KUALA LUMPUR, May 18 — A Malaysian startup intends to disrupt the brick-and-mortar jewellery business by selling diamonds and other gemstones online, complementing that with personalised consultation services.
Zcova Sdn Bhd, an online diamond trading company, was established in July 2015 after founder and director Low Ziwei and his brother Low Ziyin, a jewellery designer, discovered that prices for diamonds in Malaysia and Singapore were “over-inflated”.
This is because mainstream diamond retailers buff up margins “to sustain their operational costs in terms of marketing, shop rentals, inventory, and others,” says Ziwei.
“All these don’t add any value to the diamond,” he tells Digital News Asia (DNA) via email, adding that diamond are a commodity, whose grading is controlled by very strict organisations like Gemological Institute of America Inc (GIA).
Being 100 per cent online, Zcova can offer diamonds at a much more affordable price.
“This is because we don’t have to maintain a physical inventory, pay rent or other expenses; therefore we are able to sell the diamond at nearer its intended value,” says Ziwei.
“And one must keep in mind that brick-and-mortar jewellery stores make at least 40 per cent-30 per cent profits on the diamonds they sell.
“We want to make the entire diamond-buying experience easy, hassle-free and most importantly, transparent, as we provide the actual cost of the diamond to consumers,” he claims.
Ziwei claims that Zcova’s growth rate has been “very promising” and it is getting at least 75 enquiries on a monthly basis.
He and his brother Ziyin invested RM30,000 into their startup, and have yet to take any funding from external investors.
As for its business model, it earns a small margin upon importing diamonds from its suppliers.
“Our margin is definitely a lot less, a fraction only, of what the major retailers are earning,” Ziwei claims.
Diamonds are also a very niche industry, with its own set of challenges, according to Ziyin.
“Our main challenges in growing the business is educating the public on how to buy a diamond, and how buying diamonds online is actually safe and easy,” he says.
“This concept of purchasing diamonds online is still very new to Malaysians, and shopping for a diamond can be overwhelming as you’re faced with a paralysing number of choices.
“You need to figure out the desired shape, the colour, clarity, the cut quality, the size of the diamond and the type of certificate that the diamond carries,” he adds.
Ziwei says that the primary goal of most jeweller stores is to sell, and not to educate the consumer.
“And many of the salespeople themselves, surprisingly, aren’t as well-informed as you’d expect. You can be misinformed and misled, both intentionally and unintentionally, in order for them to gain their sales target.
“But Zcova is all about what the customer wants and how we can cater to their needs through personalised consultation,” he declares, adding that all the diamonds that consumers purchase via Zcova are GIA-certified.
The industry also faces its own controversy – the ‘blood diamond’ or ‘conflict diamond’ issue, where diamonds are mined from war zones and sold to fund insurgencies.
How does Zcova ensure that the diamonds it sources are acquired by ethical means?
Ziwei says the company only sources diamonds from The Kimberly Process-certified dealers, and that he has a “zero tolerance policy towards conflict diamonds.”
The Kimberly Process (KP) is a joint government, industry and civil society initiative to stem the flow of conflict diamonds.
It was started when Southern African diamond-producing states met in May 2000, to discuss ways to stop the trade in conflict diamonds and ensure that diamond purchases were not financing violence by rebel movements and their allies seeking to undermine legitimate governments.
In December 2000, the United Nations General Assembly adopted a landmark resolution supporting the creation of an international certification scheme for rough diamonds.
By November 2002, negotiations between governments, the international diamond industry and civil society organisations resulted in the creation of the Kimberley Process Certification Scheme (KPCS).
The KPCS document sets out the requirements for controlling rough diamond production and trade. The KPCS entered into force in 2003, when participating countries started to implement its rules.
Citing the World Diamond Council, Ziwei says that as of today, less than 1 per cent of the world’s diamonds are conflict diamonds – at one stage, conflict diamonds made up 4 per cent of diamond production. — Digital News Asia
* This article was first published here.