Lab-Grown vs Natural Diamond Inventory Management

Two categories, one store

Almost every jewelry retailer now carries both lab-grown and natural diamonds, and that's an inventory problem, not just a sales conversation. The two have very different costs, margins and disclosure rules. Treat them as one bucket, and you'll misprice, misreport, and mislead a customer.

Why they can't share an inventory line

They can't share an inventory line. A lab-grown stone's cost can drop 20 to 40 percent in a year, while a natural one rarely moves more than a few percent, and the margins work differently. Lab-grown is mostly IGI-certified and natural mostly GIA, and the origin has to be clear on the tag, the invoice and the receipt, while insurance and appraisal values diverge too.

What to track for every stone

So for every stone, track: its origin, natural, lab-grown or treated, and the lab certificate number, the 4Cs as searchable fields, and a cost basis with a date, so you can revalue without losing history, the vendor and lot, and an appraisal value kept separate from cost.

The pricing trap

Here's the pricing trap: when lab-grown prices drop, your old stock is suddenly above market. Keystone it off the original cost, and you either lose the sale to a store with newer stock, or sell at a margin you can't sustain. Price from current replacement cost instead, and flag stones whose cost is more than 90 days old.

Disclosure: the part that sinks stores

Disclosure is the part that sinks stores. Regulators expect the words “lab-grown” on the tag, the invoice, the appraisal, and any online listing. So make origin a required field when you receive a stone, so nothing enters stock uncategorized.

Reports, split by origin

And split your reports by origin: margin, and aging, since lab-grown past 180 days is a markdown candidate, turnover, which is often three to five times faster for lab-grown, and the average ticket, plus how far your lab-grown stock's cost has drifted from the current market.

Diamonds in WJewel

In WJewel, enter a diamond's certificate type and number, and click Retrieve. The program downloads the certificate and fills in the color, clarity, weight and more, from labs like GIA and IGI. WJewel also connects to RapNet, every item carries its own attributes, for your filters and reports, and the inventory reports show exactly what you have.

Contact us

You'll find the full guide on the WJewel blog. WJewel is fully web-based, and runs on PCs, Macs, tablets and phones. To learn more, visit www.wjewel.com, or call us at (646) 578-8300.