Welcome to the Gilt Trips podcast. I'm your host, Kendra Lockhart. As a goldsmith and
gemologist, I'll be speaking 24 carat on all things jewelry, metals, and gems. Join
me plus a few friends to demystify both materials and designs as your private jeweler. Let's
tune in on these topics and get golden. Some of the reasons consumers put their jewelry
into the secondary market. They need their assets liquidated. They have no errors or
next generation. They have unplanned financial problems. Or they are simply done enjoying
their items. Where do you take jewelry or watches when it's time to let it go? Which
style of reselling fits your needs and comfort levels? Let's learn all about entering the
secondary market with your precious possessions. Chapter timestamps are in the show notes.
Let's break down each area of the industry known as pre-owned goods. I'm starting with
auction because it gets creatively interpreted in plenty of movies or TV shows, so there
is cultural familiarity. The foundation of auction, which comes from the Latin word for
I increase, is based on bids. Goods are listed and start with an opening bid. The buying
participants are called bidders and the facilitator of the electronic or verbal bids is called
the auctioneer. Auctioning is not a new concept. As early as 500 BC in ancient Babylon, women
for marriage purposes were auctioned. The most beautiful ones were part of a forward auction,
meaning one opportunity to many buyers. The least attractive females were part of a reverse
auction or one buyer and multiple opportunities presented. Not all origin stories of business
models are pretty, are they? But we've come a long way, both with auctions and women,
of course. The Greeks would go on to auction slaves and the Romans would liquidate confiscated
materials. Jumping ahead to medieval times, in auctions a candle would burn down and signal
the closing and therefore winning bid. Sometimes the winner would be determined by the height
of the flame. Good old Middle Ages superstitions. Or a foot race could be substituted. You know
some healthy competition. Again, auctions have come a long way. Now in the 17th century,
auctions were happening for artwork at taverns and coffee houses. The first known auction
house on record was the Stockholm auction house in Sweden, recorded in 1674. The precedent
setting auction house, Sotheby's, was established in London in 1744. Their first sale was quote,
noteworthy and collectible, scarce and valuable books. And the most famous house would be
formed 15 years later, also in the capital of England, known as Christie's. Several
other European companies, and later ones in America would be created, between the years
of 1681 and 1826. By the end of the century of these auction houses, lots and items were
being sold off daily. Meanwhile in America, goods seized in the Civil War were auctioned
by both sides, facilitated by the colonel of the winning army division. A common secondary
title for auctioneer in some locations is still colonel. The Confederate states were
hosting large tobacco leaf sales, and not surprisingly, slaves before and up until
the end of the Civil War. In modern times, the rise of the internet has expanded the
scope of this presence in the secondary market. In the 1990s, this not only opened up the
audience and reach of traditional houses, having sales to people being online, and therefore,
not close proximity to the sale. But it also birthed a digital counterpart to a brick and
mortar company, which we all know as eBay. I'll say more about the distinguishing elements
of that brand later in the episode. By 2008, the auction industry swelled to a whopping
$268.4 billion dollar annual model, with the most growth in real estate, agricultural,
and machinery or equipment. This was helping tip the scales around the stigma of used goods,
as America was entering a strong recession on top of an unprecedented presidential election.
Let's discuss the modern version of an auction house and the potential experiences of buyers.
Is it driven by increasing or decreasing bids? Is it time sensitive? Is it a single shot,
meaning sealed envelopes of your ideal price they all get submitted at once, and the highest
bidder is the winner on a one take basis? So what is the life cycle of a new seller and
bidder in the world of auctioning? Because I am in Chicago, I turned to Hinman auctions.
Let's start with valuing property. Here, an owner can get a complimentary estimate via
images sent digitally with certain parameters, meaning multiple pictures, detailed and accurate
descriptions, and documented markings, stampings, or hallmarks on fine jewelry and watches.
If you are an individual, appraisal services help with gift tax, estate tax, insurance,
and charitable contributions. Knowing what you have is the first step for both sides.
But this serves additional purposes. It helps trust and estate executors or attorneys. It
assists restoration contractors to potentially improve the value. And it complies with the
USPAP, Uniform Standards of Professional Appraisal Practice. And the IRS should there be an audit
regarding property and settlement situations. As for entering the selling arena, there are
notifications and previews or browsing online. And now it's time to get in the game. You
register. Making an account means you are able to bid online, in person, by telephone,
or absentee. An auctioneer sees it all. There is a bidding increment based on base price.
And remember, a buyer pays and so does the seller after hammer, meaning final call.
