Chris Delgatto's New Venture Merges With I Do Now I Don’t
Rob Bates | July 28, 2015 |
Chris Del Gatto . . . is launching a new company that is merging with secondhand jewelry site I Do Now I Don’t.
Del Gatto will have a majority stake in the new venture, and the owners of I Do Now I Don’t will have a minority stake and will stay involved in the new company, Del Gatto says. No other investors are involved.
The new business, named Del Gatto, which will launch mid-September, is Del Gatto says, with a number of high-tech elements. One lets consumers snap a picture of their piece, text it to the company, and receive price estimates in return. Another, rolling out next year, is a proprietary online diamond and watch calculator that spits out estimates after consumers enter the product’s specs. Del Gatto hopes to partner with retailers to station the calculator as an in-store kiosk.
Like I Do Now I Don’t, the new company provides potential jewelry sellers with two options: They can put their piece up for sale on its online marketplace, or the company can buy the piece outright. (Unlike that site, which is mostly engagement rings, the new company will buy “everything.”)
The marketplace is peer-to-peer, with sellers offering their wares direct to buyers, and Del Gatto receiving a commission (generally 15 percent) on each sale. The company provides an estimate for the piece’s worth, but the seller makes the final call.
“We suggest they take a picture of it and we ask if they have an appraisal,” he says. “If they have an appraisal, then we don’t need anything else. We will suggest a price, but if they want to try for a higher price, that is absolutely up to them. We might say this should be priced $8,000, and sometimes they’ll listen and sometimes they won’t.”
The suggested price tries to “target below retail but above what [other buyers] would pay,” Del Gatto says. “It is really a sweet spot. We want to add value to both sides of the table. A consumer can get more than they get selling to any industry person, and you are buying a lot cheaper than you are when buying retail.”
He notes that I Do Now I Don’t recently sold a 4.22 ct. G SI2 round stone for $14,000.
“That’s a stone that is probably $35,000 at a retail store,” he says. “I would buy that as a dealer for $12,000.”
The difference from models like eBay is that “we sit in the middle verifying it all,” Del Gatto says. “The buyer sends us the money, and we hold it in escrow. As soon as we notify the seller the stone has been paid for, the seller sends us the piece, and we verify it is what they say it is. [If it is] we issue an independent appraisal, they release the stone, and we release the money.”
Appraisals generally take two business days, he says. Occasionally, valuers will disagree with the piece’s initial assessment.
“That happens, and we’ll say to the buyer, ‘I know your appraisal says G color, but I know it’s closer to I color,’” he says. “Most of the time the buyer and seller will renegotiate price a bit. Rarely, does the deal fall apart. Most of the time a new price is set.”
Del Gatto says that the marketplace option means the company is no longer in an “adversarial” position with buyers.
“The model is not: The cheaper we buy it, the better off we are,” he says. “It’s now: We want to get you as close to retail at possible. We can do it with this model that exposes you to thousands of consumers. We are now sitting with the client on the same side of the table.”
If the consumer decides for the more traditional option—getting a straight check—the company will make an offer and, if it’s accepted, take possession of the piece.
“If you do want a check, because you don’t want to wait anymore, we will be able to do that, that is part of the business model,” he says.
Del Gatto says the two options complement each other.
The check option “should make you feel good about everything,” he says. “You can keep the piece up on the marketplace for a week or two weeks, and if it doesn’t sell, you have the check option.”
“Most people who sell come in with a number of things,” he adds. “They will say these two things I will take the check for, and let me give this piece a shot on the marketplace.” . . . Del Gatto plans a retail office in Manhattan but doesn’t foresee many more.
“The nice part about this model is we don’t need offices in B-tier or C-tier markets,” he says. “What we will probably have are individual associates in, say, the Chicago market, without the overhead of an office and all the things that go along with it, just with advertising. They will go [to people’s homes] and give a listing price or immediate offers.”
I Do Now I Don’t was founded in 2007 by two siblings, Josh and Mara Opperman, after Josh couldn’t find a good place to sell his ring when his engagement fizzled. Its memorable name meant it received publicity right off the bat. Projected 2015 revenues are $15 million, reports say.
The site is now being relaunched as a division of the new company. Del Gatto says he had done business with the site [before].
“The founders reached out to me almost seven years ago, and said they would like to partner with me,” he says. “I didn’t have the opportunity at the time. But it was natural, as soon as my non-compete was up, that we began talking and started to formulate.”
He knows that the recycled diamond field has grown increasingly crowded. In addition to his old business, ventures such as White Pine, Worthy.com, and De Beers’ International Institute for Diamond Valuation are all buying product from the public.
“Everyone is doing it differently, and in my humble opinion, no one really has it right. . . . [T]there was nothing really new about the business model. The revolution was, we approached it differently. We looked at it as a luxury brand. I wanted clients who were selling to be served properly because it was a luxury item, and we didn’t want a pawnshop-y type of attitude. I am talking to a lot of those companies that want to do business with us. But there is no one that is offering close to what Del Gatto will be offering.”
As with other players in the recycled diamond market, he feels it has huge untapped potential.
“The number of the overhang, as De Beers calls it, is frighteningly large,” he says. “If there is $60 billion in annual sales in North America, if you think what percentage of that product gets sold back to the trade for divorce or financial reasons, or change of taste, that is 2 percent. That doesn’t take into account the stuff that is sold the year before. That is why De Beers is so worried about the overhang, and rightfully so. If anyone gets just a fraction of that marketplace you are doing extremely well.”
He thinks recycled diamonds will prove especially appealing to eco-conscious consumers.
“At some point in the near future millennials who are getting engaged and are very conscious of their eco-footprint will want a diamond that has been recycled,” he says. “We want to talk to consumers about having stuff sit in a vault for 20, 30 years. If they are wearing their jewelry they should enjoy it. But if they aren’t, they should think about their jewelry as that plastic bottle that they didn’t recycle. Someone may want to wear it, and you don’t have the need for mining.”
He compares it to the used-car market.
“The car companies would prefer for a car to be crushed,” he says. “They hate the used-car market. When I was growing up, used-car dealers had a stigma. But then Mercedes and BMW stopped turning a blind eye and took ownership of it and now offer pre-owned cars. You can’t ignore the [secondhand market]. If you are the guy who embraces it and creates a better mousetrap, that’s the real opportunity.”