In this blog we will focus on exploring this fast growing trend and how digital tenders are enabling efficient and confident trading, contributing both to buyers and sellers.
For a long time, tenders have been a popular way for diamantaires to purchase rough diamonds.
While the method traditionally serves both buyers and sellers very well, tenders do have their drawbacks. One of the biggest problems with the tender format is the lack of time that potential customers have to inspect the inventory. Tenders also don’t have the ability to incorporate advanced assessment tools developed in the past decade that dramatically enhance the buyer’s ability to accurately inspect rough stones and better evaluate their worth.
In light of this, rough sellers in recent years have begun to consider how they can boost the efficiency of tenders while also improving the service level they provide to customers.
And now, a new and surprisingly successful concept has burst onto the scene: digital tenders.
Tenders Go Digital: How It Works
At digital tenders, buyers can evaluate the value of the rough diamonds on offer using advanced technological and digital-based systems in ways that are not possible at a physical tender. Here’s how:
Prior to the tender, the rough stones are measured with Sarine’s advanced scanning and mapping technology, and the data is inputted into the Advisor™planning files, which are the industry standard today.
These planning files are then sent to potential buyers who can virtually plan the polished diamonds they will extract from the rough stones in extreme detail and with high levels of accuracy. This all happens in the pre-tender stage, entirely online.
For sellers, the ability to send digital planning files online before the tender means they can reach out to a much larger pool of potential customers and increases the probability of finding a customer willing to pay the optimal price for the inventory. It also means they need much less physical rooms to showcase the diamonds and can therefore significantly reduce operational costs.
For buyers, it allows to accuracy inspect, plan and evaluate the rough diamonds, also minimizing the time required for physical inspection at the tender itself. Buyers significantly reduce the risk of purchasing mistakes and make sure not to miss the opportunity of purchasing rough inventory that could serve them well.
The win-win situation for both buyers and sellers has led to the rapid success of digital tenders, and the disruption of the tender format that has not undergone any significant change in many years.
Digital Rough Tenders: New Convenience and Accuracy
In the fall of 2019, Alrosa launched a digital rough tender platform based on Sarine’s rough scanning and analysis technology. The activity was Alrosa’a first-ever foray into the new world of digital tenders, using Sarine’s Galaxy® inclusion mapping tech and DiaExpert® planning tool to support buyers in assessing the rough diamond’s precise features, shape, inclusions, fluorescence, and more, via a virtual experience.
The digital platform enabled prospective buyers to complete almost the entire planning process prior to attending the physical tender. It also meant that buyers could consult with their local teams and polishing staff to make collaborative decisions in real-time about the best stones for purchasing.
In a market with small profit margins, there is little room for error. The digital tender by Alrosa is considered a novel success, demonstrating a new possibility for rough trading now proven to be supportable, realistic, and beneficial.
Not Just Convenient, But Necessary
During COVID, social distancing canceled many of the gatherings and events that were once part of everyday life and business. Parties, weddings, conferences – and even rough digital tenders – were not possible for some to attend.
In 2020, the importance of digital tenders became much clearer. There were even digital tenders with very high sales, in which the diamonds were not inspected physically at all! For the conservative diamond trade, the success of the digital tender was no less than amazing. Few would even have dared to imagine that is was possible.
Although Sarine digital tender technology was already in use before COVID-19, the pandemic showed that such capabilities are not just “nice to have” – they are a “must” to ensure a fully functioning diamond pipeline during times of crisis.
In 2020, digital tech was put into full flight in several rough tenders. Alrosa’s May tender saw demand for large, costlier rough stones via the digital sale of 102 roughs ranging from 5 to 10 carats.
In the company’s fourth digital tender, in December 2020, the virtual experience proved itself once again with even larger diamonds. The tender concluded with sales of $7 million in special sized rough diamonds of 10.8 carats and over, representing the sale of 80% of available goods.
The Benefits of Digital Tenders, Beyond the Pandemic
The reliability and accuracy of digital tenders were proven this year when going online was absolutely necessary. However, the success of the digital rough purchasing experience has demonstrated a host of advantages that will remain even after the pandemic is over and business is back to normal.
Here are some of the benefits of digital rough tenders:
- Complete flexibility: Planning files can be sent simultaneously to as many potential customers as the seller wants to reach. With a simple link, buyers can access the rough stone with accurate 3D modeling and critical data, much more so than if they were viewing it in real life.
- More people can participate: Having already examined the digital planning files, buyers need only conduct a very quick physical inspection of the rough diamond, if at all. This enables participation of many more potential buyers in each tender.
- Reduced error: The ability to access the highest quality, precision-detailed 3D scans and diamond data in real-time prior to attending the physical tender, means that buyers can make smart rough purchasing decisions with less error and less pressure.
- Increased profit margins: Advanced Sarine scanning tech provides exceptional diamond data that enables buyers to select the most suitable, highest yield rough stones for their specific markets and customers, thereby increasing potential profits with each rough purchase.
- Business continues, no matter what: As this past year has shown us, unforeseen events can have a total impact on the diamond pipeline. The digital realm enabled many parts of life to continue during the pandemic, via online shopping, Zoom meetings, and more. It is now clear that digital technologies, in conjunction with Sarine’s rough scanning, analysis, and cloud data storage, can facilitate the ongoing functioning of rough diamond trading under almost any circumstances.
Global Rough Trade moving forward
The challenges of this past year have taught the world many lessons. For the diamond industry, the need to rely on digital technologies has sharpened in focus. But it’s not just about the pandemic.
Lockdowns and social distancing shined a spotlight on what is clearly the next era of rough tenders for many reasons, including convenience and profitability, and why digital tenders should and will be adopted by forward-thinking diamond traders worldwide.
In December 2020, the largest diamond tender in the history of the UAE was held by Stargems in Dubai, where rough diamonds totaling a value of $87.5 million were sold. At this tender, Stargems utilized the digital rough trading platform powered by Sarine technologies. Press release
Following the recent peace agreements with Israel and Dubai’s transformation as one of the main trade centers in the world, it is clear that Dubai will be a very active diamond hub in the implementation of digital tenders as part of the standard pipeline practice.
Under the pressure of a challenging year, new approaches and paradigms have been revealed. No matter where in the world, Sarine stands ready with digital-based technology to support the coming dawn in rough diamond trading.