I reached out to the senior specialist at Hinman auctions in Chicago. Karina Hammer states
that with an auction, your items have the potential to sell higher than a set figure
given for consignment value or by immediate check payment, particularly with unusual or
rare pieces or jewelry that is signed, meaning it has a maker's mark. As for the ideal client
for auctions, she says it is likely someone who may have jewelry that they are looking
to sell that is not modern or mass produced pieces. Antique or vintage and in excellent
condition is a rare find. Colored gemstones without treatment and natural diamonds of
high quality are also beneficial in an auction setting to achieve the highest price for a
customer. She continues trends do come and go. Bold and gold, particularly with gold
being so elevated right now price wise, are gaining very high hammer prices at auction.
Our deco pieces with old cut diamonds are also sought after. Younger clientele are looking
for unique cuts that are no longer produced. Signed pieces by the larger jewelry houses,
especially with unique stones or limited edition craftsmanship, have the potential to hammer
well above their high estimate at auction. Regarding the opportunity in auction overselling
or consigning, Karina answered, one of the positive aspects of auction is that the estimate
you can sign your item for will not be lowered. You are also able to set a reserve at the
low at or over $1,000. Your proceeds of the sale are paid by wire transfer or check 35
days after the auction. She continues, I would assist a prospective seller to choose auction
by highlighting the potential for achieving higher sale prices through competitive bidding.
Auctions offer a fast and transparent selling process, often attracting a global audience
of serious buyers. Additionally, I would explain the benefits of a definite sale day and the
excitement generated by live auction events. Karina also states a live auction can sometimes
create bidding wars over a less exciting piece. It just so happens to be a piece that
two bidders have their eye on. If you can sign your jewelry, for example, at a jewelry
store, there is no guarantee it will sell in one week or one year or even more. If you
choose to immediately sell your jewelry for a set cash amount, you are not opening it
up to the prospective buyers. That may compete for new ownership of the piece.
Let's touch on eBay, which first began as Auction Web in 1995 as a hobby for a computer
programmer. As traffic grew, the founder had to update his site and renamed it after his
consulting practice, Echo Bay Technology Group. Last year, eBay reported revenue of over $10
billion. Now it hasn't been the prettiest past for this company. Antitrust violations required
forms of payment that were a conflict of interest, counterfeit sales issues, which I mentioned
a specific instance in the Tiffany's episode, insensitive memorabilia, and the non-authentication
process left for compromised experiences. Aside from these challenges, the culture of
auctioning may be unfamiliar to sellers, so it can lack consistency. Fortunately, some
of the fine jewelry and watch items now do require physical inspection before a bidding
and sale as possible. This likely stemmed from the verdict to payout to LVMH, over $43
million, for facilitating counterfeit handbag, perfume, and accessories sales. The earlier
claim that eBay did not need to take responsibility for inauthentic items, even while profiting,
as argued in the Tiffany's lawsuit, did not hold up in a second situation. eBay has also
had to monitor shill bidding, where you get your friends to drive up the pricing. However,
if you are feeling lucky and willing to enter the arena, the cost to sell is attractive.
Items have a 10-15% deduction for successful bids to buyers, and boast about 135 million
active users. Moving on to in-person, as well as digital platform sales, let's cover the
difference of professionally versus personally conducted sales. On websites like Depop or
Poshmark, called Peer2Peer or P2P, you sell your items without experts or authenticating.
Depop allows you to direct message buyers and sellers, whereas on Poshmark, there is the
opportunity to bid on high-demand items. Depop has a competitive deduction of 10% plus transaction
fees and 42 million users, while Poshmark has a flat $2.95 commission on items under
$15 or 20% for anything over, with a following of 80 million members. Some feel that the
low touch is not personal, or in models like Fashionfile, the upfront payment for product
means higher working capital and lower seller payout. It's important to know your priorities
and expectations. If you prefer in-person and want to get away from being behind a computer
screen, then estate or garage sales may be the best version of buying for you. An estate
sale is run by a professional company. The home is usually staged with different rooms
representing various departments, such as clothing, treasures, media, furniture, and
kitchenware. The event is promoted in their channels to existing audiences, both privately
and publicly. A typical payout from the seller is 30-40% deductions. Buyers simply pay sale
tax. Items are not always authenticated, but do have some background information or internet
lookups to give potential context. So the benefit is, you may discover an underpriced
or unrecognized find. As for a garage sale, it's personal. Maybe it's circulated to
friends, family, and neighbors. Or it can be posted on marketing sites, like estatesales.net.
The commission or deduction is eliminated. Both parties find value in the selling and
buying without third parties directly to each other. Can you find a steal that went unrecognized?
Absolutely. Most garage sales don't test metal, and therefore a ring can get mislabeled
as costume or fashion when it is genuine and has precious elements. That is how Harry Winston,
profited from recognizing a two-carat emerald in a pawn shop, bought it for 25 cents, and
sold it two days later for $800. More on that episode dedicated to him.
