Sramana: By 2009 you had started going deeper into the supply chain and were reaching cutters directly. How did 2009 end for your business?
Mithun Sacheti: We ended at around $3 million in revenue. We had around 90,000 diamonds listed at that point. We had really developed our international pipeline by then. If at any point the rupee got strong, we could buy the same diamond out of America for a lower cost. Our system was dynamic, whereas in an unstable market diamond pricing moves a lot. Unstable markets force local retailers without a huge pipeline to raise their costs dramatically, which was something we were insulated from.
Sramana: Did you have an IT system to manage your pipeline?
Mithun Sacheti: Yes. Our entire back end process was automated. There was no way we could have done that manually; we would have made a lot of mistakes. We were very conscious of the fact that we had to stay ahead of the game when it came to pricing. A competitor could come online any day to challenge us, so we always had to go deeper and deeper.
Sramana: Listening to your story, it sounds like price is the major differentiator.
Mithun Sacheti: If people know what they are looking for, price really is the only thing we can do. Our focus was price and trust. We did second level certifications to validate that a diamond that was shipped to us truly did match the certificate on which it was shipped. That was more than any jewelry store could provide.
Sramana: What did you do to reach the cutters?
Mithun Sacheti: We encouraged them to sell directly to consumers. They were always stuck selling to wholesalers, and as a result they would not get paid for 90 days. If they wanted to get paid in cash they were squeezed for that as well. Our pitch to them was that if they sold directly to consumers that they could get paid early enough at a price which was favorable to them. We demonstrated to them that most of the wholesalers they were dealing with were already selling through us anyways. We had to work with each cutter individually to convince them to come on board.
Sramana: What cutter market are we talking about, Bombay?
Mithun Sacheti: Yes, Bombay. There are around 150 companies that do diamond cutting. If you have only 20 vendors and you are selling $100 million, then the vendors can use their exclusivity against them. We realized that in the long run we had to go deeper and get as broad of a platform as possible. Today we have about 350 cutters working for us directly globally.
Sramana: How do the cutters align geographically?
Mithun Sacheti: For every 10 diamond cutters in India, there is one in Hong Kong, one in New York, one in Antwerp, and two in Israel. This is in tons of companies as well. In India they cut the .3 and .4 carat diamonds. The other sites cut larger diamonds, so they do not need as many employees.
Sramana: How do your diamond prices compare internationally?
Mithun Sacheti: We are one of the best price sources for diamonds globally. We know that long-term price alone is not a final strategy, especially in a luxury product. Ultimately, the diamond is a gift for a spouse or fiancee. You want to make sure the person who is buying is getting top quality. We don’t advertise that we have the cheapest diamond, we advertise that we have the best price for the quality. We talk about having the widest choice possible. You can see other people’s inventory on our site as well. Pricing gets competitive when you include as many vendors as possible. In the back end our vendors can see what others are pricing their diamonds for, which helps them keep their pricing competitive but also consistent.