Diamond & Emerald Exchange
We ethically source and supply loose gemstones and create bespoke items of jewellery in workshops in London's Hatton Garden. Building upon our relationships in the industry, we can deliver gems and jewellery at a price well below that of traditional high street retailers. We offer a large range of diamonds (we have access to an inventory of over 100,000 stones via our wholesaler) and we specialise in precious coloured gemstones, a fast growing area of the market.
We supply high quality products to both business and retail markets in a smarter, more cost-effective way. This is achieved in part through our relationships high in the gem supply chain and partly through a lean business model.
We work to order, operating online, over the phone and face-to-face, without the need for costly retail premises or inventories. This enables us to serve our customers with a small, dynamic team, helping us to keep our costs low. It also means that we can put capital to work marketing the business.
We have built and developed good working relationships with both suppliers and customers, putting us in a strong position to grow over the months and years that lie ahead. With an additional capital injection, we plan to grow revenues and take on extra staff.
One of our key USPs is a hybrid approach to what can often be a highly impersonal purchasing experience via an e-commerce website. This is achieved by a consultative sales process, incorporating 'click & buy' functionality and inter-personal contact with our team.
The impact of the business model is to increase choice, to both retail and business customers alike, without compromising on quality or the personal touch. Recent MacKinsey & Company research stated "two-thirds of luxury shoppers say they engage in online research prior to an in-store purchase; one- to two-thirds say they frequently turn to social media for information and advice." This clearly demonstrates the direct and indirect power of the internet in this market.
Substantial accomplishments to date
Founded in December 2013, we have traded successfully for over 3 years. We turned over £417K and were profitable in our first financial year alone*.
We were proud to be shortlisted for the KPMG SME Awards 2016, in the categories of "Start-up: one to watch" and "Entrepreneur of the year."
We have developed a specialised hybrid e-commerce website and we are planning to develop an API (Application Programme Interface) which will enable us to feed selected loose stones directly into other companies website inventories.
Within the industry, we are a member of the NAJ (National Association of Jewellers') and the BATF (British Allied Trades' Federation). We are members of the Goldsmiths' Company and the "LDE" hallmark is registered with the London Assay Office. LDE is a member of the FSB (Federation of Small Businesses).
The Managing Director, Phil Spencer, is a member of the IoD (Institute of Directors), CMI (Chartered Management Institute) and CISI (Chartered Institute of Securities and Investments).
We have just agreed to take on a new Creative Director and we are planning to expand at a steady pace over the course of the next 12-36 months. Our network includes a partnership agreement with a highly specialised web design and development company and a professional video production team. We are now proactively looking for relationships with notable jewellery designers, creators and craftspeople.
*source: unaudited accounts
We do not hold expensive stock and we do not operate costly retail space. Our direct relationships with suppliers at the top of the chain enables us to cut through the middlemen and deliver excellent value for money to our customers.
We are conducting search engine optimisation (SEO) to increase website traffic and grow the volume of sales enquiries. We have engaged with social media as a channel and we are pro-actively marketing and promoting on Facebook, Instagram, Linkedin, Twitter, Google+ and Pinterest.
The customer base encompasses retail and business clients, including both jewellery and loose stones. We have trading relationships with a number of other businesses, in both Europe and North America.
Our business model and the broad scope of our product range enables us to offer multiple products to several markets. We offer engagement rings, jewellery and bespoke jewellery, as well as investment grade loose stones to the retail market via our hybrid website.
Use of proceeds
We intend to expand to 3 sales consultants, plus a full time administrator, in addition to a new Creative Director over the course of the next 12 months. We are investing heavily in digital marketing and we intend to actively develop API software. We have honed our digital strategy enabling the accurate use of Google Pay Per Click.
We plan to attend a number of exhibitions and trade events in 2017, including JCK Las Vegas (for which UK Trade & Investment funding was previously approved), HKTDC Hong Kong International Jewellery Show and Baselworld, Switzerland.
We intend to partner with Sky AdSmart to launch a series of TV advertising campaigns. This is a highly targeted system that is highly cost effective and will result in a number of spin-off benefits, including brand awareness and boosted Google/web/social media traffic and interaction. The intention is to raise the capital in order to launch the first advert this Summer, followed by a Winter campaign in the run-up to Christmas.
The company has an outstanding loan for £21,000 from GLE (Greater London Enterprise) as part of the the UKTI business start-up scheme, however none of the proceeds of investment are intended to be used to repay this.
We supply loose stones and jewellery, both B-B & B-C. Included in our B-B channel are jewellers, manufacturing jewellers and gem dealers. We are most competitive when it comes to the supply of Colombian emeralds, due to our direct relationships with their source suppliers in South America.
We supply a number of the leading brands in both Europe and North America. We also sell to a number of small independent jewellers and manufacturers, and we are looking to expand our client base. In addition to diamonds and emeralds, we also work with rubies and sapphires and we are looking to extend the range further.