Another selling option is what we call over the counter, or OTC. This means buying and
selling at registered jewelry stores. I interviewed the president of Wolf Diamond Jewelers in
Crown Point, Indiana, just outside of Chicago. Colin gave the following insight on the benefits
of a buyout. He says that if items qualify, it is an instant transaction. The cash is
immediate and it is conducted in a realistic forum. The sale is guaranteed if the condition
and sell-through fit a store's timing and market. As for being the buyer, the repurposing
aspect is attractive. A purchase can be reinvented or made into multiple inventory pieces without
having to call a vendor or generate invoices. He mentions the time-saving aspect of having
smaller goods on hand, especially for repairs, versus having to source less significant elements
to restore or complete a project. Colin considers his ideal client for buyout being someone
who has inherited a sizable amount and is unsure of its value. The process at Wolf Diamond
Jewelers is identifying, sorting, offering prospects to keep once the seller knows what
they have, providing a value range, and calculating a price based on current market numbers. There
is no commission taken and expectations on the experience are realistic. He says, quote,
depending on the situation and what you need, it is a cash offer, no gray area, and completely
straightforward, unquote. This is his secret to high levels of customer trust. As for
unseen chance in OTC dealings, Colin reveals that sellers are presented ideas to reinvent
pieces they wish to keep. Old gold can get credited towards the restyling of sellers'
gems, or even simpler manufacturing steps, like sizing a ring up or down and fixing any
broken elements. One of his favorite reactions in Buying Over the Counter is when a seller
walks in thinking he or she only has low value or modest total worth. Colin is not looking
to take advantage of an owner's unawareness, but rather witness their joy, relief, and
often excitement upon learning they possess genuine jewelry. With the aid of gemological
tools and microscopes, he demonstrates how the authenticity was determined and walks
the seller through a transparent formula for arriving at an offer on the pieces.
And finally, we address the opportunity in consignment. The word has French origins that
translate to handover or transmit. With this type of reselling, the seller gives permission
to a third party to conduct a transaction in a certain period of time for a percentage
of the buyer's total. The owner maintains rights and retentions of their goods until
a realized sale, or when time is up and that opportunity is abandoned. Frequently, prices
are reduced to promote the sale or incentivize the completion of the goods getting purchased.
The risk is on the seller so that the agent doesn't need to front the capital or invest
in inventory. Unlike a final sale in the previous models of secondary markets, there can be
a window for return of goods and that would affect the time of payout. The retailer or
selling agent does not have to purchase the items, sets the discounting policy, and creates
the timeline and limit regarding how long they are willing to give the items the chance
to sell. Some businesses of this variety will conduct a trade for your merchandise, often
at a more attractive rate than a straight sale. When I talked to the CEO of the RealReal,
John Coral, he provided the following answers. My question, how does the expense of authentication
add value to the sale? He spoke to trust, confidence, and reliability. Quote, at the
RealReal, we invest significantly in our authentication process for numerous reasons.
We also know verified authentication adds value to the items on our site and boost
trust within our community. Items are met with a robust team of expert authenticators
combined with cutting edge AI technology, which gives buyers confidence in their purchases
and allows sellers a seamless consignment experience. This investment in authenticity sets us apart
from competitors and reinforces our commitment to providing a safe and reliable marketplace
for both buyers and sellers. Regarding the ideal client for consignment, the benefit
for natural resources with the secondary market was underlined. Quote, the ideal client for
consigning with the RealReal is someone who values convenience, expertise, and the ability
to maximize the return on their luxury items. Additionally, environmentally conscious consumers
who appreciate the sustainable aspect of resale find consigning with us particularly appealing.
And lastly, when advising a prospective seller to choose consigning before other possibilities,
John's response was, quote, first, our platform offers a broader reach and higher visibility
to a global audience of 36 million members, ensuring items sell more quickly and often
at better prices than local pawn shops or auctions. Second, we handle all aspects of
the selling process, from professional photography and detailed listings to pricing expertise
and customer service, providing a hassle-free experience. Additionally, our reputation for
rigorous authentication builds by our trust, which translates into higher sale values.
Lastly, consigning with us supports the sustainable fashion movement, appealing to those who want
to make environmentally conscious choices. The goal of this episode was to expose you
to the world of pre-owned fine jewelry and watches. Globally, the secondary watches market
alone is expected to top $26.5 billion last year. The jewelry sector is projected to hit
$1.3 billion US dollars by 2028. The stigma of a used item has been replaced with a savvy
shopper-to-seller dynamic that understands intrinsic value and the absence of a big overhead
or the primary round of retail markup. Maybe it's time for you to find your favorite piece
outside of a branded store, showroom, or typical luxury sale.
Thank you for listening and learning with me. I would love you to share this project
with people finding rare beauty in today's world and throughout our times. Until the
next episode, keep your own stories sparkling.