- Your name and role: Tobias Kormind, Managing Director
- Company: 77 Diamonds Ltd
- What it does: We disintermediate the diamond chain and bring made-to-order fine jewellery, the largest selection of certificated diamonds in the wrold, directly to consumers offering affordable luxury, both online and through our showrooms in Mayfair and Manchester.
- Founded: London 1st June, 2004
- Founder/s: Tobias Kormind, Vadim Weinig
- Size of team: 64 people
You are a Mayfair-based jeweller and believe in creating ‘affordable luxury’ with zero compromise on craftmanship and value. How are you able to achieve this and keep the costs low?
It is not easy to balance a luxury product and experience with wholesale pricing. We started from scratch with a new business model without any legacy costs. We use technology to optimise the supply chain, and apply an inventory light model, so that our consumers benefit from any price and currency fluctuations.
How did you get this unique brand name?
We wanted a name with historical significance. 1477 is actually the first time a diamond ring was used in an official capacity as an engagement ring when Archduke Maximilian of Austria (Habsburg Dynasty) proposed to Mary of Burgundy. In addition, when light hits a diamond, it slows from 186,000 miles per second to 77,000 miles per second, so we thought the number 77 had a great significance for diamonds.
You are a banker-turned-jeweller. How did this transition happen? Who bankrolled you?
The transition from banking to jewellery happened gradually. Firstly I transitioned to the internet and ecommerce, by jumping ship into a client who had the largest financial portal in the UK, which I had helped list on the stock exchange. There I met a very innovative marketing team and we set up a marketing agency together. As we had luxury clients who we successfully help grow online, and my sister had married into a larger diamond family, I decided that combining the 2 could yield results. In addition a few of my friends were getting engaged had become customers, so there was already a proof of concept. The 77 Diamonds plan was hatched.
What metrics do you look at every day?
Sales, enquiries, traffic to website, meeting bookings, conversions, margins and the average order value.
You must be reading about the retail bloodbath on the UK high-street. Has Brexit taken the sheen off your diamonds in any way?
Firstly, the fall in Sterling during 2016 made diamonds more expensive as diamonds globally are priced in USD. Surprisingly, we didn’t see a drop in sales or average order values, people ended up adjusting the size of diamonds and quality to compensate for the lower buying power. Secondly, we have seen a greater use of consumer financing and a longer time to purchase as a result of the Brexit uncertainty and belt tightening. Sales are up year on year double digits so we have yet to feel a significant slowdown, but we have not been entirely immune. The most pain may yet to come, if trade barriers are errected and the UK’s competitive position becomes significantly weakened. We may need to move part of our manufacturing to mainland Europe to remain competitive.
How big is the ‘engagement ring’ market – and how much of it do you think you can own?
Diamond jewellery globally increased to $82bn in 2017, a significant market by any measure. The UK occupies less than 3% and UK and with Europe, they are less than 10% of the market. We believe we can become the dominant local player in several European markets with a 10% market share, which means our turnover would eventually reach several hundred million pounds.
What is unique about your website, marketing strategy that distinguishes you from other Bond Street jewellers?
Firstly, our jewellery quality is comparable and in some cases better, we are obsessed by quality and craftsmanship. But our value does not reside in the branded outer packaging but exists in our DNA, not only in the products but across all touchpoints on the website and in-store. Our website is state of the art, the customer can see and study the ring design as well as the diamond, in 3D rotation, with every detail apparent. All products are made to order, so it is complete customisation from start to finish, every time. The consumer literally sits in the driving seat the whole way through.
You talked about having a portfolio of high net worth clients including celebrities. What steps have you taken to protect their data and storing key information?
No business today can be 100 per cent immune from attack, just look at corporate espionage and even the US government hacks, so its important to be paranoid. We have invested significantly in tech, almost 20% of our workforce is IT, and we constantly upgrade our systems to make sure all data is as safe as can be. That is all any business can do today.
Many investors are scared to put their money in diamonds over ‘synthetic diamonds’ scare. How much of this is true?
Its a complicated question that can be answered on several levels. Synthetic diamonds will eventually have very little intrinsic value as production costs come down and they are produced on scale. Natural diamonds are of limited supply and billions of years old. There are limited number of mines meeting the current consumer demand, and their resources are depleting with no new major discoveries in the pipeline, so the supply demand equation points to higher prices.
What do you think is on the horizon for your industry in the next 5 years?
The predictions are about how the growing desire for experiences is the biggest threat to luxury consumerism, but don’t believe all of the hype. One of life’s biggest experiences remains getting engaged, love is timeless and still the ultimate human aspiration. There are a few other trends of note that may impact the industry and could have an enduring effect. The use of 3D printing is likely to influence and transform how consumers purchase their jewellery, allowing much more just in time manufacturing. VR is evolving and again may transform the way consumers try before buying their jewellery.
Which London start-up/s are you watching, and why?
Farfetch, Revolut, Monzo. Farfetch because it has had such great success in a crowded marketplace. It’s both luxury but accesble, leads the way in curated content to inspire, offers emerging brands alongside big brands and now even it’s own brands. Revolut because it achieved momentum organically with a spectacular offer and little marketing budget, but has yet to make money. Monzo again for an amazing platform with technology at its heart.