March 25th, 2020 – New York
Hundreds of diamond companies have removed their goods from RapNet after Martin Rapaport cut prices by an average of 7 percent across all types and sizes.
The movement started last week after the latest Rapaport Group price list came out on Friday morning.
During a Skype interview on Sunday, Martin Rapaport told National Jeweler he made the decision to cut prices after he saw them going down amid the spread of COVID-19.
The Rapaport Group chairman expressed sympathy for dealers during the unprecedented crisis but said the point of the price list is to reflect what’s going on in the market and establish a benchmark that’s fair to both dealers and buyers.
“I am doing my job—to communicate diamond prices and to establish a fair balance,” he said. “If you don’t like it, don’t look at it, don’t use it. [But] I can’t put out false information.”
Rapaport’s decision ignited a firestorm among diamond dealers and a protest mobilized via Instagram.
Doron Serrouya, owner of Israel-based Yondor Diamond, said his son, Ido Serrouya, helped him start the Instagram account @stock_off_rapnet, which had more than 1,600 followers as of Tuesday morning and already more than 500 posts.
The account is a compendium of the logos of companies that have pulled their goods from RapNet and/or are benchmarking their diamonds against an older Rap list.
The Instagram account includes messages from some of the largest players in the diamond industry including Rosy Blue, Diamex Inc., Pluczenik, Venus Jewel and Taché.
Serrouya said in a telephone interview last week he woke up last Friday (March 20) to see prices slashed.
“We are not the stock market,” he said. “It’s not normal that you wake up in the morning and all the diamonds are less because of the coronavirus crisis.”
“Instead of helping the industry, [Rapaport cuts prices],” he lamented. “It’s not normal. It’s really not normal.”
Serrouya and a fellow diamond dealer created @stock_off_rapnet, jumpstarting a viral, global movement of diamond companies—more than 450 as of press time—deflecting from RapNet in protest of the price cut.
It caught on “like a fire,” Serrouya said. “Everybody decided to do it.”
The Suspension Question
In Sunday’s interview with National Jeweler, Rapaport dug in his heels when asked if he would consider rolling back the price cut: “No way. I’m not a liar,” he said.
But in a letter sent to dealers Monday, Rapaport offered another alternative—giving RapNet members the opportunity to vote on suspending the price list until Friday, May 1.
“Many have expressed outrage about the reduction of prices in our March 20 price list. Others have asked that we suspend publishing the price list. While we reject the idea that prices have not declined and requests that we recall the March 20 price list, we are receptive to calls for a short-term suspension of the price list,” the letter reads, noting this would mark the first suspension of the list in its 42-year history.
Voting was slated to close around 10 a.m. EDT Tuesday, but the rallying cry on Monday afternoon among those who united via @stock_off_rapnet was for another boycott—a boycott of the vote.
Results of the vote were not available as of press time Tuesday. National Jeweler will report the results of the vote in a separate story.
“For the first time ever, the diamond industry is united and determined to create its own trade platform, which is transparent and independent, not from a private company,” Yodor Diamonds said in an official statement shared via WhatsApp.
“There is no meaning in freezing a price list, which we never agreed to.”
Price Protest Déjà Vu
This is not the first time RapNet has caused an uproar.
A similar controversy arose in 2008 but, back then, it was a price hike (as much as 25 percent for some goods) amid the financial crisis and just ahead of the Las Vegas jewelry trade shows that roiled dealers.
This time, however, there is growing sentiment among dealers worldwide Rapaport might have crossed a line that could spell the end of his long-standing trading platform.
“Prices haven’t gone up, prices haven’t gone down, prices haven’t gone anywhere,” New York-based diamond dealer Ronnie VanderLinden said in a phone interview Monday, noting trade has been non-existent for the past week and a half due to the coronavirus. “He really stepped over the line.”
In addition to being president of Diamex, one of the companies that has pulled its goods off RapNet, VanderLinden is president of the Diamond Manufacturers & Importers Association of America.
On Monday, he sent a statement to DMIA members suggesting they consider trading platforms other than RapNet, like IDEX, Polygon or Virtual Diamond Boutique, while also noting that a new, alternative industry platform is in the works.
“This is not an endorsement of any of these specific platforms at this point; I am only citing them as examples of existing viable alternatives,” the statement read. “Whether you continue to use Rapaport’s services is your decision and your decision alone. However, I urge you to consider other options as well.”
The letter goes on to state DMIA members “must consider the future well-being of our industry.”
“The time has come to diffuse and diminish Rapaport’s overwhelming and indeed conflicted control over our industry,” VanderLinden wrote. “Restoring this industry to a free, open and transparent marketplace is in our collective best interests.”