Our largest retail market is for engagement rings, wedding rings and bespoke jewellery, in addition to the supply of loose stones. We have multiple channels to our target markets:
1. E-commerce website - developed by our web partners, the full range of engagement rings and bespoke jewellery can be viewed and purchased here. This includes the functionality to build a custom engagement ring from scratch using the embedded software and search tools, filtering stones and rings from the inventory stock feeds.
An ongoing programme of SEO and social media back links are aimed at promoting this channel. In addition, the website contains a blog which is kept up to date and relevant, original articles are written and added almost every day. This aims to reach the target retail market of medium to high net worth individuals via search engines.
2. Social media - Active profiles have been built and are continually maintained on Facebook, Twitter, Instagram, LinkedIn, Google+ and Pinterest. These also act as back link channels to the website.
3. Word of mouth - We conduct proactive face to face networking in order to reach the target market by this tried and tested method. We also encourage customers to leave written reviews.
4. PR - we are proactively raising the profile of LDE in a number of ways, including applying for industry awards and recognition.
Characteristics of target market
Over 65% of independent retail jewellers still do not transact online. Annual global sales of €148 billion are expected to grow at around 5-6% each year, totalling €250 billion by 2020. Furthermore, the e-commerce share of the fine jewellery market is set to double by the end of the decade.
According to MacKinsey & Co: "two-thirds of luxury shoppers say they engage in online research prior to an in-store purchase; one to two-thirds say they frequently turn to social media for information and advice." This emphasises the need for a smart, adaptable website that offers the functionality of 'click and buy' combined with the key personal touch: people buy people!
The fastest growth in demand is however in the emerging markets. In 2014, Bain & Co publicised the little known fact that in the USA 80% of adult women owned at least one diamond but it China that figure only stood at 20%. It is easy to see how the rising Chinese middle class will profoundly increase future demand.
The price of emeralds has almost tripled in the past 10 years (Gemval, 2015). Gemfields (the principle miner of these gems) are aiming to corner the emerald market in the way that De Beers once cornered the diamond market. Emeralds are estimated to be around 20 times rarer than diamonds. Coloured gems in general are a growing force in the market and they are experiencing the most rapid gains. We've found that they also attract a higher margin and cost less to advertise than diamonds.
We currently have an e-commerce website, strong social media presence and a digital marketing partnership with the BBG Group. We have used Google Adwords Pay Per Click (PPC) to good effect and we have an advertising account with Facebook. The primary aim of our social media presence is to engage with our customers and potential customers to attract them to our website, where they can enquire for information and enter the sales process.
Going forward, we intend to partner with AdSmart to launch a series of TV marketing campaigns on Sky. This is a targeted system of TV advertising that is highly cost effective and aims to achieve a number of spin-off benefits, including brand awareness and boosted Google / web / social media traffic and interaction. Our intention is to focus these advertisements at the key peak periods of demand throughout the year, most notably Christmas and Valentine's Day.
We plan to attend a number of exhibitions and trade events over the next year, including JCK Las Vegas (for which UK Trade & Investment funding was previously approved), HKTDC Hong Kong International Jewellery Show and Baselworld.
We aim to establish our first overseas footprint in Dubai in 2-3 years. Within 5 years we plan to have global time zone coverage, with sales offices in London, New York, Dubai and Hong Kong. We also intend to have multilingual sales consultants, administrators, websites and marketing material in order to open up the world-wide market for our products and services. By this stage we will have built an instantly recognisable global brand in the luxury industry.
It is anticipated that spin-off opportunities may arise from this, enabling us to further diversify our portfolio of products and services to maximise profitability and reach. Continuous television and digital marketing campaigns would promote the brand via every available medium. A physical presence within the major luxury hubs of the world will greatly enhance sales opportunities.
We operate in a highly competitive environment and we have clearly identified 4 rival businesses with which to compare services, business model and performance:
These organisations have been established far longer than LDE and they have a very highly developed online presence. Their success has been an inspiration but we have also identified some key areas in which we can strongly compete with them.
Our key advantage lies in our strong relationships with emerald suppliers in Latin America. Colombia produces the majority of the World's fine emeralds (although large quantities of lower quality emeralds are produced in a number of central African and Asian nations) and cutting out the middlemen is crucial in delivering these gems at a competitive price.
We buy stones directly from Bogotá, Colombia, (utilising our business connections in that region & the language skills within our network). We have also recently entered into a partnership with an emerald miner.
The stones supplied are natural, certified and any minor oiling is fully stated to the customer. Furthermore, the we have an exclusivity agreement to supply fine Muzo emeralds to Europe from IEEX (International Emerald Exchange).
We do not rely on expensive retail space in central London, or indeed elsewhere, enabling us to work on a streamlined basis. By employing only a small team of sales consultants & minimising the amount of administration work that is required, we can operate on a very cost effective basis.
The traditional jewellery shop no longer controls the market:
"The experts agree that anyone buying an engagement ring should give the high street jewellers a miss and go on-line instead. As well as saving up to 80% of the cost of a diamond, shopping on-line at certain sites allows buyers to match up the exact combination of the 4 c's that they want." (Emma Lunn, guardian.com).