of the ring.

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Confident in their choice, they left the store, secure in the idea that their investment would grow in value over the years. After all, the ring had been appraised at $15,000. It was a reassuring thought, a testament to the quality of their purchase. Unfortunately, what they didn’t know was their expectations would be challenged in the years to come. They misunderstood the trade-in policy and believed that if they returned with the ring in the future, the store would reimburse them with the full $10,000 they initially paid or even the appraised value of $15,000. (It is a common misconception among customers: the belief that the value of a diamond will never diminish.)

As time passed, Richard and Molly’s love for each other continued to grow stronger, but life had thrown them a few curveballs and their financial situation became less than ideal. Two years after purchasing their beloved engagement ring, they found themselves back at the same jewelry store to inquire about selling their prized possession, a decision made with heavy hearts.

Upon their arrival, Emily welcomed them with a warm smile. Richard and Molly shared their intention to part ways with the engagement ring, hoping to sell it back for a fair cash value.

Emily carefully appraised the 1-carat diamond and offered a buyback amount of $3,500 for the diamond and a mere $300 for the ring, which included the semi-mount and the small melee diamonds.

Richard and Molly were taken aback by the disappointing offer. They had expected to receive at least the $10,000 they originally spent on the ring, considering it had appraised at $15,000. But it seemed that reality was quite different. Emily noticed their dismay and compassionately explained the reasoning behind the offer. She clarified the difference between selling a ring back and trading it in. The former, she explained, meant parting with the piece for its intrinsic value, while the latter involved using the value of the ring as credit towards a new purchase, often at a higher minimum requirement.

Richard and Molly were furious with the offer and felt deceived. They couldn’t help but think back to the day of their purchase, wishing they had received a clearer explanation of the potential resale value. They told Emily that they would not return as clients in the future, and unfortunately would have to recommend to friends and family that they not patronize her store, either.

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The Big Questions

  • How should Emily help Richard and Molly overcome their feelings of frustration?
  • How can retailers proactively communicate the potential disparities between appraised value and resale value to customers while maintaining their trust?
  • What educational tools can jewelry retailers provide to help customers understand the differences between trade-in, trade-up, and buyback?
Patrisha C.
Osterville, MA

This happens way too often. First, they are usually so wrapped up in the “moment” that they do not truly listen to the salesperson. Second, every customer is under the impression that diamonds always go up in value and will double in value as years go on. Unfortunately, as we know, that does not happen. Diamonds go up and down depending on markets. Lastly, everyone thinks an appraisal value is a selling price: WRONG!! There are various types of appraisals, hence various values. Most people think that the appraisal value is what they sell it for across the counter. No matter how many times I explain to clients, they still don’t understand. Emily did explain from what I read, but again, the client only heard what they wanted to believe. Too many times a bad review or disgruntled customer is a result of you doing your job but the customer hearing what they want to hear … and no, the customer is not always right.

Peter T.
Show Low, AZ

You can’t fix stupid. Sometimes it’s best to simply apologize that they didn’t understand and let the customers walk. The only thing that would help customers like this is to have the trade-in policy printed and given to them at the time of purchase.

Marcus M.
Midland, TX

At the end of the day, consumers are only going to hear what they want to hear. It sounds like Emily clearly stated what the trade-in policy is, and this couple is choosing to use their frustration with their financial situation to guilt her into giving them all of their money back. This is not the ways of the world, and ignorant people like this need to be shown the door. Emily is not going to be able to save face with the people, so let them be. Their ill words against the store will have little to no effect. Anyone with common sense will see how ridiculous they are being and disregard anything maliciously said.

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David B.
Calgary, AB

First, kudos to Megan for an accurate and interesting “Real Deal”. The reality is that no matter how much the store would have explained and detailed, the customer never remembers if it isn’t favorable to their own needs. Cover the details and still won’t be better. Then the usual threats of telling friends and not coming back should be expected. Nothing you can do about that. In many cases, I will “feel” the client out, and if I sniff this type of expectation, I will find an excuse to avoid purchasing the item back. I make a point of explaining my pricing for a “buy-back.” And I never sell a diamond as an investment. I also explain the difference from appraised value to retail. My appraisals are typically closer to retail anyways. Now imagine when people start to bring in their lab-grown diamonds for a buy-back?

Megan C.
Poulsbo, WA

This is so unfortunate, but also, not surprising. No matter how clear we are as salespeople, the client hears what they want to hear. Our approach to clients at the moment is to do our best to find ways to say “yes”, even when it’s “no.” Yes, there is a misunderstanding of how our trade-up policy works versus selling a ring back to the store. No, we can’t buy it back for the value you’re hoping for, but I do have XYZ to offer instead, such as consignment or selling it to another dealer. The proactive approach for situations in the future is to make up a card to give with every purchase outlining the store’s guarantee policy, trade-up policy, and buy-back policy. Having something to refer to in black and white can help manage expectations in the future.

Marc A.
Southampton, PA

Our store has a brochure outlining our trade-in and buy-back policy. It states the following:

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  • Lifetime Trade Program for Natural Diamonds Only
  • You will receive 100% of the full original purchase price of the diamond in store credit.
  • Your credit may be used toward any Jewelry item, not limited to diamonds.

-or-

  • You may use your credit to upgrade your diamond, and you are not required to spend more.
  • Diamond Repurchase Program for Natural Diamonds Only*
  • In the event you would like to sell your diamond purchased from B&E, we offer an 80% refund of the full purchase price of the diamond, not including the mounting or sales tax.
Joseph V.
Austin, TX

For the most part, I believe Emily explained everything clearly. However, things may have gone wrong beginning with the appraised value of $15K. Why was the appraised value $15K? If the ring was purchased for $10K, shouldn’t the appraised value be the same? After all, there was no mention of a discount. Who performed the appraisal, the store or an independent appraiser?

Nevertheless, other than Richard and Molly not fully understanding the trade-in policy, the possibly inflated appraised value may have exacerbated the situation by giving the buyers the illusion of an unrealistic value. Numerous times, we have experienced consumers requesting to sell their jewelry and using the inflated appraisal as a means to justify a high selling price. You and I know that the appraisal is typically used for purchasing insurance and not resale. In my opinion, inflated appraisals only harm the consumer by providing a misleading or misunderstood value. As a result, the consumer pays unnecessarily higher insurance premiums.

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Sherlene B.
Rockville, MD

Two different markets. One is retail and the other is basically liquidation. Trade-in implies that the client will be upgrading and spending more money to at least cover the cost of the new stone. Selling is completely different. The store must now incur the cost of refurbishing if possible or scrap the mounting at a loss and resell the main diamond as a previously-enjoyed entity. This is assuming the stone is in salable condition. The stone could move in a week or five years from now.

Michael C.
Beaver, PA

If they purchased a car and used that car for two years, I’m sure Richard and Molly wouldn’t expect to receive what they paid for it if sold or traded in. Why should they expect to receive what they paid just because it’s a diamond ring? The store was offering them the full amount of what they paid if they would spend twice as much on a new purchase. The store never guaranteed to purchase it back, only for a trade-up purchase. Not many purchases offer that. It’s hard to convey to customers that their purchase isn’t an investment with guaranteed increase value. It is a luxury item to be enjoyed and possibly passed on for generations.

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